Energy Sector Update for 06/27/2018: RIG,TOO,NOG,TUSK

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Energy stocks moderated some of their prior gains Wednesday, with the NYSE Energy Sector Index falling back to a 1.1% advance near today's close while shares of energy companies in the S&P 500 were up just over 1.4% as a group in late trade. Oil prices continued their sharp rise Wednesday after the White House pushed allies to stop buying oil from Iran and a pair of reports showed much larger-than-expected drops in U.S. crude inventories last week. West Texas Intermediate crude oil for August delivery settled $2.23 higher at $72.76 per barrel, earlier climbing as high as $73.06 per barrel, while the global benchmark Brent crude August contract advanced $1.03 to $77.34 per barrel. July natural gas futures also rose 6 cents to $3.00 per 1 million BTU. Among energy-related ETFs, United States Oil was adding nearly 2.7% in value while United States Natural Gas was ahead almost 1.6%. The Philadelphia oil-service sector index was up more than 3.0% in recent trading.

In industry news:

Crude oil extended its price gains Wednesday after the Energy Information Administration reported the largest weekly drop in inventories so far in 2018 with a decline of 9.9 million barrels during the seven days ended June 22. The big slide in domestic supplies was largely in-line with the American Petroleum Institute late Tuesday reporting a 9.2 million-barrel decline for last week but was more than four times the projected 2.3 million-barrel drop by industry experts polled by S&P Global Platts. The federal agency also reported a 1.2 million-barrel increase in gasoline supplies last week while distillate inventories were little changed from last week.

Among energy stocks expected to move on news:

+ Transocean Ltd. ( RIG ) charged to an outized gain Wednesday, at one point climbing almost 9%, after the offshore oilfield-services company launched a $700 million private placement of senior secured notes due 2024 and also closed on a new, $1 billion senior secured revolving credit facility maturing 2023. The new facility also contains an accordian feature allowing Transocean to borrow up to $1.5 billion under certain circumstances and replaces its existing revolver loan. . climbing shares were over 1% higher pre-market Wednesday after the provider of offshore contract drilling services said that its unit Transocean Guardian started a private offering of senior secured notes. The company expects to use net proceeds from the notes offering to refinance existing debt.

In other sector news

+ Northern Oil & Gas ( NOG ) climbed to a 16-month high in Wednesday trading, rising almost 7% to reach its best share price since Feb. 27, 2017, at $3.00 apiece, after late Tuesday saying it expects to issue nearly 3.39 million shares of its common stock to an unnamed bondholder in exchange for $10 million of the company's 8.00% senior notes due 2020. According to a regulatory filing, the bondholder has agreed to not sell the new shares for at least nine months after their issue, subject to certain exceptions, and the company also agreed to issue additional shares to the bondholder if Northern's share price drops below a certain level during a predetermined period after the lock-up period expires.

+ Teekay Offshore Partners ( TOO ) advanced on Wednesday, at one point posting a more than 3% gain, after the oil-tanker company late Tuesday priced an upsized private placement of its 8.5% senior unsecured notes due 2023 at 100% of their face value. Shortly before pricing, the company and its underwriters increased the size of the offering by $200 million over its original plans when Brookfield TK TOLP - the owner of 59.5% of Teekay Offshore's equity stock - agreed to buy $500 million of the notes. The company plans to use the new funds to repay debt.

- Mammoth Energy Services ( TUSK ) was down over 6% in recent trading Wednesday after the company late Tuesday priced a $152.8 million secondary offering of 4 million shares of its common stock previously held by MMEH Sub LLC and Gulfport Energy Corp at $38.20 apiece, a 3.7% discount to the last closing price for the company's stock. The selling shareholders also provided underwriters with a 30-day option to buy up to 600,000 additional shares. Mammoth did not receive any proceeds from the offering.

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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This article appears in: Investing , Energy
Referenced Symbols: RIG , NOG , TOO , TUSK

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