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Oil Under Pressure As OPEC Weighs Smaller-Than-Expected Output Cut


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THURSDAY, DECEMBER 06, 2018

SECTOR COMMENTARY

The energy sector is poised for a sharply lower start, weighed down by weakness in the crude complex and major equity futures. Global stocks slummed after the arrest of a top executive of Chinese tech firm Huawei for extradition to the United States sparked fears of a flare-up in Sino-U.S. tensions.

WTI crude oil futures were off ~3% in early trading, trailing Brent which was down ~2.5%, pressured by news out of OPEC's summit in Vienna that the group was considering a smaller-than-expected cut in crude output. OPEC tentatively agreed an oil-output cut on today but was waiting to hear from non-OPEC affiliate Russia before deciding the exact volumes. WTI also came under additional pressure ahead of the weekly EIA data later this morning which analyst expect to show crude stocks fell just shy of 1mm barrels and a build in distillate and gasoline stocks.

Natural gas futures fell over 2% today as the market took a break from weeks of extreme volatility after daily production picked up a bit and the latest forecasts continued to call for warmer-than-normal weather starting in the middle of next week. The weakness also comes ahead of the storage report which analysts anticipate to show utilities likely pulled a bigger-than-usual 73 billion cubic feet of gas from inventories during the cold week ended Nov. 30.

INTERNATIONAL INTEGRATEDS

Reuters - Royal Dutch Shell has concluded that a Nigerian oilfield sale where it suspects an executive took bribes was not linked to a separate court case in which he and Shell face corruption charges over a $1.1 billion offshore acquisition.

U.S. E&PS

MKM Partners initiated coverage of Anadarko Petroleum Corporation,  Antero Resources Corporation, Continental Resources, Inc., CNX Resources Corporation, Carrizo Oil & Gas, Inc., Concho Resources Inc., Devon Energy Corporation, Encana Corporation, EOG Resources, Inc., EQT Corporation, Hess Corporation, HighPoint Resources Corp., Jagged Peak Energy, Inc., Laredo Petroleum, Inc., Marathon Oil Corporation, Matador Resources Company, Murphy Oil Corporation, PDC Energy Inc, Pioneer Natural Resources Company, SM Energy Company, SRC Energy Inc, Southwestern Energy Company and Cimarex Energy Co. with 'Buy' ratings.

MKM Partners initiated coverage Chesapeake Energy Corporation, Cabot Oil & Gas Corporation, Gulfport Energy Corporation and Range Resources Corporation with 'Neutral Ratings.

Stephens's initiated coverage in Apache, Continental Resources, Callon Petroleum, Devon Energy, Earthstone Energy, Diamondback Energy, Hess Corp, Noble Energy, PDC Energy, Pioneer Natural Resources, Talos Energy, Whiting Petroleum, WPX Energy and Extraction Oil & Gas with 'Overweight' rating.

Stephens initiated coverage Abraxas Petroleum Corporation, Centennial Resource Development, Concho Resources Inc., Denbury Resources Inc., Matador Resources Company, Murphy Oil Corporation, Oasis Petroleum Inc., Parsley Energy, QEP Resources, Inc., Range Resources Corporation and Unit Corporation with 'Equal-Weight' ratings.

Press Release - HighPoint Resources announced that its Board of Directors has appointed Lori A. Lancaster as a director of the Company, effective December 4, 2018. She will serve as an independent director and as a member of the Audit Committee and the Nominating and Corporate Governance Committee.

(Late Wednesday) Press Release - The Board of Directors of Hess declared a quarterly cash dividend of $20 per share on the Company's 8.00% Series A Mandatory Convertible Preferred Stock, which is equivalent to $1.00 per depositary share, each representing 1/20(th) interest in a share of Series A preferred stock. The dividend is payable on February 1, 2019 to holders of record at the close of business on January 15, 2019. The depositary shares are listed on the New York Stock Exchange under the symbol HESPRA.

Press Release - The Board of Directors of QEP Resources announced that Chairman, President and CEO Charles "Chuck" Stanley has elected to retire from the Company, effective January 14, 2019. The board has named Timothy "Tim" Cutt as QEP's President and Chief Executive Officer, effective January 15, 2019. Mr. Cutt will also serve as a member of the Company's board. The board also announced it will separate the roles of Chairman and Chief Executive Officer and that Lead Independent Director David A. Trice has been named to succeed Stanley as Chairman of the board.

CANADIAN E&PS

(Late Wednesday) Press Release - Tourmaline Oil announced that its Board of Directors has declared a quarterly cash dividend on its common shares of C$0.10 per common share. The dividend will be payable December 28, 2018 to shareholders of record at the close of business on December 14, 2018. This quarterly cash dividend is designated as an "eligible dividend" for Canadian income tax purposes.

OILFIELD SERVICES

Press Release - Mitcham Industries reported total revenues for the third quarter of fiscal 2019 increased 71% to $14.7 million, compared to $8.6 million in the third quarter of fiscal 2018 and $8.4 million in the second quarter of fiscal 2019, driven by both an increase in orders for marine technology products as well as an uptick in leasing revenues. The Company reported a net loss attributable to common shareholders of $5.6 million, or $(0.47) per share, in the third quarter of fiscal 2019 compared to a net loss of $5.5 million, or $(0.46) per share, in the third quarter of fiscal 2018.

Press Release - Patterson-UTI Energy reported that for the month of November 2018, the Company had an average of 185 drilling rigs operating. For the two months ended November 30, 2018, the Company had an average of 182 drilling rigs operating.

Press Release - Petrofac 's Engineering & Production Services East division has secured an operations and maintenance support services contract with Trans Adriatic Pipeline AG. The 13 month contract is in support of the development and operation of the TAP natural gas pipeline, which will bring Caspian natural gas to Europe. The scope of services includes provision of specialist personnel to support the project with operations and maintenance, technical services, environmental and safety requirements, along with transition plans through to operations.

MARKET COMMENTARY

The arrest of a top executive at Huawei Technologies ignited fresh concerns over the China-U.S. trade war dragging global equities and U.S. stock futures down. The dollar was little changed, while gold prices fell on profit taking. Trade deficit, private payroll and factory orders scheduled for release later during the day are the key indicators markets would have an eye on.

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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