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Energy Stocks Fall, Pressured by Weakness in U.S. Stock Index Futures


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Friday, Febr uary 8, 2019

SECTOR COMMENTARY

The energy sector is poised for a mixed to lower start, pressured by weakness in U.S. stock index futures while oil prices trade off session lows. A lack of progress on the U.S.-China trade talks ahead of a looming deadline added to investor nerves over slowing global growth.

Oil prices on both sides of the Atlantic got a boost this morning and are now trading higher on no specific catalyst. However, oil prices are heading for a weekly loss on worries about a global economic slowdown, although OPEC-led supply cuts and U.S. sanctions against Venezuela provided crude with some support. "It seems that macro risk still prevails over constructive supply fundamentals in the oil market," Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil forum.

Natural gas futures are up by 1%, supported by forecasts for much colder weather next week than previously expected.

US INTEGRATEDS

(Late Thursday) Reuters - Chevron plans to set greenhouse gas emissions targets and tie executive compensation and rank-and-file bonuses to the reductions. The move is a first for a U.S. oil major and focuses on the company's oil fields. More investors have been pressuring San Ramon, Calif.-based Chevron and other big oil companies to reduce emissions that contribute to climate change.

INTERNATIONAL INTEGRATEDS

(Late Thursday) Reuters - Petroleo Brasileiro said it will make a $622 million provision to pay for an arbitration decision in favor of U.S.-based Vantage Deepwater Co. Vantage won the decision against Petrobras last year after the Brazilian company cancelled an exploration contract in the Gulf of Mexico that had been awarded in exchange for kickbacks related to the wider "Car Wash" corruption probe.

Reuters - Royal Dutch Shell bought stakes and options in gas licenses in the southern British North Sea estimated to contain a total of 190 million barrels of oil equivalent from Cluff Natural Resources. Cluff's P2437 license, of which Shell now has an option to buy 50 percent until April 30, contains the Selene prospect next to Shell operated infrastructure linked to the Barque gas field which exports gas into the Bacton Gas Terminal. Shell agreed to buy 70 percent of the P2252 license and will become its operator.

U.S. E&PS

(Late Thursday) Press Release - Apache announced that its board of directors has approved a 2019 upstream capital budget of $2.4 billion. This represents a significant reduction from its previous 2019 investment plan, as well as from its actual upstream investment level in 2018. Despite a lower planned activity set, Apache is projecting 2019 total adjusted production for the full year will trend to the midpoint of its previous guidance range of 410 to 440 thousand barrels of oil equivalent (BOE) per day. This budget excludes the planned consolidated activities of Altus Midstream Company.

Susquehanna upgraded Cimarex Energy to 'Positive' from 'Neutral'.

(Late Thursday) Press Release - Murphy Oil announced that Eugene T. (Gene) Coleman, Executive Vice President, Exploration & Business Development, has elected to retire effective February 28, 2019, after 17 years of service at Murphy and more than 38 years of energy industry experience. At that time, the responsibility for Exploration will be assumed by Michael K. (Mike) McFadyen, Executive Vice President, Offshore, and the responsibility for Business Development will be assumed by David R. Looney, Executive Vice President & Chief Financial Officer.

CANADIAN E&PS

(Late Thursday) Press Release - ARC Resources reported its 2018 year-end reserves and resources information. Replaced 245 per cent of total 2018 production, adding 118 MMboe of proved plus probable ("2P") reserves through development activities. This includes positive technical revisions of 22 MMboe, predominantly in Sunrise and the greater Parkland area, reflecting the strong well performance from these Montney assets. 2018 is the eleventh consecutive year that ARC has replaced an average of 200 per cent or greater of produced reserves through development activities.

(Late Thursday) Press Release - ARC Resources reported fourth quarter production averaged 136,502 boe per day, net income was $159.7 million ($0.45 per share), funds from operations totaled $208.6 million ($0.59 per share), and net debt was $702.7 million as at December 31, 2018.

(Late Thursday) Press Release - Parex Resources announced the results of its annual independent reserves assessment as at December 31, 2018. Replaced respectively 175%, 261% and 238% of total 2018 production (16.2 million barrels of oil equivalent ("MMboe")) adding 28.3 MMboe proved developed producing reserves ("PDP"), 42.4 MMboe proved ("1P") reserves, and 38.6 MMboe 2P reserves. Increased PDP reserves by 24% year-over-year, from 51 MMboe to 63 MMboe (99% crude oil).

OILFIELD SERVICES

(Late Thursday) Press Release - Black Hills reported net income from continuing operations available for common stock for the fourth quarter and full year 2018 was $88 million and $265 million, or $1.51 and $4.78 per diluted share, respectively, compared to $64 million and $194 million, or $1.17 and $3.52 per diluted share, respectively, for the same periods in the prior year. The three and 12 months ending Dec. 31, 2018 included net tax benefits of $27 million and $69 million, or $0.46 and $1.24 per diluted share, respectively, primarily related to legal entity restructuring at our gas utilities that resulted in the recognition of deferred tax benefits associated with amortizable goodwill for tax purposes. The same periods in 2017 included a benefit from tax reform and other tax items of $12 million or $0.21 per diluted share.

(Late Thursday) Press Release - Forum Energy Technologies announced fourth quarter 2018 revenue of $273 million, an increase of $6 million, or 2%, from the third quarter 2018. Net loss for the quarter was $384 million, or $3.52 per diluted share, compared to net loss of $3 million, or $0.03 per diluted share, for the third quarter 2018. Excluding $392 million, or $3.60 per share of impairments and special items, adjusted net income was $0.08 per diluted share in the fourth quarter of 2018.

(Late Thursday) Press Release - Newpark Resources reported total revenues for the fourth quarter of 2018 were $247.7 million compared to $235.3 million for the third quarter of 2018 and $204.4 million for the fourth quarter of 2017. Income from continuing operations for the fourth quarter of 2018 was $10.6 million, or $0.11 per diluted share, compared to $3.6 million, or $0.04 per diluted share, for the third quarter of 2018, and $7.9 million, or $0.09 per diluted share, for the fourth quarter of 2017.

(Late Thursday) Press Release - NCS Multistage announced total revenue for the quarter is expected to be between $49.7 million and $50.7 million. U.S. revenue is expected to be between $27.3 million and $27.7 million, the midpoint of which represents a 4% increase compared to the third quarter of 2018. Canadian revenue is expected to be between $19.1 million and $19.4 million, the midpoint of which is a 34% decrease compared to the third quarter of 2018. International revenue is expected to be between $3.3 million and $3.6 million.

Press Release - Schlumberger announced that its Board of Directors has appointed Olivier Le Peuch as Chief Operating Officer of Schlumberger Limited, effective immediately.

(Late Thursday) Press Release - U.S. Silica announced that its SandBox Logistics business unit has filed a notice of appeal in its lawsuit against Proppant Express (PropX), which will allow the company to take fundamental issues directly to the Federal Circuit Court to enforce its intellectual property rights.

REFINERS

Press Release - Phillips 66 announced fourth-quarter 2018 earnings of $2.2 billion, compared with $1.5 billion in the third quarter of 2018. Excluding special items of $20 million in the fourth quarter, adjusted earnings were $2.3 billion, compared with third-quarter adjusted earnings of $1.5 billion. During the quarter, Phillips 66 funded $497 million of share repurchases, $367 million o f dividends , $994 million of capital expenditures and investments, and prepaid $300 million of floating rate notes due 2019. The company ended the quarter with 456 million shares outstanding.

MLPS & PIPELINES

Press Release - Buckeye Partners reported net income attributable to Buckeye was $482.5 million for the fourth quarter of 2018 compared to $126.3 million for the fourth quarter of 2017. The fourth quarter of 2018 benefited from the $343.0 million gain recognized upon closing of the previously announced sale of a package of domestic pipeline and terminal assets during the quarter. Buckeye also announced that its general partner declared a cash distribution of $0.75 per limited partner unit for the quarter ended December 31, 2018. The distribution will be payable on February 26, 2019 to unitholders of record on February 19, 2019. Buckeye has paid distributions in each quarter since its formation in 1986.

UBS downgraded Enbridge to 'Neutral' from 'Buy'.

Stifel initiated coverage of EnLink Midstream at 'Buy'.

Press Release - Phillips 66 Partners announced fourth-quarter 2018 earnings of $221 million, or $1.09 per diluted common unit. Cash from operations was $240 million, and distributable cash flow was $238 million. Adjusted EBITDA was $309 million in the fourth quarter, compared with $305 million in the prior quarter.

(Late Thursday) Reuters - A portion of TransCanada 's Keystone oil pipeline remained shut on Thursday for investigation of a possible leak on its right-of-way near St. Louis, Missouri. TransCanada shut the pipeline between Steele City, Nebraska and Patoka, Illinois and sent crews to assess the situation. The 590,000 barrels-per-day Keystone pipeline is a critical artery taking Canadian crude from northern Alberta to U.S. refineries.

MARKET COMMENTARY

U.S. stock futures were lower, tracking global equities, as investors worried about a global economic slowdown and the lack of clarity on the U.S. - China trade dispute. The dollar edged higher against its major rivals as trade tensions remained dominant. Gloomy economic outlook weighed on oil prices. Gold held steady.

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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