Thursday, July 18, 2019
The energy sector is poised for a mixed start, supported by strength across the underlying commodities while weak earnings on the tech front mixed with signs that the U.S.-China trade war was hurting corporate earnings, weighed on sentiment and broader equity futures.
WTI crude oil futures bounced higher this morning after three consecutive days of steep declines, trending just behind Brent, rising after Iran said it had seized a foreign oil tanker in the Gulf it claimed was smuggling 6,200 barrels of fuel. The news comes amid rising tensions between Tehran and the West over the safety of shipping in the Strait of Hormuz. Yesterday's mixed EIA data showing a sharp rise in U.S. gasoline stockpiles continued to weigh while traders also digested a report from Barclays who lowered their 2019 and 2020 oil price forecasts on weaker demand expectations. Their 2019 WTI and Brent estimates were both lowered $2/bb to $61 and $69, respectively and their 2020 Brent price forecast was lowered by $6/bbl to $69 and WTI by $5/bbl to $62.
Natural gas futures jumped over 1% higher this morning ahead of EIA Weekly storage data due later this morning. Analyst consensus expects a build of +69 Bcf vs the 5 yr average of +63 Bcf. Every build this season as come in above the 5 yr average. Cooler weather forecasts in key consuming regions kept a cap on the upside.
Press Release - A joint venture led by Chevron is proposing to rely on two energy plays in British Columbia and Alberta to help supply an export terminal for liquefied natural gas on the West Coast.
Reuters - Officials from Eni sought to convince a witness, a former Eni manager, to withdraw some statements he made during investigations into a Nigerian corruption case involving the Italian oil group. Prosecutor Fabio De Pasquale made the comment in a trial hearing into the case, during a legal debate over a request by Eni lawyers to adjourn proceedings to give more time to consider evidence in a related obstruction-of-justice investigation.
Reuters - Russian President Vladimir Putin will meet Royal Dutch Shell Chief Executive Ben van Beurden in St. Petersburg.
Reuters - Total 's batteries company Saft announced it invested 9 million euros in Poitiers site.
Reuters - Eni has filed a fraud complaint against its former head of oil trading over a suspect Iraqi crude oil shipment, amid concerns inside the Italian oil major that the failed delivery may have included Iranian crude targeted by U.S. sanctions. In the filing to the Milan prosecutor's office Eni accused its former head of trading and operations, Alessandro Des Dorides, of misleading all parties to the deal and hiding the role of a small Italian oil trading firm, Napag.
Press Release - SM Energy reported second quarter 2019 total production of 12.4 MMBoe (136.5 MBoe/d), up 16% sequentially, as performance from both the Permian and South Texas exceeded expectations. Commodity mix included 44% oil and 62% liquids. In addition, the company reported second quarter 2019 costs incurred in oil and gas activities of $269 million and total capital spend of $261 million. Total capital spend was below guidance, reflecting continued capital efficiencies. Full year 2019 total production guidance further increased at the mid-point to 47.0 - 47.8 MMBoe, or 129 - 131 MBoe/d, while total capital spend guidance is reduced at the mid-point to $1,025 million, or approximately $70-80 million per month for the remainder of the year.
RBC Capital Markets initiated coverage of Diamondback Energy at 'Outperform.'
(Late Wednesday) Press Release - Sundance Energy Australia announced that it had entered into a definitive agreement to sell its assets in Dimmit County, TX for a purchase price of $29.5 million, subject to customary adjustments at closing.
(Late Wednesday) Reuters - Morgan Stanley reported 5.0% passive stake in Extraction Oil & Gas .
RBC Capital Markets downgraded Vermilion Energy to 'Sector Perform' from 'Outperform.'
(Late Wednesday) Press Release - Canadian Natural Resources may offer for sale from time to time debt securities in the aggregate principal amount of up to $3,000,000,000 (or the equivalent thereof in other currencies or currency units based on the applicable exchange rate at the time of the distribution) during the 25 month period that this prospectus remains valid. The debt securities may be offered separately or together, in one or more series, in amounts, at prices and on other terms to be determined based on market conditions at the time of issuance and set forth in an accompanying prospectus supplement.
Press Release - Arcline Investment Management, a growth oriented private equity firm with $1.5 billion of capital under management, announced that it has signed a definitive agreement to acquire the Reciprocating Compression division of Baker Hughes , a GE company.
Press Release - Petroleum Geo Services ASA reported 2Q'19 cash flow from operations of $108.1 million, compared to $121.7 million in 2Q'18, and revenues according to IFRS of $192.4 million and EBIT loss of $7.3 million, compared to $239.7 million and positive $30.5 million in 2Q'18.
CIBC Capital Markets downgraded Trican Well Service to 'Neutral' from 'Outperformer.'
(Late Wednesday) Press Release - Seadrill has secured a nine well contract with three options, each for two wells, for the West Gemini in West Africa. Total contract value for the firm portion of the contract is expected to be approximately $84 million with commencement expected in early Q4 2019 and running through Q4 2020.
(Late Wednesday) Reuters - Kinder Morgan will go ahead with a South Texas pipeline connection that would transport crude from Phillips 66 's 900,000 barrel-per-day (bpd) Gray Oak pipeline in the Permian Basin to delivery points at the Houston Ship Channel.
MLPS & PIPELINES
(Late Wednesday) Press Release - Targa Resources announced that its board of directors has declared a quarterly cash dividend of 91.00¢ per share, or $3.64 per common share on an annualized basis, for the second quarter of 2019. This cash dividend will be paid August 15, 2019 on all outstanding common shares to holders of record as of the close of business on July 31, 2019.
(Late Wednesday) Reuters - Kinder Morgan will go ahead with a South Texas pipeline connection that would transport crude from Phillips 66's 900,000 barrel-per-day (bpd) Gray Oak pipeline in the Permian Basin to delivery points at the Houston Ship Channel.
(Late Wednesday) Press Release - Kinder Morgan reported second quarter net income available to common stockholders of $518 million, compared to a net loss of $180 million in the second quarter of 2018; and distributable cash flow of $1,128 million, a 1 percent increase over the second quarter of 2018. KMI announced that its board of directors approved a cash dividend of $0.25 per share for the second quarter ($1.00 annualized) payable on August 15, 2019, to common stockholders of record as of the close of business on July 31, 2019.
U.S. stock index futures were down, in line with Asian markets on signs that the U.S.-China trade war was hurting corporate earnings. Most European shares were slightly higher as investors parsed through corporate results. The dollar was nearly flat. Gold prices eased from two-week high earlier in the session on profit-booking. Microsoft, Morgan Stanley and Union Pacific are scheduled to report results later in the day.
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