Leadership

Crude Climbs to 2019 High on Renewed Optimism over OPEC’s Supply Cuts

Tuesday, March   19, 2019

SECTOR COMMENTARY

The energy sector is poised for another higher start, gaining amid further strength in the underlying commodities and in the broader equity futures which rose ahead of the start of the U.S. Federal Reserve’s two-day policy meeting.

WTI and Brent crude oil futures continued to swing higher this morning and are at their highest levels so far in 2019, backed by renewed optimism over OPEC’s supply cuts and support from falling output in Iran and Venezuela due to U.S. sanctions. OPEC announced last night that it was scrapping its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June. The news follows recent comments from chief member Saudi Arabia, which has signaled that OPEC and its allies may continue to restrain oil output until the end of 2019. Meanwhile, Azeri energy ministry commented that Venezuela has suspended its oil exports to India, one of its key export destinations.

Natural gas futures popped 1.3% this morning, edging up near a seven-week high on forecasts for cooler weather and higher heating demand next week than previously expected.

INTERNATIONAL INTEGRATEDS

Press Release - Chesapeake Energy announced the preliminary results of its private offers to exchange new 8.00% Senior Notes due 2026 for certain outstanding senior unsecured notes. As of 5:00 p.m., New York City time, on March 18, 2019, approximately $883.5 million aggregate principal amount, or approximately 59.7%, of Existing Notes were validly tendered and not validly withdrawn.

Press Release - Eni through Vår Energi, jointly owned by Eni (69.6%) and by HitecVision (30.4%) announced an oil and gas discovery in production licence 869 in the North Sea by drilling the exploration well 24/9-14S and a horizontal appraisal well 24/9-14A in the Froskelår Main prospect. Vår Energi AS holds a 20% stake in the licence, while Aker BP ASA (which is the Operator) holds 60% and Lundin Norway AS 20%. The wells are located about 4 km northwest of the Bøyla Field and 225 km west of Stavanger in a water depth of 120 m and were drilled with the semisubmersible drilling rig Scarabeo 8.

Press Release - Petróleo Brasileiro announced the expiration and expiration date results of the previously announced offer to purchase by its wholly-owned subsidiary Petrobras Global Finance B.V., of any and all of its outstanding notes. The Offer was made pursuant to the terms and conditions set forth in the offer to purchase dated March 12, 2019 (the "Offer to Purchase" and, together with the accompanying notice of guaranteed delivery and related letter of transmittal, the "Offer Documents").

Reuters - Petroleo Brasileiro said it had started production at its P-77 platform, its fourth platform to enter operations in the Buzios field within the pre-salt region of Bacia de Santos. Petrobras, as the company is known, had said the platform would commence production in the first half of 2019. In a securities filing, Petrobras said the platform can produce 150,000 barrels of oil and up to 6 million cubic meters of natural gas a day.

Press Release - Petrobras informed that its CEO Roberto Castello Branco appointed Ms. Andrea Marques de Almeida as Chief Financial and Investor Relations Officer of the company and Mr. Rafael Salvador Grisolia as CEO of Petrobras Distribuidora (BR). The nomination of the new Officer shall be subject to the internal corporate governance procedures, including the compliance and integrity analysis necessary for the company's succession process, and referred to the Appointments, Remuneration and Succession Committee and subsequent deliberation of the Board of Directors, in attention to the provisions of arts. 30, V and 36, § 1, II of the Company's Bylaws. Rafael Grisolia will remain in his current position at Petrobras until his successor takes office.                  

U.S. E&PS

(Late Monday) Press Release - Approach Resources reported production for fourth quarter 2018 totaled 963 MBoe (10.5 MBoe/d), made up of 26% oil, 35% NGLs and 39% natural gas. Net income for fourth quarter 2018 was $0.9 million, or $0.01 per diluted share, on revenues of $22.4 million. Excluding the increase in the fair value of our commodity derivatives of $10.1 million, adjusted net loss (non-GAAP) for fourth quarter 2018 was $6.9 million, or $0.07 per diluted share. EBITDAX (non-GAAP) for fourth quarter 2018 was $13.5 million.

Mizuho downgraded Anadarko Petroleum and Pioneer Natural Resources to ‘Neutral’ from ‘Buy.’

(Late Monday) Press Release - Cimarex Energy announced that its Board of Directors approved a cash dividend of $20.3125 per share on its 8⅛ percent Series A Cumulative Perpetual Convertible Preferred Stock, which was issued to replace Resolute Energy Corporation's Cumulative Perpetual Preferred Stock, in connection with the March 1, 2019, closing of the merger. The dividend is for the period beginning on January 16, 2019 and ending on April 15, 2019.

Press Release - Denbury Resources and Penn Virginia jointly announced that, in connection with Denbury’s pending acquisition of Penn Virginia, April 16, 2019 at 5:00 p.m. Eastern Time is the election deadline for record holders of shares of Penn Virginia’s common stock to elect the form of merger consideration they wish to receive in connection with the transaction.

Mizuho upgraded Noble Energy to ‘Buy’ from ‘Neutral.’

(Late Monday) Reuters - Ring Energy filed prospectus related to possible resale or other disposition of up to 3,000,000 shares of common stock.

CANADIAN E&PS

Press Release - Enerplus announced that a cash dividend in the amount of CDN$0.01 per share will be payable on April 15, 2019 to all shareholders of record at the close of business on March 29, 2019. The ex-dividend date for this payment is March 28, 2019. The CDN$0.01 per share dividend is equivalent to approximately US$0.01 per share if converted using the current Canadian/US dollar exchange rate of 0.7493.

OILFIELD SERVICES

Press Release - CGG announced the launch by Sercel of the world’s first Vibrator Auto-Guidance solution, designed to increase vibroseis productivity by up to 10%. The solution can be fitted to all Sercel Nomad seismic vibrator trucks and works by optimizing a truck’s travel time to the next vibrating point (VP) and reducing baseplate dead time. This provides an increase in source efficiency and consequently a cost saving for acquisition.

Press Release - Fluor announced that its joint venture with TechnipFMC has successfully completed its engineering, procurement and construction management services scope of work on Sasol’s world-scale petrochemical complex in Westlake, Louisiana. The joint venture will continue to provide assistance to the Sasol team with remaining activities by working with Sasol in parallel on transition plans for each unit and system. The joint venture team will also assist in performance testing for the complex.

Credit Suisse downgraded Mammoth Energy Services to ‘Neutral’ from ‘Outperform.’

REFINERS

Reuters - Phillips 66 said no planned maintenance work currently underway at the Los Angeles, California refinery. Refinery capacity: 139,000 barrels per day. The Los Angeles refinery comprises two linked facilities about five miles apart in Carson and Wilmington. The former processes crude oil, while the latter upgrades the products.

MLPS & PIPELINES

Wells Fargo upgraded Crestwood Equity Partners LP to ‘Outperform’ from ‘Market Perform.’

MARKET COMMENTARY

Wall Street futures were higher ahead of the Federal Reserve's two-day policy meeting starting later in the day, with investors anticipating a more accommodative stance on interest rates. Equities in Europe traded higher, while Asian indexes were mixed. The dollar fell against the yen, while gold prices moved up. Durable goods numbers are scheduled for release later in the day.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


Nasdaq Advisory Services Energy Team Nasdaq's Advisory Services Tamar Essner
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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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