Crude Climbs as U.S. Moves to End Waivers for Iranian Oil
SECTOR COMMENTARY
Energy stocks are set to open near breakeven levels as slightly elevated index futures and oil prices counterbalance a pause from investors after yesterday’s oil-driven surge in energy equity performance. Earnings continue to flow through, with more results from the oilfield services and E&P contingents.
In deal news, Murphy Oil Corp announced this morning it would buy Gulf of Mexico assets from LLOG Exploration Offshore and LLOG Bluewater Holdings for roughly $1.4Bln in cash. The deal would help the company strengthen its position in the region that saw record production last year.
Crude oil prices are higher by about 10 cents on both grades, remaining near 6-month highs following yesterday’s news that the U.S. would cease providing waivers to buyers of Iranian oil. The administration had granted eight waivers when it re-imposed sanctions on Iran in November. These expire May 2nd. "There isn't much doubt about the trigger for the latest rally, with Trump's decision not to extend waivers on imports of Iranian oil beyond May unsurprisingly providing further upward pressure," said Craig Erlam, senior market analyst at OANDA. API inventory will be released this evening and provide the latest read on inventory levels.
Natural gas futures are flat around $2.52 as moderate temperatures and steady record production keep futures near 12-month lows.
INTERNATIONAL INTEGRATEDS
Press Release - BW Offshore has signed an agreement with Petrobras for a one-year extension for the lease and operation of BW Cidade de São Vicente. The firm period has been extended to Q2 2020 (from Q2 2019).
(Late Monday) Reuters - Petroleo Brasileiro said that it would immediately start publishing daily diesel and gasoline prices on its website. The company, which recently halted a diesel price rise under pressure from a government fearful of a truck-driver strike, said in a statement that it "is committed to transparency" and is against "monopolistic practices."
(Late Monday) Reuters - Petroleo Brasileiro said it had halted production at its P-25 platform in the Albacora offshore field, after detecting a leak in a pipeline. The leak was detected on Monday around dawn and had spilled 941 liters.
Reuters - Royal Dutch Shell restarted the large crude distillation unit (CDU) at its 340,000 barrel-per-day (bpd) joint-venture Deer Park, Texas, refinery. The 270,000 bpd DU-2 CDU and associated vacuum distillation unit (VDU) were shut on Thursday by a malfunctioning pump. Shell worked over the weekend to repair the pump.
Reuters - Royal Dutch Shell said that maintenance activity is underway at Deer Park, Texas facility. Shell operates a 275,000 barrel-per-day (bpd) joint-venture refinery at its Deer Park facility.
U.S. E&PS
Press Release - Apache announced that it initiated natural gas production volume deferrals from its Alpine High play in late March, in response to extremely low prices at Waha Hub. Current deferrals represent approximately 250 million cubic feet (MMcf) per day of gross gas production.
(Late Monday) Reuters - Rice team filed proxy statement to solicit votes to elect its nine nominees to EQT board at annual meeting on July 10 - sec filing. Rice team's director nominees include Lydia Beebe, Lee Canaan, Jay Graham, Kathryn Jackson, Mark Leland, John Mccartney, Daniel Rice IV, Toby Rice and Hallie Vanderhider.
Press Release - Murphy Oil announced that its wholly owned subsidiary, Murphy Exploration & Production Company – USA, has entered into a definitive agreement to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings. The accretive, cash flow providing Gulf of Mexico assets currently produce approximately 38,000 barrels of oil equivalent per day net (Boepd) and are expected to add approximately 66 million barrels of oil equivalent net (Mmboe) of Proven (1P) reserves and 122 Mmboe of Proven and Probable (2P) reserves1. The transaction will have an effective date of January 1, 2019 and is expected to close in the second quarter, subject to normal closing adjustments.
(Late Monday) Press Release - Northern Oil and Gas announced that it has entered into a definitive agreement to acquire the Williston Basin properties of VEN Bakken (“Seller”). Seller is a wholly-owned subsidiary of Flywheel Bakken, LLC (formerly Valorem Energy), a portfolio company of the Kayne Private Energy Income Funds. The assets to be acquired are expected to produce approximately 6,600 barrels of oil equivalent (“Boe”) per day (2-stream) during the second half of 2019 and consist of approximately 18,000 net acres containing 86.9 net producing wells, 2.7 net wells in process, and 47.5 net undrilled locations across the heart of the Williston Basin. The Assets are expected to generate approximately $44.9 million in cash flow from operations (unhedged) during the second half of 2019, with an estimated second half capital expenditure budget of $15.6 million.
Press Release - TechnipFMC has been awarded a significant integrated Engineering, Procurement, Construction and Installation (iEPCI) contract from ConocoPhillips for the TOR II development, located in the Norwegian sector of the North Sea at a water depth of 80 meters. This contract covers the delivery and installation of a subsea production system including installation of umbilical, rigid flowlines and associated subsea equipment.
(Late Monday) Press Release - RANGE RESOURCES reported non-GAAP revenues for first quarter 2019 totaled $835 million, an increase of 9% compared to first quarter 2018, and cash flow from operations before changes in working capital, a non-GAAP measure, was $269 million, compared to $323 million in first quarter 2018. Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $90.7 million ($0.36 per diluted share) in first quarter 2019, compared to $112.7 million ($0.46 per diluted share) in the prior-year first quarter.
(Late Monday) Press Release - SRC Energy issued preliminary first quarter 2019 operating results, provides an operations update, updates 2019 production guidance, and announces its first quarter 2019 earnings release and conference call dates. For the quarter ended March 31, 2019 production was positively impacted by the continued performance of new wells turned to production, non-operated production volumes and sustained performance from wells associated with the second closing of the GCII acquisition. Furthermore, DCP’s system has maintained consistent throughput during the winter months.
CANADIAN E&PS
Press Release - AFTI WatchDog announced that Crescent Point Energy has selected the AFTI WatchDog as a key service provider to support its field automation strategy.
OILFIELD SERVICES
CIBC downgraded Calfrac Well Services to ‘Neutral’ from ‘Outperformer.’
Stifel suspended coverage of Emerge Energy Services.
(Late Monday) Press Release - Emerge Energy Services announced that it has entered into a restructuring support agreement with its operating subsidiary Superior Silica Sands LLC and the Partnership's other subsidiaries (together with the Partnership and SSS, "Emerge Energy"), its general partner ("Emerge GP"), certain direct and indirect equity holders of Emerge GP, the lenders under Emerge Energy's revolving credit facility, and the noteholders under Emerge Energy's second lien note purchase agreement (the noteholders, together with the lenders under the revolving credit facility, the "Consenting Creditors").
(Late Monday) Press Release - Helix Energy Solutions Group reported net income of $1.3 million, or $0.01 per diluted share, for the first quarter of 2019 compared to a net loss of $2.6 million, or $(0.02) per diluted share, for the same period in 2018 and a net loss of $13.7 million, or $(0.09) per diluted share, for the fourth quarter of 2018. Helix reported Adjusted EBITDA1 of $30.2 million for the first quarter of 2019 compared to $27.6 million for the first quarter of 2018 and $23.2 million for the fourth quarter of 2018.
Press Release - KBR announced that it has successfully developed Ammonia 6000 based on its highly successful Purifier based ammonia technology.
Press Release - W. R. Grace & Co. announced that it has signed an agreement with TechnipFMC to jointly develop improved catalyst and process technology related to TechnipFMC Deep Catalytic Cracking (TDCC). TDCC is a high-severity fluid catalytic cracking process licensed by TechnipFMC and designed to produce very high yields of propylene and other petrochemical feedstocks. The collaboration will leverage Grace’s knowledge as the leading supplier of FCC catalysts and light-olefins additives as well as TechnipFMC’s significant experience in Deep Catalytic Cracking including process and mechanical know-how.
Press Release - TechnipFMC has been awarded a significant integrated Engineering, Procurement, Construction and Installation (iEPCI) contract from ConocoPhillips for the TOR II development, located in the Norwegian sector of the North Sea at a water depth of 80 meters. This contract covers the delivery and installation of a subsea production system including installation of umbilical, rigid flowlines and associated subsea equipment.
MLPS & PIPELINES
Press Release - TransCanada announced that 725,094 of its 24,000,000 fixed rate Cumulative Redeemable First Preferred Shares, Series 7 were deposited for conversion on April 30, 2019 on a one-for-one basis into floating rate Cumulative Redeemable First Preferred Shares, Series 8.
MARKET COMMENTARY
U.S. stock index futures were slightly higher as investors awaited a barrage of major earnings this week. Earlier, Japan’s Nikkei closed higher. The dollar index held near three-week highs, while gold prices fell.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 3/26/19 - CNBC World Wide Exchange – Energy sector performance
- 3/18/19 - Bloomberg Daybreak Asia – OPEC meeting, Iran sanctions
- 2/20/19 - CNBC Squawk on Street– Shale growth vs. global growth demand
- 2/11/19 - CNBC World Wide Exchange – NOPEC & role of private producers
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