Oil mills
Oil

Crude Edges Higher, but Trade Tensions Remain

Both WTI and Brent are up about 1% ahead of inventory data that is expected to show bullish draws across the board as well as the EIA’s short term energy outlook. 

SECTOR COMMENTARY

Energy stocks are showing moderate strength as oil prices and broader equities move higher as China today stepped in to stabilize the yuan after the US Treasury last night designated that nation as a currency manipulator.  A handful of E&Ps reported results and while production figures came in line with expectations commodity realizations remain problematic due to weak gas prices. 

Both WTI and Brent are up about 1% ahead of inventory data that is expected to show bullish draws across the board as well as the EIA’s short term energy outlook.  “This morning’s slight price recovery is hardly worthy of mention. Concerns about demand and the escalating trade conflict are still keeping the oil market in a stranglehold,” Commerzbank analyst Carsten Fritsch said in a note.   

Natural gas prices are up over 1% however gains were considered to be limited as US dry gas production remains at record highs and with below seasonal temperatures ahead. 

INTERNATIONAL INTEGRATEDS

Reuters - BP is deepening its ties with Indian industrial company Reliance with a new joint venture for retail service stations and aviation fuel distribution across India. Reliance will own 51% of the new entity. The two companies expect the deal to close in the first half of next year and to benefit from Reliance's huge Jamnagar refining complex.

Reuters - Royal Dutch Shell is considering to install solar panels to power its Bukom refining site in Singapore. The Bukom manufacturing site includes a 500,000 barrels-per-day refinery, which is Shell's largest wholly owned refinery. The oil and gas company has been exploring solar installations for its other sites in Singapore as part of its plans to improve energy efficiency and reduce carbon footprint.

(Late Monday) Reuters - Royal Dutch Shell is returning the crude unit (CDU) at its 225,300 barrel-per-day (bpd) Norco, Louisiana, refinery to normal operations. The 225,300-bpd CDU remained in operation while repairs were performed on a portion of the unit.       

U.S. E&PS

(Late Monday) Press Release - Centennial Resource Development announced financial and operational results for the second quarter 2019. For the second quarter 2019, Centennial reported net income of $17.9 million, or $0.07 per diluted share, compared to $63.5 million, or $0.24 per diluted share, in the prior year period. Average daily crude oil production increased 38 percent to 43,105 barrels of oil per day compared to the prior year period. Average total equivalent production increased 32 percent in the second quarter and 33 percent for the first six months of 2019 compared to prior year periods.

Press Release - Chesapeake Energy reported financial and operational results for the 2019 second quarter. For the 2019 second quarter, Chesapeake reported net income of $98 million and net income available to common stockholders of $75 million, or $0.05 per diluted share.  Adjusting for items typically excluded by securities analysts, the 2019 second quarter adjusted net loss attributable to Chesapeake was $158 million or $0.10 per share while adjusted EBITDAX was $612 million.

(Late Monday) Press Release - Cimarex Energy reported second quarter 2019 net income of $109.3 million, or $1.07 per share, compared to $141.0 million, or $1.48 per share, in the same period a year ago.  Second quarter adjusted net income (non-GAAP) was $83.0 million, or $0.82 per share, compared to second quarter 2018 adjusted net income (non-GAAP) of $151.9 million, or $1.59 per share.  Net cash provided by operating activities was $414.0 million in the second quarter of 2019 compared to $321.2 million in the same period a year ago.  Adjusted cash flow from operations (non-GAAP) was $336.4 million in the second quarter of 2019 compared to $349.5 million in the second quarter a year ago.

Concho Resources was downgraded to underweight from overweight at Morgan Stanley.

(Late Monday) Press Release - Continental Resources announced second quarter 2019 operating and financial results. The Company reported net income of $236.6 million, or $0.63 per diluted share, for the quarter ended June 30, 2019. The Company's net income includes certain items typically excluded by the investment community in published estimates, the result of which is referred to as "adjusted net income." In second quarter 2019, these typically excluded items in aggregate represented $17.4 million, or $0.04 per diluted share, of Continental's reported net income. Adjusted net income for second quarter 2019 was $219.1 million, or $0.59 per diluted share (non-GAAP). Net cash provided by operating activities for second quarter 2019 was $783.4 million and EBITDAX was $858.0 million (non-GAAP). As previously announced, the Company's Board of Directors authorized an initial share-repurchase program of up to $1 billion. The share-repurchase program commenced in the second quarter 2019 and is expected to continue through 2020. Share repurchases will be made at times and levels deemed appropriate by Company management. The Company intends to purchase shares under the program opportunistically using available funds while maintaining sufficient liquidity to fund operating needs, capital program, and dividend payments. As of August 2, 2019, the Company has executed $92 million of share repurchases for 2.4 million shares.

Barclays downgraded Continental Resources to ‘Market Weight’ from ‘Overweight.’

(Late Monday) Press Release - HighPoint Resources reported second quarter of 2019 financial and operating results, including year-over-year increases in production, oil volumes and EBITDAX, record Hereford field production and positive well performance in both Hereford and NE Wattenberg. For the second quarter of 2019, the Company reported a net loss of $1.9 million, or $0.01 per diluted share. Adjusted net income for the second quarter of 2019 was a net loss of $15.0 million, or $0.07 per diluted share. EBITDAX for the second quarter of 2019 was $71.1 million. Adjusted net income (loss) and EBITDAX are non-GAAP (Generally Accepted Accounting Principles) measures.

(Late Monday) Press Release - Lonestar Resources US reported financial and operating results for the three months ended June 30, 2019. Total cash expenses, which include the cash portions of lease operating, gathering, processing, transportation, production taxes, general & administrative, and interest expenses were $25.3 million for 2Q19. While 2Q19 cash operating costs rose 9% compared to $23.3 million in 1Q19, strong volume growth yielded a 10% reduction on a per-unit basis to $20.43 per BOE in 2Q19. Operating revenues increased sequentially by $11.5 million to $52.2 million, or 28%, compared to 1Q19, primarily driven by a 20% increase in production coupled with a 6% increase in commodity price realizations.

(Late Monday) Press Release - WPX Energy reported unaudited second-quarter income available to common stockholders of $305 million, or income of $0.72 per share on a diluted basis. This includes a $247 million recorded gain related to WPX’s equity interest in the sale of the Oryx II pipeline project. Cash flow from operations, inclusive of hedge impact, in the first half of 2019 was $634 million, including $362 million in the second quarter. Cash flow for the first half of 2019 was 48 percent higher than the same period a year ago. In addition, WPX’s board of directors has authorized a plan for the company to repurchase up to $400 million of shares over the next 24 months.

OILFIELD SERVICES

(Late Monday) Press Release - Helix Energy Solutions Group announced that it has entered into a contract for its new-build semi-submersible well intervention vessel, the Q7000. The vessel will be performing subsea workover and integrated well intervention services with a major client offshore Nigeria, an estimated minimum 80-day campaign. Helix continues to mobilize the vessel from the shipyard in Singapore, and the project is scheduled to begin in early January 2020.

Press Release - Natural Gas Services Group announced financial results for the three and six months ended June 30, 2019. For the quarter ended June 30, 2019, NGS reported rental revenue of $13.6 million compared to $11.4 million for the quarter ended June 30, 2018. Sequentially, rental revenue increased from $13.4 million. The Company reported net income for the second quarter of $573,000 compared to $247,000 in the same quarter in 2018 and $357,000 in the prior quarter. Earnings per diluted share for the quarter ended June 30, 2019 was 4 cents. 

(Late Monday) Press Release - NCS Multistage Holdings announced its results for the quarter ended June 30, 2019. Revenues were $39.8 million for the quarter ended June 30, 2019, which was a decrease of 8% compared to the second quarter of 2018. The decrease was primarily attributable to lower volumes of fracturing systems product sales and services in the U.S. and Canada, and lower tracer diagnostics revenue in the United States. The decrease was partially offset by increased sales of our well construction and Repeat Precision, LLC products. Total revenues decreased by 25% as compared to the first quarter of 2019 with decreases of 54% in Canada and 39% outside of North America partially offset by an increase of 6% in the United States.

REFINERS

(Late Monday) Reuters - Valero Energy shut a hydrocracking unit (HCU) and sulfur recovery unit (SRU) at its 335,000-barrel-per-day (bpd) Port Arthur, Texas, refinery. The 45,000-bpd 942 HCU is scheduled to be shut until mid-September while the 545 SRU will be out of production for about 25 days.

MLPS & PIPELINES

Press Release - Enable Midstream Partners announced financial and operating results for second quarter 2019. Net income attributable to limited partners was $124 million for second quarter 2019, an increase of $29 million compared to $95 million for second quarter 2018. Net income attributable to common units was $115 million for second quarter 2019, an increase of $29 million compared to $86 million for second quarter 2018. Net cash provided by operating activities was $212 million for second quarter 2019, a decrease of $27 million compared to $239 million for second quarter 2018. Adjusted EBITDA was $281 million for second quarter 2019, an increase of $36 million compared to $245 million for second quarter 2018. DCF was $197 million for second quarter 2019, an increase of $26 million compared to $171 million for second quarter 2018. 

(Late Monday) Press Release - SunCoke Energy announced that it and certain of its wholly-owned subsidiaries have entered into an amended and restated revolving credit agreement, which increased total borrowing capacity to $400 million and extended the maturity date to August 5, 2024. Proceeds from the initial drawing were used to repay an existing term loan in full and refinance its other existing revolving credit facilities.

MARKET COMMENTARY 

Futures for U.S stock indexes pointed to a higher opening as China's yuan firmed and a rout in global markets moderated. European shares steadied on upbeat German data, while Asian equities ended in the red. The dollar index and gold prices were little changed. Oil prices rebounded slightly from big falls in recent sessions. Walt Disney, Wynn Resorts and Papa Johns are scheduled to report after closing bell.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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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