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Energy Sector Lower on Weakness in the Crude Complex


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Friday, January 11, 2019

Sector Commentary

The energy sector is poised for a lower start, tracking mild weakness in the crude complex and U.S. stock index futures which dipped after rallying for the past five sessions on hopes of a resolution in the U.S.-China trade dispute and assurances from the Federal Reserve on interest rate hikes.

Oil prices on both sides of the Atlantic dipped into negative territory, giving up earlier momentum, but futures are on track for solid weekly gains after financial markets strengthened due to hopes the United States and China may soon resolve their trade dispute.

Natural gas futures continued to climb higher following yesterday's better than expected storage draw and on forecasts for below-seasonal temperatures in key consuming regions.

US INTEGRATEDS

(Late Thursday) - Reuters - Seismic research vessels hired by Exxon Mobil to explore for oil off Guyana's coast have not yet returned to the site of a December incident with Venezuela's navy, but they may in the future.

INTERNATIONAL INTEGRATEDS

(Late Thursday) - Reuters - Petroleo Brasileiro has named Jeronimo Antunes as chairman of the board. The company said that Antunes chose to replace Nelson Carvalho after his resignation on January 1.

U.S. E&PS

(Late Thursday) - Press Release - QEP Resources announced that the sale of its natural gas and oil producing properties, undeveloped acreage and associated gas gathering and treating systems in the Haynesville/Cotton Valley has closed. As part of this transaction, Aethon III, an affiliate of Aethon Energy, assumed all firm gas transportation agreements related to these assets. In addition, QEP novated to the Buyer natural gas derivative contracts covering approximately 40 Bcf of gas for the last eleven months of 2019. The Company intends to use the proceeds from the divestiture to repay the outstanding balance on its revolving credit facility and to help fund a portion of its 2019 capital expenditure program.

CANADIAN E&PS

(Late Thursday) - Press Release - Parex Resources provided an operational update, highlighted by the testing of the Capachos Block Andina-2 well in the Guadalupe Formation. Capachos (WI Parex 50%, Ecopetrol S.A 50%): As previously reported (please refer to September 10, 2018 and October 10, 2018 press releases), Parex, as the operator drilled the Andina-1 exploration well to a total depth of 17,500 feet and encountered potential oil bearing reservoirs in the Une, Guadalupe and Mirador formations.  The Une Formation was first tested and had a final production rate during the test period of 2,545 barrels of oil per day and 8.7 million cubic feet per day of natural gas. Subsequently Parex completed and tested the Lower Guadalupe Formation over an 88-hour period under natural flow conditions, recovering a total of 8,826 barrels of 35 API oil and 3.9 million cubic feet of natural gas (gas-oil-ratio of 442 scf/stb) with an average production rate from the Lower Guadalupe Formation during the test of 2,407 bopd.

OILFIELD SERVICES

(Late Thursday) - Press Release - CES Energy Solutions announced that it will pay a cash dividend of $0.005 per common share on February 15, 2019 to the shareholders of record at the close of business on January 31, 2019.

Press Release - Mitcham Industries announced that it has declared a quarterly cash dividend on its 9.00% Series A Cumulative Preferred Stock or the fourth quarter of its fiscal year ending January 31, 2019. In accordance with the terms of the 9.00% Series A Preferred Stock of the Company, the Board of Directors has declared a Series A Preferred Stock cash dividend of $0.5625 per share for the quarterly period that began on November 1, 2018 and ends on January 31, 2019. The dividend on the Series A Preferred Stock is payable on January 31, 2019 to holders of record at the close of business on January 15, 2019. The Series A Preferred Stock is currently listed on the Nasdaq and trades under the ticker symbol "MINDP".

(Late Thursday) - Press Release - CLEANCOR Energy Solutions, a wholly owned subsidiary of SEACOR , announced that a subsidiary, CLEANCOR Equipment Solutions LLC, has acquired substantially all of the assets of GreenFix America. The acquired equipment will further CLEANCOR's ability to offer turnkey liquefied natural gas and compressed natural gas solutions for use by truck fleets, off-pipeline agriculture and industrial customers, as well as specialized utility pipeline interruption projects.

DRILLERS

(Late Thursday) - Press Release - Seadrill announced that its Chief Financial Officer, Mark Morris, will step down from his position following the completion of the Company's financial restructuring. He will remain in post until the end of June 2019 to enable the Company to find a suitable replacement. The Company has begun a formal search process and a further announcement will be made in due course.

MLPS & PIPELINES

Raymond James initiated coverage of DCP Midstream at 'Outperform'.

Raymond James initiated coverage of Oneok at 'Strong Buy'.

(Late Thursday) - Press Release - Targa Resources Partners , a subsidiary of Targa Resources , and the Partnership's subsidiary Targa Resources Partners Finance Corporation announced the pricing of an upsized offering of $1.5 billion aggregate principal amount of senior unsecured notes consisting of the originally announced $750.0 million of senior unsecured notes due 2027 and an additional $750.0 million of senior unsecured notes due 2029. The 2027 Notes will accrue interest at a rate of 6.500% per annum, will mature on July 15, 2027, and were priced at par. The 2029 Notes will accrue interest at a rate of 6.875% per annum, will mature on January 15, 2029, and were priced at par.

Credit Suisse terminated coverage of Valero Energy Partners .

MARKET COMMENTARY

U.S. stock futures were slightly lower as investors await inflation data, which is scheduled to release later in the day. European shares were mostly higher, while Japan's Nikkei posted its biggest weekly gain in more than two months. Cautious signals from the Federal Reserve about further interest rate hikes hurt the dollar, while gold prices rose. Oil gained, supported by OPEC-led supply curbs.

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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