Weekly Review: Crude Oil & Natural Gas Prices
Oil prices rose to another 9-month high last week, as tensions
over Iraq continued to feed supply concerns in the Middle East. By
close of trade on Friday in New York, West Texas Intermediate (WTI)
crude futures was up 0.7% during the week to close at $106.83 per
The recent natural gas rally took a breather last week on
apprehensions of lower electric power demand with the imminent
break in hot weather conditions across certain central U.S.
regions. Sentiments were further dampened by a bearish supply data.
Natural gas prices ended Friday at $4.53 per million Btu (MMBtu),
down 4.4% over the week.
U.S. pipeline operator
Williams Companies Inc.
) shares jumped after it agreed to a $6 billion deal to buy control
of natural gas processor Access Midstream Partners L.P.
European energy biggie
Royal Dutch Shell plc
) decided to sell most of its shares in Australia's Woodside
Petroleum Ltd. For $5 billion, while it's Houston-based midstream
subsidiary filed for an U.S. IPO.
Energy Week That Was: Detailed Analysis
The week's energy coverage was dominated by the following news:
Williams Companies to Spend $6B on Access Midstream
Shares of North American energy firm Williams Companies Inc.
surged 19% after announcing plans to purchase the remaining 50%
general partner (GP) interest and 55.1 million limited partner (LP)
units in Access Midstream Partners L.P. Williams will spend roughly
$6.0 billion in cash to procure the stake and units of the master
limited partnership (MLP) engaged in the midstream business. The
acquisition - likely to close by the third quarter - will likely
give Williams full GP ownership and 50% LP interest in the Oklahoma
City-based partnership. Importantly, the ownership expansion will
boost the pure play energy infrastructure company's presence in
areas with growing energy output from shale formations.
Shed 19% Stake in Woodside for $5B, Subsidiary Applies
for $750M IPO
Europe's largest oil company Royal Dutch Shell plc announced
plans to reduce its stake in the Australian petroleum exploration
and production company, Woodside Petroleum Ltd. by 19%. The 156.5
million shares sale is expected to garner around $5 billion for
Shell. The Anglo Dutch energy major's management stated that the
deal was a means to improve the company's capital efficiency and
that it intends to drive growth in Australia through directly owned
Later in the week, Shell Midstream Partners, L.P., a wholly
owned subsidiary of the integrated energy behemoth, filed for an
initial public offering. The subsidiary intends to list its units
on the NYSE under the ticker SHLX. The offering will likely take
place in the second half of 2014 and Shell expects to raise a
maximum of $750 million from it.
ConocoPhillips to Shed Nigerian Unit
The world's largest independent energy explorer and producer
) has received the consent of the Minister of Petroleum Resources
of Nigeria for divestiture of its assets in the West African
nation. The properties would be acquired by the leading
Nigeria-focused oil and gas explorer Oando Plc for $1.65 billion in
cash. The to-be-sold assets hold an estimated 213 million
oil-equivalent barrels in proved reserves with average daily
production of about 43,000 barrels of oil in 2013. The deal -
expected to close by Jun 30 - will help ConocoPhillips to exit
Nigeria, a country that has been plagued by unrest, violence and
crude theft in recent years.
Weatherford Shareholders Approve Relocation to
Oilfield services giant
Weatherford International Ltd.
) announced that its shareholders have approved the relocation of
its legal domicile to Ireland from Switzerland. The approval was
received at an Extraordinary General Meeting of Shareholders at
which over 98% of the shareholders voted in favor of the
proposal. The company also announced that it would delist its
shares from the Swiss stock exchange. The incorporation under the
Irish law will strengthen Weatherford's activities and facilitate
operations at the lowest possible cost. It will also boost the
company's ability to rapidly and efficiently progress on its
transformational path, while facilitating to retain and further
attract the finest personnel in the industry.
Precision Drilling to Sell Trucking Assets, Focus on Core
Canada's largest drilling contractor
Precision Drilling Corp.
) declared that it has entered into an agreement with oilfield
hauling and rentals company Aveda Transportation and Energy
Services Inc. to divest a part of its trucking operations. The
closure of the deal is expected on Jul 1. The assets under sale
include trucks and other associated assets that are used to move
drilling rigs for Precision Drilling and other third parties based
in Texas and New Mexico. Precision Drilling's management stated
that the company intends to use the funds generated from divesting
these non-core assets to facilitate growth of its core operations
in Canada, the U.S. and other regions abroad.
Performance Chart of Some Major Companies:
The following table shows the price movement of the major oil
and gas players over the past 5 days and during the last 6
Last 5 Day's Performance
6 month performance
Other Headline News on Energy:
CNOOC to Share Production with Eni Unit in South China
China's number one offshore oil producer
) has entered into a production sharing agreement with Rome-based
) subsidiary - Eni China B.V. - for Block 50/34 in the South China
Sea. The acreage is located in the Qiongdongnan Basin, offshore
Hainan Island, with a total area of 2,000 square kilometers. Per
the agreement, Eni China will conduct 3D seismic survey and drill
an exploration well in Block 50/34 during the six and half years
exploration period. The local unit of the Italian major will bear
all the expenditures during this period. CNOOC Ltd. will have a 51%
working interest in any commercial discovery in the block.
Encana Seals $3.1B Buyout of Eagle Ford Assets
Canadian energy outfit Encana Corp. announced the closure of its
previously announced agreement with mineral explorer
Freeport-McMoRan's oil and gas subsidiary to acquire 45,500 net
acres of oil-rich Eagle Ford properties. Being a predominantly
natural gas player, Encana's profit in recent times have fluctuated
wildly due to volatile
that made the company restructure its asset base with a focus on
oil-producing resources. The latest deal, which aims to double the
company's oil output, corroborates this shift.
Range Resources, EQT Complete Asset Swap
Fort Worth, TX-based energy explorer Range Resources Corp.
announced the closure of an asset exchange transaction with EQT
Corp., a predominantly natural gas player. Per the agreement, Range
Resources transferred the ownership of about 73,000 net acres and
related assets in Glasscock and Sterling Counties, TX to EQT. On
the other hand, Range Resources acquired operated ownership
interests spread across 138,000 net acres and the remaining stake
in 1,200 miles of gathering pipelines and compression in the Nora
Field of Virginia from EQT.
This Week's Outlook:
Apart from the usual releases in this week - the U.S. government
data on oil and natural gas - market participants will be closely
tracking the Q1 GDP read, apart from reports on housing sector,
consumer confidence, durable orders and personal consumption.
Energy traders will also be focusing on developments in Iraq.
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WILLIAMS COS (WMB): Free Stock Analysis Report
CNOOC LTD ADR (CEO): Free Stock Analysis Report
WEATHERFORD INT (WFT): Free Stock Analysis
CONOCOPHILLIPS (COP): Free Stock Analysis
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
ENI SPA-ADR (E): Free Stock Analysis Report
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