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Oil Falls After API Reports Rise in Crude Inventories


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Wednesday, Febr uary 6, 2019

SECTOR COMMENTARY

The energy sector is poised for a lower start, weighed down by weakness in the crude complex and major equity indices which fell after President Trump at his State of the Union speech raised the prospect of another shutdown should his demand for border wall funding not be met.

WTI crude oil futures are off roughly 0.50% in early trading, in line with Brent, falling after last night's API report showed a rise in U.S. crude inventories, countering expectations of a tightening market in 2019 due to OPEC-led supply cuts and U.S. sanctions on Venezuela. Traders will be looking to the EIA data later this morning for confirmation.

Natural gas futures popped this morning, rising on the back of cooling weather forecasts that should boost demand.

US INTEGRATEDS

Reuters - Chevron said it is working to restore full operations at the El Segundo facility. A lightning strike resulted in a power disruption to several of the refinery's process units. Refinery capacity: 269,000 barrels per day.

(Late Tuesday) Reuters - Petro Rio said there are no "ongoing negotiations or binding agreements" to buy Petrobras' 30 percent stake in frade oil field. Petrorio said it will pay $184 million for Chevron 's 70 percent stake in frade oil field, plus $225 million over the next 24 months. Petrorio will become operator of frade oil field.

Press Release - ExxonMobil said it made two additional discoveries offshore Guyana at the Tilapia-1 and Haimara-1 wells, bringing the total number of discoveries on the Stabroek Block to 12. The discoveries build on the previously announced estimated recoverable resource of more than 5 billion oil-equivalent barrels on the Stabroek block.

(Late Tuesday) Reuters - Qatar Petroleum and Exxon Mobil said they are investing in a $10 billion project to expand a liquefied natural gas (LNG) export plant in Texas, as companies race to meet global demand for the fuel. Construction of the Golden Pass LNG project in Sabine Pass, Texas, is expected to begin early this year. The project will add production capacity of around 16 million tonnes of LNG per year after it starts up in 2024.

INTERNATIONAL INTEGRATEDS

Reuters - Petroleo Brasileiro said in a securities filing that it has not been notified about a potential claim filed by a group of minority investors at a local arbitration court. The claim by a local minority shareholders' association seeks compensation for the loss of value in Petrobras shares resulting from the corruption scheme revealed in the so-called Car Wash probe. Petrobras said in the filing that it was a victim of the scheme and has already recovered more than 3.2 billion reais ($866.6 million) in losses related to the scam.

Press Release - TechnipFMC has been awarded by Petrobras , on behalf of the Libra Consortium, comprised of Petrobras, Shell , Total , CNOOC Limited, CNPC and Pré-Sal Petróleo (PPSA), a large engineering, procurement, construction and installation (EPCI) contract for the Mero 1 pre-salt field, located in the Santos Basin, at 2,100 meters of water depth offshore Brazil.

(Late Tuesday) Reuters - Petro Rio said there are no "ongoing negotiations or binding agreements" to buy Petrobras ' 30 percent stake in frade oil field. Petrorio said it will pay $184 million for Chevron's 70 percent stake in frade oil field, plus $225 million over the next 24 months. Petrorio will become operator of frade oil field.

Press Release - Nordsol has brought Shell Ventures, corporate venture capital arm of Royal Dutch Shell , on as strategic investor to support its mission to enable the energy transition by making BioLNG mainstream. Nordsol uses biogas from organic waste streams to produce BioLNG, or liquified biomethane. With its unique technology, Nordsol offers a cost competitive solution for the long-haul, heavy duty transport sector with a pathway to net zero emissions.

CANADIAN INTEGRATEDS

(Late Tuesday) Press Release - Suncor Energy 's fourth quarter 2018 operating earnings were $580 million ($0.36 per common share), compared to $1.310 billion ($0.79 per common share) in the prior year quarter. The net loss was $280 million ($0.18 per common share) in the fourth quarter of 2018, compared to ne t earnings of $1.382 billion ($0.84 per common share) in the prior year quarter.

(Late Tuesday) Press Release - Suncor Energy 's Board of Directors has approved a quarterly dividend of $0.42 per share on its common shares, payable March 25, 2019 to shareholders of record at the close of business on March 4, 2019. This dividend represents a 17% increase over the prior quarter and marks 17 years of consecutive annualized dividend increases. In addition, Suncor expects to complete the current $3 billion stock buyback program by the end of February. As a result and based on expectations of sustainable future cash flow, Suncor's Board of Directors has approved an additional stock buyback program of up to $2 billion.

U.S. E&PS

(Late Tuesday) Press Release - Anadarko Petroleum announced 2018 fourth‑quarter results, reporting net income attributable to common stockholders of $102 million, or $0.21 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items decreased net income by $82 million, or $0.17 per share (diluted), on an after-tax basis. Net cash provided by operating activities in the fourth quarter of 2018 was $1.6 billion.

Press Release - Hess announced positive results from the Tilapia-1 and Haimara-1 wells offshore Guyana, bringing the total number of discoveries on the Stabroek Block to 12.

(Late Tuesday) Press Release - Southwestern Energy announced 2019 production, capital and cost guidance. This guidance is based on maximizing shareholder value assuming $2.85 per MMBtu NYMEX Henry Hub and $50 per barrel WTI commodity price environment in 2019. In 2018, the Company invested approximately $1.25 billion, delivering on its commitment to invest within cash flow and remain within original capital guidance. Appalachia production was 702 Bcfe, 20 percent of which was liquids production.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

The Williams Capital Group downgraded Black Hills to 'Hold' from 'Buy'.

Press Release - Fluor announced that Stork, part of Fluor's Diversified Services segment, was awarded a five-year maintenance contract by Ecopetrol's wholly-owned subsidiary, Cenit Transportation and Logistics, in Colombia. Stork will provide maintenance services for Ecopetrol's hydrocarbon transportation network in Colombia. Fluor booked the undisclosed contract value in the fourth quarter of 2018.

(Late Tuesday) Press Release - Hi-Crush Partners reported revenues for the fourth quarter of 2018 totaled $162.2 million on sales of 1,976,805 tons of frac sand. This compares to $214.0 million of revenues on sales of 2,775,360 tons of frac sand in the third quarter of 2018. The limited partners' interest in net loss was $(7.7) million for the fourth quarter of 2018, resulting in basic and diluted loss of $(0.08) per limited partner unit.

(Late Tuesday) Press Release - Hi-Crush Partners announced that it has set a record date of February 19, 2019 for and in advance of a special meeting of its unitholders with respect to the proposed conversion of Hi-Crush from a Delaware limited partnership to a Delaware corporation. The date, time and location of the special meeting will be announced when it is set by the Board of Directors. The Partnership has filed a preliminary proxy statement regarding the special meeting with the U.S. Securities and Exchange Commission.

(Late Tuesday) Press Release - ION Geophysical announced a new 2D multi-client reimaging program offshore Brazil. The first phase of the Farofa program covers acreage in the deep water Campos basin that will be available for licensing this October in Brazil's upcoming Round 16. The program will reimage ~10,000 km of existing data using the latest technology to provide an updated view of the outboard salt basin area. This program will extend the Picanha 3D program into the Round 16 area. The limited 3D data available in this area of Round 16 makes the Farofa dataset critical in providing valuable insights of the pre-salt potential. Initial data is expected to be available in Q1 2019 and the program is anticipated to be completed in May 2019.

Press Release - Wood and KBR have secured a new multimillion dollar contract to deliver integrated front-end engineering design (FEED) for Shell Australia's Crux project to build a not normally manned (NNM) platform and gas export pipeline located approximately 600km north of Broome, offshore Western Australia (WA).

Press Release - TechnipFMC has been awarded by Petrobras, on behalf of the Libra Consortium, comprised of Petrobras, Shell, Total, CNOOC Limited, CNPC and Pré-Sal Petróleo (PPSA), a large engineering, procurement, construction and installation (EPCI) contract for the Mero 1 pre-salt field, located in the Santos Basin, at 2,100 meters of water depth offshore Brazil.

DRILLERS

No significant news.

REFINERS

(Late Tuesday) Press Release - On January 30, 2019, Andeavor Logistics LP (the "Partnership"), Tesoro Logistics GP, LLC ("TLGP"), as the general partner of the Partnership, and certain of the Partnership's subsidiaries entered into secondment agreements (the "New Secondment Agreements") with each of Marathon Petroleum Logistics Services LLC ("MPLS"), an indirect, wholly-owned subsidiary of Marathon Petroleum Corporation ("MPC"), and Marathon Refining Logistics Services LLC ("MRLS"), also an indirect, wholly-owned subsidiary of MPC. Under the New Secondment Agreements, MPLS and MRLS will second certain employees to occupy positions within the Partnership's business and organization and to conduct business on behalf of the Partnership and its subsidiaries.

MLPS & PIPELINES

(Late Tuesday) Press Release - On January 30, 2019, Andeavor Logistics LP (the "Partnership"), Tesoro Logistics GP, LLC ("TLGP"), as the general partner of the Partnership, and certain of the Partnership's subsidiaries entered into secondment agreements (the "New Secondment Agreements") with each of Marathon Petroleum Logistics Services LLC ("MPLS"), an indirect, wholly-owned subsidiary of Marathon Petroleum Corporation ("MPC"), and Marathon Refining Logistics Services LLC ("MRLS"), also an indirect, wholly-owned subsidiary of MPC. Under the New Secondment Agreements, MPLS and MRLS will second certain employees to occupy positions within the Partnership's business and organization and to conduct business on behalf of the Partnership and its subsidiaries.

(Late Tuesday) Reuters - Plains All American Pipeline said it expects the reversed Capline crude pipeline, from the U.S. Midwest to the Gulf Coast, to begin service in the third quarter of 2020. The target in-service date for the reversed line is third quarter 2020 for light oil service and early 2022 for heavy oil service.

(Late Tuesday) Press Release - Plains All American Pipeline and Plains GP Holdings reported fourth quarter revenue of $8,786 million, diluted net income per common unit of $1.38 and diluted adjusted net income per common unit of $0.80.

MARKET COMMENTARY

Wall Street futures fell after U.S. President Trump's State of the Union address dented investor sentiment, as he raised prospect of another shutdown. European markets traded slightly lower on the back of weak corporate earnings, while Asian markets ended in the green. Oil prices dipped after a report showed a rise in U.S. inventories. Australian dollar plunged after Reserve Bank of Australia signaled a possible rate cut. Gold prices edged lower.

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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