Crude Climbs on Renewed Supply Concerns
The energy sector is poised for a mixed to higher start, backed by strength in the underlying commodities while major equity futures were flat amid some disappointing results from the chip makers while investors are waiting the latest reading of the July consumer price index for some clarity on the path of interest rate hikes from the Fed.
WTI and Brent crude oil futures continued to move higher for the third-straight session, supported by a report from Russia which said oil exports to Europe via the southern leg of the Druzhba pipeline had been suspended since early August, reviving concern about tight supply. Russian pipeline Transneft said Ukraine had suspended oil flows via the pipeline leg because Western sanctions had prevented a payment from Moscow for transit fees from going through. Earlier, oil was under pressure from progress in talks to revive the Iran nuclear accord, which would allow higher Iranian oil exports. Coming into view are the latest round of weekly supply reports, starting with the API after the close with analysts expecting a small 400,000-barrel drop in crude inventories.
Natural gas futures rebounded this morning following three-straight sessions of declines, gaining on a preliminary drop in daily output and forecasts for more demand this week than previously expected due to an increase in pipeline exports to Mexico. That price increase came despite forecasts for less hot weather over the next two weeks that will reduce air conditioning use next week and ongoing outages at the Freeport’s LNG export plant in Texas.
BY SECTOR:
US INTEGRATEDS
Nigeria's petroleum regulator said it stood by its refusal to approve Exxon Mobil's$1.28 billion sale of shares in its Nigerian unit to Seplat after President Muhammadu Buhari approved the transaction.
INTERNATIONAL INTEGRATEDS
bp and Bunge have put their Brazilian sugar and ethanol joint venture BP Bunge Bioenergia up for sale, newspaper Valor Economico reported.
bp has begun drilling an appraisal well in Texas for its U.S. carbon capture and sequestration business, an executive said.
Solstad Offshore ASA announced that Equinor has declared an option to extend the contract for the PSV Normand Searcher with one more year to September 2023. Equinor has the option to extend the contract with further 4 x 1 years.
Shell Overseas Investment B.V., a wholly owned subsidiary of Shell plc, has completed its 100% acquisition of Solenergi Power Private Limited and with it, the Sprng Energy group of companies from Actis Solenergi Limited.
TotalEnergies is restarting a unit at its 231,000 barrel per day Donges oil refinery in France, the company said, adding that the restart could lead to flaring.
CANADIAN INTEGRATEDS
Suncor Energy said that operations at its 98,000 barrel-per-day Commerce City, Colorado, refinery have returned to normal following an earlier equipment malfunction.
U.S. E&PS
Devon Energy announced it has entered into a definitive purchase agreement to acquire Validus Energy, an Eagle Ford operator, for total cash consideration of $1.8 billion. The transaction is subject to customary terms and conditions and is expected to close at the end of the third quarter of 2022, with an effective date of June 1, 2022.
Warren Buffett's Berkshire Hathaway bought more shares of Occidental Petroleum, surpassing the 20% stake where it could record some of the oil company's earnings with its own and potentially add billions of dollars of profit. In a regulatory filing on Monday night, Berkshire said it paid about $391 million for nearly 6.7 million Occidental shares between Aug. 4 and Aug. 8.
Talos Energy provided some expected benefits to the Company if the Inflation Reduction Act of 2022 passes into law in its current form. The bill was approved by the Senate on Sunday, August 7, and is expected to be voted by the House of Representatives on Friday, August 12. If approved by the House, it is expected that President Biden will sign the Act into law. The inclusion of several favorable provisions in the Act will benefit both Talos's Upstream business and its Carbon Capture and Sequestration business.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Martin Marietta Materials announced that it has entered into a definitive agreement to sell the Tehachapi, California cement plant and related distribution terminals to CalPortland Company for $350 million in cash.
MRC Global announced second quarter 2022 results. Net income attributable to common stockholders for the second quarter of 2022 was $8 million, or $0.09 per diluted share, as compared to the second quarter of 2021 net loss of ($2) million, or ($0.02) per diluted share. Adjusted net income attributable to common stockholders for the second quarter of 2022 was $23 million, or $0.27 per diluted share, as compared to the second quarter of 2021 adjusted net income of $6 million, or $0.08 per diluted share.
DRILLERS
Noble reported second quarter 2022 results. Q2 Total Revenue was $275 million, an increase of 31% quarter-over-quarter. Q2 Net Income was $37 million and Adjusted EBITDA was $84 million.
The board of directors of Seadrill has approved a new management incentive plan under which awards may be made to certain members of the Company's management and other leading employees.
REFINERS
No significant news.
MLPS & PIPELINES
Brooge Energy announced that the floods in the Port of Fujairah did not affect its facilities and they are secure. Brooge Energy's strong management team and technologically advanced infrastructure has secured the oil storage facilities, which are proving to be one of the highest technologically advanced units in the world.
International Seaways reported results for the second quarter of 2022. Net income for the second quarter was $69.0 million, or $1.38 per diluted share, compared to a net loss of $18.8 million, or $0.67 per diluted share, in the second quarter of 2021. Net income for the second quarter of 2022 excluding one-time items was $71.5 million, or $1.43 per diluted share.
MPLX LP announced that it has priced $1,000,000,000 in aggregate principal amount of 4.950% senior notes due 2032 in an underwritten public offering. The Notes were offered at a price to the public of 99.433% of par.
Tsakos Energy Navigation announced that its Board of Directors declared the regular quarterly cash dividend of $0.546875 per share for its Series D Cumulative Perpetual Preferred Shares and the regular quarterly cash dividend of $0.578125 per share for its Series E Cumulative Perpetual Preferred Shares.
As per SEC filing, Williams Companies completed a registered offering of $1.00 billion aggregate principal amount of 4.650% Senior Notes due 2032 and $750 million aggregate principal amount of its 5.300% Senior Notes due 2052.
MARKET COMMENTARY
Wall Street futures edged lower and European shares dipped as investors awaited the U.S. inflation data due later in the week and maintained a cautious stance amid fears of the impending interest rate hike by the Fed. Japan's Nikkei ended lower following weak corporate earnings. The dollar fell, while gold prices strengthened. Oil prices slipped over possibility of the Iran nuclear deal which would boost supply.
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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