Crude Climbs as Supply Concerns Offset Weaker Demand
The energy sector is set for a higher start, supported by mild gains in the crude complex and a rally in U.S. Natural gas futures, despite losses in the major equity futures. U.S stocks are poised for a lower start amid weakness in technology as bond yields hit their highest level in three years and investors wait for more details about the Federal Reserve’s plan to raise interest rates.
WTI and Brent crude futures are up in early trading as the threat of new sanctions on Russia raised supply concerns, offsetting fears of weaker demand following a build in U.S. crude stockpiles and extended COVID-19 restrictions in Shanghai. Oil futures also rose as a halt in talks to revive the 2015 Iran nuclear deal increased concerns over existing tight supply. The United States and its allies prepared new sanctions on Moscow over civilian killings in northern Ukraine, which President Volodymyr Zelenskiy described as "war crimes,” to which Russia has denied. Additionally, Goldman Sachs raised its 2023 oil price forecast to $115 a barrel from $110 a barrel on tight fuel supplies and firm demand despite COVID-19 lockdowns in China and a record release of strategic reserves by the United States.
U.S. Natural gas futures are up by more than 5% as Western nations are set to announce sanctions on Russian gas supplies which will keep U.S. LNG exports near record highs, outweighing forecasts for mild weather and lower heating demand in key consuming regions.
BY SECTOR:
US INTEGRATEDS
Chevron announced an agreement to join the Global Centre for Maritime Decarbonisation (GCMD). Chevron’s involvement aims to help support GCMD’s efforts to develop potentially scalable lower carbon technologies – including those that enable the use of ammonia as a maritime fuel – and the commercial means to enable their adoption.
Reuters reported that Exxon Mobil has pushed back by a week the restart of a gasoline-producing fluidic catalytic cracker (FCC) at its 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery.
Occidental Petroleum Corporation was initiated with a buy rating at Stifel Nicolaus, target $84.
INTERNATIONAL INTEGRATEDS
GreenIT, a joint venture between Eni's Plenitude and CDP Equity for the production of energy from renewable sources, and CI IV, a fund managed by Copenhagen Infrastructure Partners (CIP), have signed an agreement to develop two floating offshore wind farms in Sicily and Sardinia. Both projects are located more than 35 km from the coast and have a total capacity of approximately 750MW.
Equinor and Naturgy partner up and enter a development agreement prior to Spain’s first upcoming offshore wind auction off the coast of the Canary Islands. The Spanish government aims to transform its energy mix and plans to develop up to 3 GW offshore wind by 2030. The first Spanish offshore wind auction is expected to be in the Canary region in 2023 and here Equinor and Naturgy are jointly assessing the opportunity to develop and construct a floating offshore wind project.
Vår Energi has been awarded the Polaris CO2 storage license in the Barents Sea, together with its partners Equinor (operator) and Horisont Energi.
Repsol has acquired a minority stake in the Canadian company Enerkem, a technological world leader in the production of renewable fuels and chemical products through gasification of non-recyclable waste. This investment allows the Spanish multi-energy company to step up the development of decarbonization projects through the deployment of Enerkem’s technology in its existing industrial facilities and future plants. Repsol has subscribed €54 million to Enerkem's share capital. It will contribute an additional €68 million through the subscription of convertible notes which could allow Repsol to increase its stake in accordance with a number of financial variables over the coming years. This makes Repsol a strategic shareholder in the company to accelerate the adoption and deployment of Enerkem's technology and to develop new industrial projects in Spain and other locations.
Jefferies upgraded Repsol to Buy from Hold.
Environmental organisation Greenpeace urged organisers of the 2023 Rugby World Cup to exclude oil and gas group TotalEnergies from its list of official sponsors, notably because it did not exit Russia following Moscow's invasion of Ukraine.
Jefferies downgraded TotalEnergies to Hold from Buy.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
No significant news.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Geospace Technologies Corporation announced a $10M contract for the purchase of the company's OBX series of deepwater ocean bottom nodes from an international seismic contractor. The sale of the nodes occurred prior to the end of the company's Q2 of FY22.
Patterson-UTI Energy, Inc. had an average of 117 drilling rigs operating in the US in March vs 116 in Feb. For 1Q22, averaged 115 drilling rigs operating in the US.
Shawcor announced that its pipe coating division has received a Letter of Intent with Saipem for the Yellowtail development project, located in the Stabroek block offshore Guyana at a water depth of approximately 1,800 metres. The Company anticipates that it will receive a formal contract in the middle of 2022, subject to the necessary government authorizations. Project initiation is expected to begin in the first quarter of 2023 from Shawcor’s Veracruz, Mexico facility. In addition to the LOI with Saipem, Shawcor has received formal contract awards from other customers for two smaller projects located in the Gulf of Mexico. Shawcor will provide coating services for these projects which will commence in the second quarter of 2022 from the Company’s Veracruz facility.
Anson Resources announced an updated Memorandum of Understanding with TETRA Technologies in respect of Anson’s Paradox Lithium-Brine Project. Under the updated MOU between Anson and TETRA, the expiry date of the MOU has been extended to 31 July 2022. This is designed to give the parties additional time to discuss the change of product mix which takes into account TETRA’s increased zinc-bromide commitment from energy storage battery technology manufacturers, and for the future supply of both zinc-bromide and sodium-bromide, and how the two companies with cooperate to produce these products.
DRILLERS
Patterson-UTI Energy reported that for the month of March 2022, the Company had an average of 117 drilling rigs operating in the United States. For the three months ended March 31, 2022, the Company had an average of 115 drilling rigs operating in the United States.
REFINERS
Phillips 66 announced the commencement of offers to exchange any and all validly tendered (and not validly withdrawn) and accepted notes of the seven series of notes issued by Phillips 66 Partners LP for notes to be issued by Phillips 66 Company, a wholly owned subsidiary of Phillips 66.
MLPS & PIPELINES
Jim Cramer LNG top picks include Cheniere Energy Inc, Tellurian Inc and Sempra Energy.
Holly Energy Partners, L.P. announced that it and its wholly owned subsidiary, Holly Energy Finance Corp., subject to market conditions, intend to offer $400 million in aggregate principal amount of senior notes due 2027 in a private placement in accordance with Rule 144A and Regulation S under the Securities Act of 1933, as amended to eligible purchasers. The Partnership intends to use the net proceeds from the Offering to partially repay outstanding borrowings under its revolving credit agreement.
NextDecade Corporation announced the execution of a 20-year sale and purchase agreement with ENN LNG (Singapore) Pte Ltd, a wholly-owned subsidiary of ENN Natural Gas Co., Ltd. for the supply of liquefied natural gas from NextDecade's Rio Grande LNG export project in Brownsville, Texas.
Nordic American Tankers said that it has informed earlier that political uncertainty normally creates strong markets for its vessels. There is now a solid momentum in the market. It is currently securing spot contracts for a month or longer at rates above USD 50,000 a day. Its operating costs are about USD 8,000 per day per ship. NAT has a large part of the fleet operating in the spot market.
Plains All American Pipeline, L.P. and Plains GP Holdings announced their quarterly distributions with respect to the first quarter of 2022. PAA announced a quarterly cash distribution of $0.2175 per common unit ($0.87 per unit on an annualized basis), which represents a $0.0375 increase from the distribution paid in February 2022 ($0.15 per unit, or 21%, on an annualized basis). PAGP announced a corresponding quarterly cash distribution of $0.2175 per Class A share ($0.87 per Class A share on an annualized basis), which also reflects a $0.0375 increase from the distribution paid in February 2022 ($0.15 per unit, or 21%, on an annualized basis). With respect to PAA’s Series A Preferred Units, PAA announced a quarterly cash distribution of $0.525 per Series A Preferred Unit, or $2.10 on an annualized basis. Each of these distributions will be payable on May 13, 2022 to holders of record of each security at the close of business on April 29, 2022. For its Series B Preferred Units, PAA announced a semi-annual distribution of $30.625 per Series B Preferred Unit, which will be payable on May 16, 2022 to holders of record at the close of business on May 2, 2022.
MARKET COMMENTARY
Wall Street futures were in the red, mirroring global equities, as investors worried over aggressive U.S. interest rate hikes and more Western sanctions on Russia. Treasury yields rose to multi-year highs. The euro fell and the dollar rose. Oil prices gained on supply concerns. Gold strengthened as investors sought refuge in the safe-haven metal.
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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