Crude Climbs After 5-Day Slide
SECTOR COMMENTARY
Energy stock are poised for a moderate rebound on higher oil prices after investors take a pause following the market’s biggest sell-off in more than three months. Sector news is very light in the lull before earnings.
Oil prices are accelerating after a five day slide as several analysts downgrade their oil demand forecasts due to coronavirus while OPEC comments suggest the cartel could respond with further production cuts if needed. Reuters reports OPEC is discussing extending current output cuts until at least June as the current deal expires in March. Meanwhile, Libya shut ins continue.
Natural gas prices are advancing as demand today is expected to improve vs yesterday on wintry weather in the Midwest.
U.S. INTEGRATEDS
Reuters - Egypt has signed two deals with Exxon Mobil for oil and gas exploration in the Mediterranean, the petroleum ministry said. The exploration deals include a minimum investment of $332 million, the ministry said in a statement.
INTERNATIONAL INTEGRATEDS
Press Release - Saudi Aramco has bought into the blockchain-based oil trading company Vakt, Reuters reports on Jan. 28. Saudi Aramco’s Energy Ventures branch has bought $5 million in new shares, according to Vakt’s press release. The investment will be used to develop the platform, with a focus on expansion into the Asian market. In addition to investment, the oil conglomerate’s trading subsidiary Aramco Trading is set to use the Vakt platform.
Reuters - Air Liquide Arabia (ALAR) began pumping hydrogen through its $400 million pipeline network in Saudi Arabia's Red Sea city of Yanbu and will supply a Saudi Aramco refinery as the kingdom seeks to shift towards cleaner fuel. Pressure has mounted on the world's biggest fossil fuel producers to reduce their carbon emissions as concern mounts among policy-makers, investors and the general public about their impact on global warming.
Reuters - Fourteen French local authorities and six campaign groups have asked a French court to order oil major Total to sharply reduce its greenhouse gas emissions, campaign groups said on Tuesday. The lawsuit filed against Total comes as oil majors face increasing pressure from activists to act on climate change. The French campaign groups said in a statement the lawsuit was the first of its kind filed in France. Total said it regretted the legal action taken, adding it was working in compliance with national legal standards. "Total remains open to constructive talks," it said. Under French law, large French companies are required to publish annual plans that address any adverse impact of their activities, and those of subsidiaries and suppliers, on people and the environment. In their legal application, the six campaign groups, that included Les Eco Maires, a group of local authorities acting for sustainable development, alleged that Total's activities failed to comply with the goal of limiting a rise in global warming to 1.5 degrees Celsius.
Press Release - Total, through Total Quadran - its renewable electricity production subsidiary in France, and Banque des Territoires have signed an agreement upon which Banque des Territoires takes a 50% equity stake in Total Quadran’s portfolio of solar and wind energy assets in France of a total capacity of 143 MW. This portfolio consists of 11 wind farms and 35 solar power plants, with a cumulative capacity of 96 MW and 47 MW respectively and has been valued at around 300 Million euros (100%) in this transaction.
U.S. E&PS
(Late Monday) Press Release - Continental Resources announced that its Board of Directors has declared a quarterly dividend of $0.05 per share on the Company's outstanding common stock, payable on February 21, 2020 to stockholders of record on February 7, 2020.
Press Release - Hess announced a 2020 Exploration & Production capital and exploratory budget of $3.0 billion, of which more than 80% will be allocated to high return investments in Guyana and the Bakken. Net production is forecast to average between 330,000 and 335,000 barrels of oil equivalent per day in 2020, excluding Libya. Bakken net production is forecast to average approximately 180,000 barrels of oil equivalent per day in 2020.
OILFIELD SERVICES
(Late Monday) Press Release - Calfrac Well Services provided an operational update with respect to its fourth quarter of 2019 preliminary results (all amounts are in Canadian dollars). Results for the three months ended December 31, 2019 are expected to be in-line with the outlook that was communicated in Calfrac's Q3 2019 Interim Management's Discussion and Analysis. Calfrac estimates, on a preliminary basis, that for the three months ended December 31, 2019, revenue will be between $310 million and $325 million; Adjusted EBITDA will be between $26 million and $31 million; and the loss before income taxes will be between $69 million and $74 million. For the year ended December 31, 2019, Calfrac estimates, on a preliminary basis, that revenue will be between $1.60 billion and $1.65 billion; Adjusted EBITDA will be between $159 million and $164 million; and the loss before income taxes will be between $204 million and $209 million.
(Late Monday) Press Release - Calfrac Well Services announced that Calfrac Holdings LP, an indirectly wholly-owned by Calfrac, intends to offer to exchange up to US$100,000,000 aggregate principal amount of Calfrac Holdings' newly issued 10.875% Second Lien Secured Notes due 2026 for validly tendered (and not validly withdrawn) 8.500% Senior Unsecured Notes due 2026 of Calfrac Holdings. Calfrac and Calfrac Well Services Corp., its wholly-owned subsidiary and a Colorado corporation, will fully and unconditionally guarantee the New Notes, which will be issued under a new indenture. The New Notes will be secured by a second lien on the same assets that secure obligations under Calfrac's existing senior secured credit agreement.
Press Release - Fluor announced that it was awarded a project management consultancy services contract by Bharat Petroleum Corporation Limited (BPCL) for its Polyols Petrochemicals Project at its existing integrated refinery and petrochemicals complex in Kochi, Kerala, India. Fluor’s scope of work includes front-end engineering and design of both the inside and outside battery limits as well as detailed design, engineering, procurement and construction management services for the facility’s utilities and offsites. Fluor booked its portion of the undisclosed contract value in the fourth quarter of 2019.
Press Release - Halliburton announced it has been awarded seven contracts for drilling and completion services for the next phase of field development of the INPEX-operated Ichthys Project in the Browse Basin offshore northern Australia. The well development campaign is due to start in March 2020 and will continue for an estimated 3-year term. The contracts awarded include directional drilling, logging while drilling, surface data logging, drilling and completions fluids, cementing, liner hangers, coring and well completions services.
(Late Monday) Press Release - Superior Energy Services announced that its wholly owned subsidiary, SESI, L.L.C., has reached an agreement in principle with a steering committee of holders of 34.210% of SESI's $800 million aggregate principal amount of outstanding 7.125% Senior Notes due 2021. The Steering Committee is also working together with other noteholders and the Ad Hoc Group owns 61.369% of the aggregate principal amount of outstanding Original Notes. SESI has agreed to amend certain terms of its previously announced offer to exchange up to $500 million of the Original Notes for up to $500 million of newly issued 7.125% Senior Notes due 2021 and cash, upon the terms and subject to the conditions set forth in SESI's offering memorandum and consent solicitation statement, dated as of January 6, 2020.
MLPS & PIPELINES
(Late Monday) Press Release - Cheniere Energy announced that it has produced and exported its 1000 th cargo of liquefied natural gas (LNG). The 1000 th cargo was exported within a four-year time period after startup, setting an industry record and making Cheniere the fastest producer in the world to reach this milestone. Cheniere has produced these 1,000 cargoes from both the Sabine Pass Liquefaction Project and the Corpus Christi Liquefaction Project.
(Late Monday) Press Release - Energy Transfer announced a quarterly cash distribution of $0.305 per ET common unit ($1.22 on an annualized basis) for the fourth quarter ended December 31, 2019. This cash distribution is supported by the company’s underlying long-term stable cash flows. Energy Transfer benefits from a fully-integrated business with a diverse mix of earnings, generated by providing midstream services from the well-head to the market. The announced quarterly distribution is consistent with the distribution for the third quarter of 2019 and will be paid on February 19, 2020 to unitholders of record as of the close of business on February 7, 2020.
Scotiabank initiated coverage of ONEOK at ‘Sector Outperform’.
MARKET COMMENTARY
Futures for major U.S. stock indexes, and European stock markets rebounded after sliding in the previous session on panic surrounding coronavirus outbreak, while sell-off in Asian equity markets and oil continued. Gold prices eased as demand for riskier assets improved. The dollar edged up ahead of the Federal Reserve meeting. Durable goods orders and consumer confidence data are scheduled for release. Investors’ eyes will also be on Apple, Starbucks and Ebay, which will report their quarterly earnings post market close.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 - CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 - Bloomberg Day Break - Steady escalation of US-Iran tensions
- 12/5/19 - Bloomberg Balance of Power - OPEC's Limited Efficacy
- 9/17/19 - Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 - Discussion on Bloomberg TV about Impact of Abqaiq Attack
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.
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