Oil pumpjacks in a desert landscape
Oil

Crude Climbs, on Track for Weekly Gains

U.S. futures were mixed on Friday while energy stocks struggled on profit-taking.

SECTOR COMMENTARY:

U.S. futures were mixed on Friday while energy stocks struggled on profit-taking.

WTI and Brent are advancing this morning on pace for weekly gains of +1.9% and +0.8% respectively. A positive week for Brent would mark its seventh consecutive weekly gain. Headlines are fairly quiet heading into the weekend. The ongoing supply deficit remains a key focus among market participants. President Biden last night attributed high gasoline prices to OPEC+'s current production policy. He said he expects gasoline prices to fall in 2022. President Xi told oil workers that China must secure its own energy supply according to Bloomberg.

Natural gas futures are advancing this morning but remains on pace for a >2% weekly decline. IHS-Markit data from yesterday had total supply increase +0.3 Bcf/d w/w to 98.1 Bcf/d, and total demand increase +1.6 Bcf/d w/w to 86.3 Bcf/d for the week-ended 20-Oct. LNG feedgas flows rose +0.4 Bcf/d w/w to 10.9 Bcf/d. The updated 6-10 day forecast from yesterday afternoon shifted warmer d/d along the West Coast, and the 8-14 day forecast shifted warmer d/d along the West Coast and cooler in the southeast.

BY SECTOR:

INTERNATIONAL INTEGRATEDS                                           

Petrobras reached a 559 million real ($98.75 million) agreement with the country's oil regulator ANP regarding royalties over its SIX refinery, located in the southern state of Parana, Reuters reported. Petroleo Brasileiro SA, as the company is formally known, said in a securities filing that 302 million reais have already been provisioned for a potential payment in the second quarter. It expects to start paying for the deal as soon as the contract is signed. In a separate filing, Petrobras also said that has put its Catua oilfield, located in the Campos Basin, up for sale.                  

U.S. E&PS

Goldman Sachs upgraded Coterra Energy to Buy from Neutral.

Rattler Midstream, a subsidiary of Diamondback Energy announced that Rattler Midstream Operating LLC entered into a definitive purchase agreement to acquire certain water midstream assets from subsidiaries of Diamondback for $160 million in cash in a drop down transaction. The assets subject to the drop down consist primarily of produced water gathering and disposal systems, produced water recycling facilities, and sourced water gathering and storage assets acquired by Diamondback through transactions with QEP Resources, Inc. and Guidon Operating LLC and certain of its affiliates in early 2021. Additionally, Rattler and Diamondback have mutually agreed to amend commercial agreements covering the produced water gathering and disposal and sourced water gathering services between Rattler and Diamondback to add certain Diamondback leasehold acreage to the Rattler dedication. Rattler intends to fund the transaction, expected to close in the fourth quarter of 2021, through cash on hand and borrowings under its revolving credit facility.

Diamondback Energy announced that it has completed its previously announced divestiture of its oil and gas assets in the Williston Basin to Oasis Petroleum Inc. The Company also issued a notice of redemption today providing for the redemption of $650 million aggregate principal amount of the Company’s 0.900% Senior Notes due 2023 representing all of the outstanding 2023 Notes, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest on the 2023 Notes redeemed to but not including the redemption date, which is scheduled for October 31, 2021.

Kosmos Energy announced the pricing of $400 million aggregate principal amount of its 7.750% senior notes due 2027. The offering is expected to close on October 26, 2021, subject to customary closing conditions. Kosmos intends to use the net proceeds from the offering, together with cash on hand, to refinance the $400 million aggregate principal amount of private placement notes the Company issued to fund its acquisition of Anadarko WCTP Company.

Goldman Sachs reinstated coverage of Southwestern Energy with a Neutral rating.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Schlumberger reported results for the third-quarter 2021. Global revenue of $5.85 billion increased 4% sequentially and 11% year-on-year. International revenue was $4.68 billion and North America revenue was $1.13 billion. GAAP EPS, including charges and credits, was $0.39 and increased 30% sequentially EPS, excluding charges and credits, was $0.36 and increased 20% sequentially. In addition, the Board approved quarterly cash dividend of $0.125 per share.

DRILLERS

Canaccord Genuity downgraded Precision Drilling to Hold from Buy. Raymond James also downgraded the company to Market Perform from Outperform.

MARKET COMMENTARY

Futures for the Nasdaq edged lower after Intel warned of lower profit margins, while Snap Inc led declines among social media firms on flagging privacy changes from Apple. European stocks rose, and Japan and Hong Kong stocks closed higher as a surprise interest payment by debt-ridden China Evergrande Group lifted the mood. Gold gained, propped up by a subdued dollar. Oil prices bounced off their overnight lows. Markit’s PMI figures are scheduled for release later in the day.


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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