Oil Rebounds Following U.S. Sanctions Against Venezuela

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Tuesday, January 29 , 2019


Energy stocks are higher in the pre-market along with stronger oil prices and higher equities futures following strong earnings reports from several bellwether companies.

Both WTI and Brent oil prices are up 1% rebounding slightly from yesterday's losses supported by announcement of US sanctions against Venezuela's oil industry which will include a three-month wind down period for US buyers.  Speculation that the US will release oil barrels from the SPR and that Venezuelan barrels could be diverted to other geographical regions limited the overall upside to oil prices today.

Natural gas futures are up just moderately ahead of contract expiration later today.  Very cold air in the Midwest and Northeast is expected in the coming three days but a warming trend into next week pressured prices yesterday.


Reuters - Chevron has agreed to buy a Texas oil refinery with a troubled past and space to handle a coming flow of shale from its West Texas operations. The U.S. oil major is expected to disclose the deal to acquire a 112,000 barrel-per-day (bpd) refinery in Pasadena, Texas, this quarter. The plant is operated by Pasadena Refining System, a Texas-based unit of Brazil's state-run oil firm Petroleo Brasileiro.

(Late Monday) Reuters - Exxon Mobil has given final approval to an expansion of its 365,000 barrel-per-day Beaumont, Texas, refinery that could make it the country's largest by capacity. The largest U.S. oil producer has been considering a third processing unit at the plant since at least 2014. The approval authorizes financing for equipment needed to convert shale crude from Exxon's West Texas oilfields into precursors for gasoline, diesel, jet fuel and other refined products.


Reuters - Brazil's secretary of privatization said the government wants state-controlled companies Petroleo Brasileiro and banks Banco do Brasil and Caixa Economica Federal to sell most of their subsidiaries.

Reuters - Chevron has agreed to buy a Texas oil refinery with a troubled past and space to handle a coming flow of shale from its West Texas operations. The U.S. oil major is expected to disclose the deal to acquire a 112,000 barrel-per-day (bpd) refinery in Pasadena, Texas, this quarter. The plant is operated by Pasadena Refining System, a Texas-based unit of Brazil's state-run oil firm Petroleo Brasileiro .

Reuters - Total said it had made a significant, new discovery off the coast of Britain at its North Sea Glengorm prospect, with recoverable resources estimated at around 250 million barrels of oil equivalent. The company said further drilling and testing would be carried out to appraise the resources and the productivity of the reservoir.

Reuters - Total is launching its biggest exploration campaign for years in 2019 as part of a turnaround plan that is ditching the company's focus on risky long-shots in favour of areas known to contain commercial levels of oil or gas. The French major aims to drill 23 wells this year, its senior vice president for exploration, Kevin McLachlan, told Reuters, in waters off Mauritania, Senegal, Namibia, South Africa, Guyana and Brazil.


(Late Monday) Press Release - Abraxas Petroleum provided 2019 guidance, operations and corporate updates. In light of the current commodity price environment and the Company's focus on capital efficiency, Abraxas has revised its 2019 capital budget to $95 million, down from the previously announced $108 million. This budget is designed to produce free cash flow in the current commodity price environment, with limited impact on future production growth. The free cash flow will be used to pay down debt. This revised budget will entail the drilling and completion of 6 gross (4.3 net) wells and the completion of 4 gross (1.0) net wells in the Bakken, and the drilling and completion of 5 gross (4.75 net) wells and the completion of 2 gross (1.9 net) wells in the Delaware Basin of West Texas. The budget includes $10 million for additional leasing and infrastructure in the Delaware.

Stephens upgraded Concho Resources and Parsley Energy to 'Overweight' from 'Equal weight'.

Stephens downgraded Hess to 'Equal weight' from 'Overweight'.

(Late Monday) Reuters - EOG Resources said it anticipates a $132.1 million non-cash gain from oil and gas hedging contracts in the fourth quarter, according to a filing with the U.S. Securities and Exchange Commission. The gain represents a reversal from the prior quarter, when the shale producer booked a non-cash loss of roughly $52 million on its derivative contracts. That hit came as U.S. oil prices CLc1 averaged $69.50 a barrel during the third quarter, about $10 above where EOG had hedged a portion of its production.

Guggenheim downgraded Gulfport Energy to 'Neutral' from 'Buy'.

(Late Monday) Press Release - SandRidge Energy announced that the Board of Directors has appointed Paul D. McKinney as President and Chief Executive Officer, effective January 29, 2019. Mr. McKinney succeeds the Company's current President and Chief Executive Officer, Mr. William M. Griffin, who will continue to serve on the SandRidge Board.


Reuters - Saudi Aramco's unit Saudi Aramco Technologies signed a joint agreement with Axens and TechnipFMC to accelerate development and commercialisation of its catalytic crude to chemicals technology.


Press Release - Ensco announced that the Company has entered into an amendment to the transaction agreement with Rowan Companies under which the companies will combine in an all-stock transaction. The amendment has been unanimously approved by each company's board of directors. Under the terms of the amended transaction agreement, Rowan shareholders will receive 2.750 Ensco shares for each Rowan share and upon closing, Ensco and Rowan shareholders would own approximately 55% and 45%, respectively, of the outstanding shares of the combined company. All other terms and conditions of the transaction agreement that Ensco and Rowan entered into on October 7, 2018 remain the same. Odey Asset Management LLP, one of Rowan's largest shareholders as of the most recent regulatory filings, has pledged its support for the amended transaction by entering into an irrevocable voting agreement for the firm's holdings of approximately 11.4 million Rowan shares, or approximately 9% of Rowan's shares outstanding.

Raymond James dropped coverage of Trinidad Drilling .


(Late Monday) Reuters - Phillips 66 has shut a 120,000-barrel-per-day crude unit at its Wood River, Illinois, refinery and will likely restart the unit in about five days.

(Late Monday) Reuters - Phillips 66 said it could mitigate any disruption in the crude supply of its refining business from U.S. sanctions on Venezuela's state-owned oil company PDVSA because it would use alternative sources of crude. Venezuelan crude has made up only a small percentage of Phillips 66's total oil supply. The Houston oil refiner imported 552,000 barrels per day of Venezuelan crude in April, but otherwise did not import crude from the Latin American country in 2018, according to Refinitiv Eikon trade flows data.


Stifel discontinued coverage of EnLink Midstream Partners LP .

(Late Monday) Press Release - The SunCoke Energy Partners Board of Directors declared a fourth quarter 2018 cash distribution of $0.40 per limited partnership unit, or $1.60 annualized. The fourth quarter 2018 distribution will be payable on March 1, 2019, to unitholders of record on February 15, 2019.

Seaport Global upgraded Targa Resources to 'Buy' from 'Neutral'.


Major U.S. stock index futures were slightly lower as investors focused on a raft of major companies' results and ahead of Fed policy meeting. Apple, eBay and Advanced Micro Devices are expected to report their results after the closing bell. European equities inched higher, buoyed by utilities and consumer goods stocks. Most Asian shares slipped after the U.S. levelled sweeping criminal charges against China's telecom giant Huawei, days before the next round of U.S.-China trade talks. Gold climbed to a more than eight-month high as the dollar eased. Oil prices rose after U.S. applied sanctions on Venezuela's state oil firm PDVSA.


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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