Crude Continues Climb on Supply Worries
Energy stocks are set to open higher, supported by rising oil and natural gas prices, strong broader index futures, and continued expectations of improving fundamentals, cash flow generation and operational efficiencies across the sector. Earnings across the sector continue to pour in, while a handful of analyst ratings changes will steer some trading in integrateds and E&Ps.
Oil prices rose on Thursday amid concerns about supply as the European Union (EU) mulls a potential ban on Russian oil imports days after diminished supplies from Libya rocked the market. Analysts said market volatility is likely to pick up again soon, with the EU still weighing a ban on Russian oil for its invasion of Ukraine, which Moscow calls a "special military operation". Libya, a member of OPEC, on Wednesday said the country was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.
Natural gas futures are higher by 5 cents, trading right around $7.00. Weekly inventory data due out later this morning expects a build of 31 bcf against the 5-year average of +42 bcf.
BY SECTOR:
US INTEGRATEDS
RBC Capital Markets downgraded Chevron to Sector Perform from Outperform.
RBC Capital Makets upgraded ExxonMobil to Outperform from Sector Perform.
INTERNATIONAL INTEGRATEDS
Petrobras and Equinor successfully started production from the first two wells of the increased oil recovery (IOR) project at Roncador.
Petrobras informed that it has concluded the sale to the company Ubuntu Engenharia e Serviços Ltda of its total stake in blocks PAR-T-198 and PAR-T-218, located in the Paraná Basin.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Piper Sandler downgraded CNX Resources to Neutral from Overweight.
Piper Sandler upgraded Range Resources and Southwestern Energy to Overweight from Neutral.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Compass Minerals announced it has completed the sale of the company’s South America chemicals business to a subsidiary of Cape Acquisitions LLC. The sale includes all remaining Compass Minerals operations in Brazil, concluding the company’s previously announced plan to exit the South American market.
Liberty Oilfield Services announced first quarter 2022 financial results. For the first quarter of 2022, revenue increased 16% to $793 million from $684 million in the fourth quarter of 2021. Fully diluted loss per share was $0.03 for the first quarter of 2022 compared to a loss of $0.31 for the fourth quarter of 2021.
DRILLERS
No significant news.
REFINERS
Wells Fargo upgraded PBF Energy to Equal weight from Underweight.
MLPS & PIPELINES
Kinder Morgan’s board of directors approved a cash dividend of $0.2775 per share for the first quarter ($1.11 annualized), payable on May 16, 2022, to stockholders of record as of the close of business on May 2, 2022. This dividend is a 3% increase over the first quarter of 2021 and marks the fifth consecutive annual increase. KMI is reporting first quarter net income attributable to KMI of $667 million, compared to $1,409 million in the first quarter of 2021; and distributable cash flow (DCF) of $1,455 million, compared to $2,329 million in the first quarter of 2021. Adjusted Earnings were $732 million for the quarter, versus $1,374 million in the first quarter of 2021. “KMI’s financial performance during the quarter was strong, as we generated earnings per share of $0.29 and DCF per share of $0.64. While these both represent a decrease from the first quarter of 2021, those 2021 results were positively impacted by the nonrecurring earnings achieved during Winter Storm Uri,” said KMI President Kim Dang. “Excluding Uri-related earnings from our 2021 results, earnings per share for the quarter were up 17% and DCF per share was up 16% as compared to the first quarter of 2021. Compared to our budget, net income attributable to KMI during the quarter was down $28 million, largely due to unsettled commodity hedges, which we treat as certain items. Adjusted Earnings, which exclude certain items, exceeded our budget for the quarter by $40 million, and DCF exceeded our budget by $62 million, or 4%. Also during the quarter, we generated $822 million of excess DCF above our declared dividend.” For 2022, KMI budgeted to generate net income attributable to KMI of $2.5 billion and declare dividends of $1.11 per share, a 3% increase from the 2021 declared dividends. KMI also budgeted to generate 2022 DCF of $4.7 billion and Adjusted EBITDA of $7.2 billion and to end 2022 with a Net Debt-to-Adjusted EBITDA ratio of 4.3 times. KMI now expects net income, EBITDA and DCF to be favorable to budget due to stronger than expected commodity prices and favorable operating results from our Natural Gas and CO2 business segments, partially offset by higher costs.
Kinder Morgan announced that it has joined a collaboration with Cheniere Energy, several other midstream operators, methane detection technology providers and leading academic institutions on a project focused on quantifying, monitoring, reporting and verifying (QMRV) greenhouse gas (GHG) emissions associated with the operation of natural gas gathering, processing, transmission, and storage systems. The work is intended to improve the overall understanding of GHG emissions and further the deployment of advanced monitoring technologies and protocols.
Shell Midstream Partners, L.P. announced that the Board of Directors of its general partner declared a cash distribution of $0.30 per limited partner common unit for the first quarter of 2022. The distribution will be paid May 13, 2022 to unitholders of record as of May 3, 2022.
MARKET COMMENTARY
Futures for Wall Street’s major indexes were higher with Tesla gaining among megacap growth and technology stocks on earnings optimism. European shares mostly advanced following a series of positive earnings updates, while underwhelming production updates from mining companies weighed on London's FTSE 100. China shares slumped to a five-week closing low as prolonged COVID-19 lockdowns and a lack of adequate policy support left investors worried, while Japan's Nikkei rose to its highest close in more than two weeks, driven by technology heavyweights. In the currency markets, the euro gained as market expectations solidified for a first interest rate hike from the ECB as early as July, while the dollar fell against its major peers. Federal Reserve Chair Jerome Powell is also scheduled to speak on the global economy before virtual International Monetary Fund Debate on the Global Economy.
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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