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Crude Rises on Supply Cuts and Middle East Tensions


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Friday, May 17, 2019

SECTOR COMMENTARY

Energy stocks are set to open mixed, supported by moderate strength in the crude complex but weakness in the broader equity futures weighed on the space as trade worries returned after Chinese media took a hard stance on the tariff dispute between the US and China.

Oil prices on both sides of the Atlantic just moved off session highs but are trading higher for a fourth-straight session and on pace for their largest weekly gains since mid-February. Prices were supported by a host of supply cuts and concerns of further disruption to Middle East shipments as tensions rise. "The Middle East is acting as a tinderbox for conflict," said Stephen Brennock of oil broker PVM. "So long as this remains the case, the energy complex will continue to be supported by bullish supply-side signals."

Natural gas futures are up by half a percent, flirting with its best levels in over a month, but has failed to close above its 50-DMA for two months. Storage data out yesterday reported a build of +106 Bcf. It was the second 100+ Bcf build this shoulder season, the first time that has occurred since 2015.

INTERNATIONAL INTEGRATEDS

Reuters - BP has brought forward a planned turnaround on the 200,000 barrel per day crude unit (CDU3) at its Rotterdam, Netherlands, oil refinery to May. The shutdown was originally planned for October.

Reuters - BP will face pressure at a meeting next week to set tougher targets to combat climate change, the latest signal from investors that they want the oil and gas industry to do more to clean up its act. After BP's 2018 carbon emissions rose to their highest in six years, the London-based major is being lobbied by activists and an increasing number of shareholders to ensure its operations are in line with goals set by the 2015 Paris climate deal to curb global warming.

Reuters - Total said that it had suspended operations at some units of the 230,000 barrel-per-day Leuna refinery in Germany for technical checks due to contamination affecting Russian crude supply.

(Late Thursday) Reuters - Total 's planned acquisition of Anadarko's African assets is "perfectly fitting" with the company's overall strategy and helps play to its strengths, Chief Executive Patrick Pouyanne said. Total agreed to buy all of Anadarko's oil-and-gas-producing assets outside the United States, including its biggest future expense, a multibillion-dollar liquefied natural gas project in Mozambique, for $8.8 billion.

U.S. E&PS

(Late Thursday) Press Release - Toby Z. Rice and Derek A. Rice (the Rice Team), shareholders of EQT , with a stake of approximately 3%, announced they are reducing the size of their slate of highly qualified nominees for the EQT Board from nine to seven. The change in the slate of nominees offered by the Rice Team was motivated by EQT's recent announcement that it will nominate three new director candidates to replace three long-tenured directors who have overseen the destruction of significant value at EQT.

MKM Partners downgraded Matador Resources to 'Neutral' from 'Buy.'

(Late Thursday) Press Release - RANGE RESOURCES announced that Dennis Degner was appointed to the position of Senior Vice President - Chief Operating Officer, effective immediately.

Press Release - Sundance Energy Australia reported that net loss attributable to owners of the Company for the period was US $31.4 million, largely attributable to an unrealized loss on hedging of $37.1 million. Adjusted EBITDAX for the period was US $31.7 million, representing a ~62% Adjusted EBITDAX margin. Total revenue for the quarter increased ~99% to US $47.7 million as compared to the same prior year period. First quarter net sales volumes were 1,107,222 boe or 12,302 boe per day, at the top end of the Company's public guidance.

CANADIAN E&PS

Press Release - OBSIDIAN ENERGY announced it has signed a purchase and sale agreement to sell its 55% working interest in the Peace River Oil Partnership for total consideration of approximately $97 million, before normal closing adjustments. Total consideration includes $85.8 million in cash and cash equivalents, with the remainder comprised of purchasers' shares and the present value of additional liabilities. The Agreement is subject to financing and the terms of the partnership agreement which provides for a 30-day right of first refusal with an additional 15-day tag-along right to our partner. The effective date of the transaction is February 1, 2019 with an anticipated closing date on or about July 31, 2019. All figures are in Canadian dollars unless otherwise stated.

OILFIELD SERVICES

(Late Thursday) Press Release - Fluor announced that its board of directors has confirmed the appointment of Carlos M. Hernandez as chief executive officer (CEO) and named him a member of the board of the company. Hernandez was named as Fluor's interim chief executive officer on May 1, 2019, in line with the company's established succession plan following David T. Seaton stepping down. The board of directors also named John R. Reynolds as the new chief legal officer of Fluor.

(Late Thursday) Press Release - Halliburton announced that at the board of directors' meeting following the shareholders' meeting, the board declared a 2019 second quarter dividend of eighteen cents ($0.18) a share on the Company's common stock payable on June 26, 2019 to shareholders of record at the close of business on June 5, 2019. Shareholders elected board members Abdulaziz F. Al Khayyal, William E. Albrecht, M. Katherine Banks, Alan M. Bennett, Milton Carroll, Nance K. Dicciani, Murry S. Gerber, Patricia Hemingway Hall, Robert A. Malone, and Jeffrey A. Miller.

(Late Thursday) Reuters - Weatherford International intends to appeal NYSE's decision to delist company's ordinary shares in accordance with NYSE rules. NYSE considered announcement made by company it expects to implement RSA through a pre-packaged Chapter 11 process.

DRILLERS

(Late Thursday) Press Release - Ensco Rowan announced that an arbitration tribunal has awarded the Company $180 million in damages in its proceedings against Samsung Heavy Industries, a shipyard in South Korea ("SHI"). Further, the Company will be claiming interest on this amount and costs incurred in connection with this matter.

RBC started coverage of Ensco Rowan at 'Outperform.'

MLPS & PIPELINES

(Late Thursday) Press Release - NuStar Logistics, a wholly owned operating subsidiary of NuStar Energy , announced that it has priced $500 million aggregate principal amount of 6.00% senior notes due June 1, 2026. The senior notes were priced at 100% of par at a yield to maturity of 6.00%. The settlement date for the offering is expected to be May 22, 2019, subject to customary closing conditions.

MARKET COMMENTARY

Futures for Wall Street's major stock indexes slid, tracking losses in European markets after strong rhetoric from China over trade. Trade worries weighed on Chinese stocks, while Japan's Nikkei ended up. The pound was down for a tenth consecutive session following setbacks in Brexit talks. The dollar index rose, while gold prices fell. Oil gained, supported by OPEC supply cuts and lower Iran exports.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP

Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




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