Crude Climbs on Weaker U.S. Dollar
The energy sector is set to kick off November higher, backed by strength in the crude complex and in the major equity futures which rose as rates fell ahead of the FOMC’s rate decision as investors hope for a sign that the Fed will ease its tightening stance in the months ahead.
WTI and Brent crude oil futures jumped higher this morning, recouping yesterday’s declines amid weakness in the U.S. dollar which offset widening COVID-19 curbs in China that have stoked fears of slowing fuel demand. The greenback sank this morning from a one-week high against a basket of major peers, as traders weighed the odds of a less aggressive Federal Reserve at Wednesday's monetary policy meeting. Traders also noted that OPEC+'s upcoming oil output cuts and record US oil export data also support oil prices. The markets will be looking to the supply reports as the next major catalysts which analyst expect to show a rise in U.S. crude stocks.
Natural gas futures are in retreat this morning after rallying over 10% rally, sliding ahead of Thursday’s storage report while forecasts for more demand this week than previously expected buoyed prices.
BY SECTOR:
US INTEGRATEDS
Reuters reported that Exxon Mobil restarted its Beaumont, Texas, lubricant oil Blending and Packaging (B&P) Plant on Sunday following a shutdown due to investigations into a fatal rail car accident, two people familiar with plant operations said.
INTERNATIONAL INTEGRATEDS
Aramco beat forecasts with a 39% jump in third-quarter net income and reported record free cash flows, joining rivals in benefiting from higher prices and robust demand. Aramco's net income rose to $42.4 billion for the three months to Sept. 30 from $30.4 billion a year earlier, it said in a regulatory filing. The company's free cash flow rose to $45 billion from $28.7 billion a year-earlier. It declared a dividend of $18.8 billion in the third quarter, meeting its own target, which will be paid in the fourth quarter.
Honeywell and Aramco have announced the signing of a joint venture (JV) agreement to provide a set of end-to-end business process automation solutions, under the Aramco Namaat Industrial Investments Program. The technology solutions can be offered to a wide range of industrial sectors to help maximize profitability, improve productivity, sustainability and operational excellence, on a global scale.
Malaysian state energy firm Petronas said it was studying the damage to interconnecting pipes caused by a fire last week at its refinery and petrochemical joint venture with Saudi Aramco.
BP announced third quarter 2022 results. Underlying replacement cost profit was $8.2 billion, compared with $8.5 billion for the previous quarter. Reported loss for the quarter was $2.2 billion, compared with a profit of $9.3 billion for the second quarter 2022. The reported result for the third quarter includes inventory holding losses net of tax of $2.2 billion and a charge for adjusting items net of tax of $8.1 billion. This charge includes adverse fair value accounting effects of $10.1 billion, primarily due to further increases in forward gas prices compared to the end of the second quarter, partly offset by $2.0 billion gain on sale relating to the formation of Azule Energy.
BP announced that it is to commence a share buyback programme to repurchase ordinary shares in the capital of the Company. The purpose of the Programme is to reduce the issued share capital of the Company towards distributing 60% of surplus cash flow generated in 2022 as announced by the Company on 1 November 2022. The maximum amount allocated to the Programme is around $2.5 billion for a period up to and including 3 February 2023.
BP expects to pay around $2.5 billion in taxes for its British North Sea business this year, including $800 million in a windfall tax, a spokesperson said.
Top U.S. liquefied natural gas (LNG) exporter Freeport LNG has informed BP it expects to resume cargo deliveries this month following a months-long outage, BP Chief Financial Officer Murray Auchincloss said.
Reuters reported that Brazilian Senator Jean Paul Prates, a close ally of President-elect Luiz Inacio Lula da Silva, is a strong candidate to head state-run oil company Petrobras next year, according to three people familiar with the matter.
JPMorgan downgraded Petrobras to Neutral from Overweight.
Shell Eastern Petroleum, a unit of Shell, said it has acquired Asia-based waste oil recycling firm EcoOils to expand its biofuels production.
Following consent from the joint venture partners and regulatory approval, ShellPetroleum N.V. has completed the sale of its 100% shareholding in Shell Philippines Exploration B.V to Malampaya Energy XP Pte Ltd, a subsidiary of Prime Infrastructure Capital.
CANADIAN INTEGRATEDS
Imperial Oil announced the terms of its substantial issuer bid pursuant to which the company will offer to purchase for cancellation up to $1,500,000,000 of its common shares. Subject to obtaining certain exemptive relief under applicable securities laws in the United States, the Offer will proceed by way of a modified Dutch auction that includes the ability for shareholders to participate via a proportionate tender. The modified Dutch auction procedure will have a tender price range from $72.50 per Share to $87.00 per Share.
U.S. E&PS
Denbury announced that its subsidiary, Denbury Carbon Solutions, LLC. has executed a CO2 Services Agreement with Clean Hydrogen Works. Under the definitive agreement, Denbury will transport and sequester CO2 captured from Clean Hydrogen’s planned hydrogen-ammonia complex in Ascension Parish, Louisiana, which is anticipated to be built less than two miles from Denbury’s existing CO2 pipeline network.
Enerplus announced that it has closed the previously announced sale of certain Canadian assets located in Alberta to Journey Energy for total consideration of CDN$140 million, prior to closing adjustments. The Assets include the Company's Ante Creek and Medicine Hat operations along with its broad interests west of the fifth and sixth meridians of Alberta.
Marathon Oil announced that the Company's board of directors has elected Mark A. McCollum to the board of directors, effective Dec. 1, 2022, and has elected Shawn D. Williams to the board of directors, effective Feb. 1, 2023.
Occidental and its subsidiary 1PointFive and King Ranch, a privately-held agricultural production and resource management company, announced a lease agreement to support large-scale Direct Air Capture (DAC) projects for dedicated carbon dioxide (CO2) sequestration on 106,000 acres in Kleberg County, Texas. The agreement provides access to land for the potential to remove up to 30 million metric tons of CO2 per year through DAC and pore space estimated to store up to 3 billion metric tons of CO2 in geologic reservoirs.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Halliburton introduced the FloConnect Surface Automation Platform, a fully automated and scalable solution for efficient and safe surface well testing operations.
Halliburton introduced the BrightStar look-ahead resistivity service, a novel solution that reveals the path ahead of the drill bit to enable proactive drilling decisions.
NCS Multistage Holdings announced its results for the quarter ended September 30, 2022. Total revenues were $48.9 million for the quarter ended September 30, 2022, which was an increase of 51% compared to the third quarter of 2021. Net income was $3.9 million, or $1.58 per diluted share, for the quarter ended September 30, 2022. Adjusted net income was $3.5 million, or $1.41 per diluted share, which adjusts for a $(0.6) million benefit associated with the addback of net foreign currency exchange losses and a benefit of $1.0 million for tax effects primarily associated with changes in valuation allowance.
RPC announced the appointment of Timothy C. Rollins to the Board of Directors of the Company.
Solaris Oilfield Infrastructure reported net income of $11.5 million, or $0.22 per diluted Class A share, for third quarter 2022, compared to second quarter 2022 net income of $8.3 million, or $0.16 per diluted Class A share. Adjusted pro forma net income for third quarter 2022 was $11.1 million, or $0.24 per fully diluted share, compared to second quarter 2022 adjusted pro forma net income of $9.4 million, or $0.20 per fully diluted share. Revenues were $92.3 million for third quarter 2022, which were up 6% from second quarter 2022, driven by an increase in systems deployed and contribution from new technologies, partially offset by a reduction in last mile trucking logistics activity.
TETRA Technologies announced third-quarter 2022 financial results. Third-quarter 2022 revenue of $135 million increased 41% from the third quarter of 2021 but decreased 4% from the second quarter of 2022 reflecting the seasonality of European industrial chemicals business. Net income before discontinued operations was break even, inclusive of $2.7 million of non-recurring charges and expenses. This compares to net income before discontinued operations of $1.8 million in the second quarter of 2022, inclusive of $4.9 million of non-recurring charges and expenses. Net income per share from continuing operations was also break even in the third quarter compared to $0.01 in the second quarter of 2022. Adjusted net income per share from continuing operations was $0.02 compared to $0.05 in the second quarter of 2022 and to $0.01 in the third quarter of 2021.
USA Compression Partners, LP announced its financial results for third-quarter 2022. Total revenues were $179.6 million for third-quarter 2022, compared to $158.6 million for third-quarter 2021. Net income was $9.6 million for third-quarter 2022, compared to $4.1 million for third-quarter 2021.
DRILLERS
Noble announced changes to its share capital. During the period since October 14, 2022, 83,296 new A ordinary shares each with a nominal value of USD 0.00001 have been issued. 81,423 new A ordinary shares have been issued to certain employees of Noble at no cost as a result of the vesting of restricted stock units. In addition, 1,873 new A ordinary shares have been issued to certain holders of warrants as a consequence of the exercise of warrants. The exercise price was USD 23.13 per A ordinary share for 166 of the new A ordinary shares and USD 19.27 per A ordinary share for 1,707 of the new A ordinary shares. The total proceeds to Noble from the warrant exercises amount to USD 36,733.47.
Valaris reported third quarter 2022 results. Net income was $78 million compared to $113 million in the second quarter 2022. Adjusted EBITDA increased to $76 million from $29 million in the second quarter. Adjusted EBITDAR increased to $94 million from $54 million in the second quarter. Revenues increased to $437 million from $413 million in the second quarter 2022. Excluding reimbursable items, revenues increased to $416 million from $385 million in the second quarter.
REFINERS
CVR Energy announced net income of $93 million, or 92 cents per diluted share, on net sales of $2.7 billion for the third quarter of 2022, compared to net income of $84 million, or 83 cents per diluted share, on net sales of $1.9 billion for the third quarter of 2021. Adjusted earnings for the third quarter of 2022 was $1.90 per diluted share compared to an adjusted loss of 24 cents per diluted share in the third quarter of 2021, primarily driven by improved crack spreads. Third quarter 2022 EBITDA was $181 million, compared to third quarter 2021 EBITDA of $243 million. On an adjusted basis, Adjusted EBITDA for the third quarter of 2022 was $313 million, up from $99 million in the third quarter of 2021.
Marathon Petroleum reported net income attributable to MPC of $4.5 billion, or $9.06 per diluted share, for the third quarter of 2022, compared with net income attributable to MPC of $694 million, or $1.09 per diluted share, for the third quarter of 2021. Adjusted net income was $3.9 billion, or $7.81 per diluted share, for the third quarter of 2022. This compares to adjusted net income of $464 million, or $0.73 per diluted share, for the third quarter of 2021. Adjusted results for third-quarter 2022 exclude net pre-tax benefits of approximately $1 billion and for third-quarter 2021 exclude pre-tax charges of $48 million.
The board of directors of Marathon Petroleum has declared a dividend of $0.75 per share on common stock, an increase of approximately 30% over its previous dividend of $0.58 per share. The dividend is payable Dec. 12, 2022, to shareholders of record as of the close of business Nov. 16, 2022.
Phillips 66 announced third-quarter 2022 earnings of $5.4 billion, compared with earnings of $3.2 billion in the second quarter of 2022. Excluding special items of $2.3 billion, the company had adjusted earnings of $3.1 billion in the third quarter, compared with second-quarter adjusted earnings of $3.3 billion.
Valero Energy announced that Marie A. Ffolkes has been elected as an independent director to Valero’s board of directors and has joined the Board’s Nominating and Corporate Governance Committee, effective immediately.
MLPS & PIPELINES
Enterprise Products Partners L.P. reported net income attributable to common unitholders of $1.4 billion, or $0.62 per unit on a fully diluted basis, for the third quarter of 2022, compared to $1.2 billion, or $0.52 per unit on a fully diluted basis, for the third quarter of 2021. Net income for the third quarters of 2022 and 2021 was reduced by non-cash, asset impairment charges of $29 million, or $0.01 per fully diluted unit.
Equitrans Midstream announced financial and operational results for the third quarter 2022. Net loss attributable to ETRN common shareholders for the third quarter 2022 was impacted by several items, including a $583.1 million impairment of equity method investment related to Mountain Valley Pipeline, LLC (MVP JV) primarily as a result of increased risk from recent legal and regulatory uncertainties, an associated $116.8 million increase in income tax expense primarily due to a valuation allowance placed on the deferred tax assets, a $2.4 million unrealized loss on derivative instruments, and a $3.7 million gain on sale of non-core gathering assets. The unrealized loss is reported within other income and relates to the contractual agreement with EQT in which ETRN will receive cash from EQT conditioned on the quarterly average of certain Henry Hub natural gas prices exceeding certain thresholds beginning with the quarter in which the Mountain Valley Pipeline (MVP) is placed in-service through the fourth quarter of 2024. The contract is accounted for as a derivative with the fair value marked-to-market at each quarter-end. The valuation allowance is reported within income tax (benefit) expense and the gain on sale is reported within other income. For the third quarter 2022, ETRN will pay a quarterly cash dividend of $0.15 per common share on November 14, 2022, to ETRN common shareholders of record at the close of business on November 2, 2022.
MPLX LP reported third-quarter 2022 net income attributable to MPLX of $1,428 million, compared with $802 million for the third quarter of 2021. Third-quarter 2022 net income includes a $509 million non-cash gain resulting from the accounting for the reclassification of a third-party contract from an operating lease to a sales-type lease. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) attributable to MPLX, which excludes the non-cash lease reclassification gain, was $1,471 million, compared with $1,389 million for the third quarter of 2021.
The board of directors of the general partner of MPLX LP has declared a quarterly cash distribution of $0.775 per common unit for the third quarter of 2022, or $3.10 on an annualized basis. This represents a 10% increase, or $0.07 per common unit, over the second quarter 2022 distribution. The distribution will be paid on Nov. 22, 2022, to common unitholders of record as of Nov. 15, 2022.
Reuters reported that New Fortress Energy’s proposed Louisiana offshore liquefied natural gas (LNG) facility likely will not begin operation until the second half of 2023, people familiar with the matter said.
Scorpio Tankers reported its results for the three months ended September 30, 2022. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.10 per share on the Company’s common stock. For the three months ended September 30, 2022, the Company had net income of $266.2 million, or $4.84 basic and $4.31 diluted earnings per share. For the three months ended September 30, 2022, the Company had adjusted net income of $264.8 million, or $4.81 basic and $4.29 diluted earnings per share, which excludes from net income (i) a $2.7 million, or $0.05 per basic and $0.04 per diluted share, gain on the sale of a vessel, (ii) $1.4 million, or $0.03 per basic and $0.02 per diluted share, write-off or acceleration of the amortization of deferred financing fees on certain debt or lease financing obligations and related debt extinguishment costs, and (iii) $0.1 million, or $0.00 per basic and $0.00 per diluted share, gain recorded on the repurchase of the Company's Convertible Notes due 2025.
Williams announced its unaudited financial results for the three months ended Sept. 30, 2022. GAAP net income was $599 million, or $0.49 per diluted share. Adjusted net income was $592 million, or $0.48 per diluted share (Adjusted EPS). Adjusted EBITDA was $1.637 billion – up $217 million or 15% vs. 3Q 2021.
MARKET COMMENTARY
U.S. stock futures suggested a positive opening for Wall Street and world stocks rose, as investors clung to hopes that the Federal Reserve will signal a slower pace of future interest rate hikes as economic growth slows. The U.S. dollar sank from a one-week high, pushing oil and gold prices higher. Manufacturing PMI and job openings data is due for release later during 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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio