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Oil

Crude Climbs on Reports of Further OPEC+ Production Cuts

Oil prices are up around 2% in early trading, rebounding slightly following Friday’s steep sell off which was driven by Russia saying it wanted to leave the output agreement as-is this week in Vienna and readdressing closer in April.

SECTOR COMMENTARY

Energy stocks are poised for a positive start, supported by gains in the underlying commodities while U.S. stock index futures edged higher on upbeat China factory data, easing investors’ concerns about a global economic slowdown in the wake of a prolonged trade war. Sector news is relatively quiet this morning to kick off the first trading session of December.

Oil prices are up around 2% in early trading, rebounding slightly following Friday’s steep sell off which was driven by Russia saying it wanted to leave the output agreement as-is this week in Vienna and readdressing closer in April. However, gains this morning come amid two sources from Reuters stating OPEC+ plans to look at deeper production cuts and have that potential new agreement run through at least June 20. The potential deeper cuts could be 400K bpd from current 1.2M bpd. Furthermore, better-than-expected Chinese manufacturing data last night also helped push futures on both sides of the Atlantic higher.

Natural gas futures are trading higher by ~2.5%, gaining back some of Friday’s steep declines, tracking positive momentum in the crude complex while shorter-term demand today is expected to run stronger than historical averages due to wintry weather in the Northeast.

INTERNATIONAL INTEGRATEDS

Press Release - Bunge Limited and BP announced that they have completed the formation of BP Bunge Bioenergia, the Brazilian bioenergy joint venture that combines their Brazilian bioenergy and sugarcane ethanol businesses.

Press Release - Eni, through its local subsidiary ArmWind LLP, has been awarded a 50 MWp photovoltaic project in the region of Turkestan, in southern Kazakhstan, as a result of an auction managed by the Kazakh Authorities. The auction was realized in the framework of a joint initiative of the Ministry of Energy of the Republic of Kazakhstan and the United Nations Development Program (UNDP).

CANADIAN INTEGRATEDS

Press Release - Husky Energy’s capital program for 2020 will be $3.2-$3.4 billion, with average annual Upstream production forecast to be in the range of 295,000-310,000 barrels of oil equivalent per day (boe/day), inclusive of an allowance for curtailment. The capital program is being reduced by $500 million in the 2020-2021 timeframe compared to Husky’s May 2019 Investor Day plan, reflecting $100 million in reductions in 2020 and $400 million in 2021.       

U.S. E&PS

Press Release - Apache updated the status of its first exploratory well in Block 58 offshore Suriname. Drilling operations on the Maka Central - 1 well commenced in late September with an expected drill time of 30 to 60 days. Upon reaching a depth of approximately 6,200 meters, the company elected to conduct various testing activities in two distinct Upper Cretaceous play types. Following the completion of these tests, the company will set casing, make equipment modifications to the rig, and resume drilling in mid-December to evaluate a third play type in the Cretaceous. The new target depth of the well is approximately 6,900 meters. Following the drilling operations, further testing and evaluation will be conducted as appropriate.  

Press Release - W&T Offshore announced the Company’s bank group has completed its regularly scheduled fall borrowing base redetermination and reaffirmed the borrowing base at $250 million. As of September 30, 2019, the Company had $41.7 million in cash and cash equivalents and $137.8 million of availability under the revolving bank credit facility.

CANADIAN E&PS

Desjardins Securities assumed coverage of ARC Resources, Crescent Point Energy, Encana, Enerplus, TORC Oil & Gas, Tourmaline Oil, and Whitecap Resources at ‘Buy’.

Desjardins Securities assumed coverage of Baytex EnergyBonavista Energy, Obsidian Energy, Paramount Resources, Peyto Exploration & Development, Seven Generations Energy, and Vermilion Energy at ‘Hold.’

Press Release - MEG Energy announced it has successfully completed rail contracting to support its 2020 production guidance.

Press Release - Obsidian Energy announced the appointment of Stephen E. Loukas as Interim President and CEO, effective December 5, 2019. Mr. Loukas will succeed current Interim President and CEO, Michael J. Faust, who will return to his prior position of Independent Director and take on new responsibilities as Chair of the Commercial Committee.

Press Release - Pengrowth Energy announced that Institutional Shareholder Services Inc., a leading independent proxy advisory firm, released a report  recommending that Pengrowth shareholders vote in favour of the proposed arrangement with Cona Resources Ltd., a portfolio company of Waterous Energy Fund.

OILFIELD SERVICES                                                          

Press Release - KBR announced that it has been awarded a $216 million task order to provide cybersecurity services for the Defense Health Agency (DHA). Under this task order, KBR will assist NIWC Atlantic with cybersecurity and risk management framework initiatives and provide support to the DHA Assessment and Authorization Division. DHA works closely with government agencies to deliver medical service to more than 9.4 million active duty personnel and their beneficiaries.

Press Release - McDermott International and its joint venture partner, Chiyoda International Corporation, a U.S.-based wholly-owned subsidiary of Chiyoda Corporation, Japan, announced that Train 2 of the Cameron project, located in Hackberry, La., has reached the final commissioning stage. This includes the introduction of pipeline feed gas into Train 2 of the liquefaction export facility, the precursor for the production of liquefied natural gas (LNG). This achievement is yet another significant milestone during 2019 and the first for Train 2.

(PRNewswire) – McDermott International announced today that it has been granted access to the second tranche ("Tranche B") of the $1.7 billion superpriority senior secured credit facility (the "Agreement") announced on October 21, 2019. Tranche B provides McDermott with a $250 million Term Loan Facility and a $100 million Letter of Credit Facility. The Company expects to utilize the amounts available under Tranche B to continue financing working capital and support the issuance of required performance guarantees on new projects.

J.P. Morgan resumed coverage in NexTier Oilfield Solutions with ‘Overweight’ rating.

REFINERS

Tudor Pickering Holt & Co upgraded PBF Energy to ‘Buy’ from ‘Hold.’

(Late Friday) Reuters - U.S. maritime officials have suspended a review of oil refinerPhillips 66's application for a U.S. Gulf Coast deepwater export terminal for additional information, but the company said it would continue outreach efforts to win over residents.

MLPS & PIPELINES

Robert W. Baird & Co upgraded Plains All American Pipeline and Plains GP Holdings to ‘Outperform’ from ‘Neutral.’ 

MARKET COMMENTARY

Wall Street futures were trading in the green, in line with most Asian stocks as upbeat factory activity data from China and renewed optimism over Sino-U.S. trade deal boosted investor sentiment. European shares dipped after U.S. President Donald Trump said he will restore tariffs on U.S. steel and aluminum imports from Brazil and Argentina. The dollar was up, while gold prices fell as investors turned to riskier assets. Oil rose ahead of possible supply cuts at OPEC meeting this week.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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