Crude Extends Decline on Renewed Coronavirus Lockdowns
SECTOR COMMENTARY
Energy stocks are set to open lower as a fresh 5% drop in oil prices is offsetting broader index futures that are clinging onto minor gains. A slew of earnings reports across the sector will be a main focus, though the weaker oil price, focus on COVID-19 infections increases and a lack of stimulus aid will remain key overhangs.
Oil prices fell 4% on Thursday to their lowest since mid-June, extending the previous day's sharp decline on the potential impact renewed coronavirus lockdowns will have on oil demand. Both contracts plunged by more than 5% on Wednesday. With COVID-19 cases surging across Europe, France will require people to stay at home for all but essential activities from Friday, while Germany will shut bars, restaurants and theatres from November 2 until the end of the month. "As lockdowns begin to bite on demand concerns across Europe, the near-term outlook for crude starts to deteriorate," said Stephen Innes, chief global market strategist at Axi.
Natural gas futures slipped further on Thursday from a 21-month high earlier in the week as a 5% drop in crude futures weighed on all energy markets. That price dip came despite forecasts for colder weather and higher heating demand over the next two weeks, rising LNG exports, and a drop in output as producers shut wells ahead of Hurricane Zeta, which is expected to smash into eastern Louisiana later Wednesday.
U.S. INTEGRATEDS
Press Release - The Board of Directors of Chevron declared a quarterly dividend of one dollar and twenty-nine cents ($1.29) per share, payable December 10, 2020, to all holders of common stock as shown on the transfer records of the Corporation at the close of business November 18, 2020.
Press Release - The Board of Directors of Exxon Mobil declared a cash dividend of $0.87 cents per share on the Common Stock, payable on December 10, 2020 to shareholders of record of Common Stock at the close of business on November 12, 2020.
INTERNATIONAL INTEGRATEDS
SocGen upgraded Eni to ‘Buy’ from ‘Hold’.
(Late Wednesday) Reuters - Petrobras posted solid margins in the third quarter, but posted an unexpected loss thanks to substantial non-recurring charges. In a securities filing, Petroleo Brasileiro, as the state-run oil company is formally known, posted a third-quarter loss of 1.546 billion reais ($275 million). Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for some one-off items, came in at 33.4 billion reais, above the Refinitiv estimate of 29.7 billion reais.
Reuters - Repsol posted a 7 million euro ($8.27 million) profit for the third quarter on Thursday, edging back into positive territory after a deep loss in the second quarter. The figure came in higher than an average analyst forecast provided by the company, which pointed to a 15 million euro loss.
Reuters - Royal Dutch Shell plans to shrink its refining and chemicals portfolio from 14 to six sites including its Deer Park, Norco, Pernis, Pulau Bukom, Rheinland and Scotford sites, it said on Thursday without giving a precise timeframe.
Reuters - Royal Dutch Shell's third quarter adjusted earnings fell 80% to $955 million but outperformed a company-provided average analysts forecasts of a $146 million profit. Additionally, Shell announced a dividend per share growth by around 4% to 16.65 US cents for the third quarter 2020 and annually thereafter, subject to Board approval.
Reuters - The crude distillation unit and coker were shut by a power outage at Royal Dutch Shell Plc's 227,400 barrel-per-day (bpd) Norco, Louisiana, refinery on Wednesday because of thunderstorms from Hurricane Zeta.
Reuters - Deliveries of refined oil products from Total's Grandpuits plant in France were disrupted on Thursday after the CGT union said employees had begun a 48 hour strike to protest against planned job cuts at the site.
CANADIAN INTEGRATEDS
Press Release - Cenovus Energy continued to deliver strong operational performance and further improved its financial resilience in the third quarter by remaining committed to disciplined capital investment, cost leadership and leveraging the flexibility of its assets and marketing strategy to generate positive free funds flow. The company took advantage of the higher commodity prices by ramping up production from its oil sands assets and selling barrels stored in the preceding quarter. Higher crude oil prices and increased sales volumes allowed the company to achieve free funds flow for the third quarter of $266 million, which contributed to a reduction in net debt to $7.5 billion at the end of the period. Cenovus recorded cash from operating activities of $732 million in the third quarter compared with $834 million of cash used in operating activities in the second quarter of 2020. The company generated third-quarter adjusted funds flows of $414 million and free funds flow of $266 million driven by the recovery in benchmark commodity prices, the ramp-up of production in the quarter and increased sales of barrels that were stored in the second quarter and were withdrawn from storage and sold as prices recovered.
Press Release - Husky Energy recorded funds from operations of $148 million in the third quarter. Cash flow from operating activities was $79 million, including changes in non-cash working capital of $69 million. The Board of Directors has approved a quarterly dividend of $0.0125 per common share for the three-month period ended September 30, 2020. The dividend will be payable January 4, 2021 to shareholders of record at the close of business on December 1, 2020.
Press Release - Imperial has started operation of its newly constructed cogeneration unit at its Strathcona refinery near Edmonton, Alberta, increasing energy efficiency at the facility and helping reduce provincial greenhouse gas emissions.
Citi downgraded Suncor Energy to ‘Neutral’ from ‘Buy’.
Press Release - Suncor’s third quarter 2020 operating loss was $302 million ($0.20 per common share), compared to operating earnings of $1.114 billion ($0.72 per common share) in the prior year quarter. In the third quarter of 2020, crude oil and refined product realizations decreased significantly from the prior year quarter, with crude oil and crack spread benchmarks declining by more than 25%, primarily due to the impacts of the COVID19 pandemic. Suncor’s net loss was $12 million ($0.01 per common share) in the third quarter of 2020, compared to net earnings of $1.035 billion ($0.67 per common share) in the prior year quarter.
U.S. E&PS
(Late Wednesday) Press Release - Antero Resources announced its third quarter 2020 financial and operational results. For the three months ended September 30, 2020, Antero reported a GAAP net loss of $536 million, or $1.99 per diluted share, compared to a GAAP net loss of $879 million, or $2.86 per diluted share, in the prior year period. The loss was driven by a $749 million unrealized commodity derivative fair value loss as a result of the 10% rise in the natural gas strip pricing during the quarter. Adjusted Net Income (non-GAAP measure) was $15 million, or $0.05 per diluted share, compared to Adjusted Net Loss of $150 million during the three months ended September 30, 2019, or $0.49 per diluted share. Adjusted EBITDAX (non-GAAP measure) was $272 million, a 5% increase compared to the prior year period driven by lower operating costs and increased production. Antero's average realized gas equivalent price after hedges declined by 7% from $3.13 per Mcfe in the third quarter of 2019 to $2.92 per Mcfe in the third quarter of 2020, a $0.94 per Mcf premium to NYMEX pricing.
(Late Wednesday) Press Release - Cabot Oil & Gas announced that its Board of Directors declared a regular dividend of ten cents ($0.10) per share on the Company's common stock. The dividend will be paid on November 23, 2020 to all shareholders of record as of the close of business on November 12, 2020.
Reuters - CNX Resources released financial and operational results for the third quarter 2020. Its quarterly total revenue and other operating income were $66.08 million. CNX quarterly loss per share was $1.03.
Press Release - ConocoPhillips reported a third-quarter 2020 loss of $0.5 billion, or ($0.42) per share, compared with third-quarter 2019 earnings of $3.1 billion, or $2.74 per share. Excluding special items, third-quarter 2020 adjusted earnings were a loss of $0.3 billion, or ($0.31) per share, compared with third-quarter 2019 adjusted earnings of $0.9 billion, or $0.82 per share.
(Late Wednesday) Press Release - Ovintiv announced its third quarter 2020 financial and operating results. In addition, the Company reaffirmed the 2020-21 scenarios and provided additional visibility on its framework related to future capital allocation plans and ongoing focus on debt reduction. Excluding these and other items, the Company reported a non-GAAP operating loss of $8 million. Cash from operating activities was $493 million and non-GAAP cash flow was $398 million.
(Late Wednesday) Press Release - Parsley Energy announced financial and operating results for the quarter ended September 30, 2020. During 3Q20, the Company recorded net income attributable to its stockholders of $22.6 million, or $0.06 per share. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted net income for 3Q20 was $82.6 million, or $0.22 per share. Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense for 3Q20 was $290.2 million. Parsley Energy's board of directors declared a quarterly dividend of $0.05 per share. The dividend is payable on December 18, 2020, to shareholders of record on December 8, 2020.
(Late Wednesday) Press Release - QEP Resources reported third quarter 2020 financial and operating results. The Company reported a net loss of $49.2 million in the third quarter 2020, or $0.20 per diluted share, compared with net income of $81.0 million, or $0.34 per diluted share, in the third quarter 2019. The $130.2 million decrease was primarily due to a $196.1 million increase in unrealized derivative losses, partially offset by a $81.8 million increase in income tax benefits.
CANADIAN E&PS
Press Release - Crescent Point Energy is pleased to announce its operating and financial results for the quarter ended September 30, 2020. Its adjusted funds flow totaled $235.7 million during third quarter 2020, or $0.44 per share diluted, driven by a strong operating netback of $21.11 per boe, or $26.73 per boe including hedging gains.
Press Release - Crescent Point Energy announced its Board of Directors has declared a quarterly cash dividend of CDN $0.0025 per share to be paid on January 4, 2021 for shareholders of record on December 15, 2020.
Press Release - Touchstone Exploration announced an operational update, highlighted by the spudding of the Cascadura Deep-1 exploration well on the Ortoire onshore exploration block (Touchstone 80% working interest operator, Heritage Petroleum Company Limited 20% working interest). Touchstone is pleased to announce that we have spudded the Cascadura Deep-1 well ahead of schedule. We are currently drilling the surface hole to a planned casing depth of 900 feet. The surface location is on the same drilling pad as the previously drilled Cascadura-1ST1 well with the bottom hole location anticipated to be 1,300 feet to the south east. The well is targeting three distinct Herrera thrust sheets and is designed for a total depth of 10,600 feet. The current drilling plan is based on a 45-day drilling schedule.
Press Release - Whitecap Resources is pleased to report its operating and unaudited consolidated financial results for the three and nine months ended September 30, 2020. In the third quarter, the company delivered strong financial improvements, generating funds flow of $119.3 million compared to $78.1 million in the second quarter, an increase of 53%. Capital investments remained restricted at $14.1 million, resulting in free funds flow of $105.2 million. In addition, Whitecap paid dividends of $17.5 million, achieving a total payout ratio of 26%.
OILFIELD SERVICES
Press Release - Calfrac Well Services confirmed that a final order hearing was held yesterday, in the Court of Queen's Bench of Alberta, to consider the approval of its plan of arrangement, under the Canada Business Corporations Act. If approved, the final order will allow for the implementation of the Company's Amended Recapitalization Transaction upon the satisfaction or waiver of the other conditions to closing, as previously disclosed.
Press Release - KBR announced strong third quarter 2020 financial results after another solid quarter of earnings, margin performance, bookings and cash generation. Year to date, the company reported $269 million of adjusted operating cash flow with all segments contributing at or above expectations. Book-to-bill of 1.1x for the company, excluding the impact of PFIs, is a healthy signal of future growth with Government Solutions posting 1.3x, Technology Solutions posting 1.3x and Energy Solutions posting 0.5x. Its quarterly revenue was $1.38 billion. For FY 2020, KBR has increased GAAP EPS guidance to $(0.58) to $(0.38), increased Adjusted EPS guidance to $1.60 to $1.80, increased GAAP operating cash flow guidance to $375 million to $395 million, and increased adjusted operating cash flow guidance to $270 million to $290 million.
Press Release - Kirby announced net earnings attributable to Kirby for the third quarter ended September 30, 2020 of $27.5 million, or $0.46 per share, compared with net earnings of $48.0 million or $0.80 per share for the 2019 third quarter. Consolidated revenues for the 2020 third quarter were $496.6 million compared with $666.8 million reported for the 2019 third quarter.
Press Release - MIND Technology announced that it has received a purchase order from Sanco Shipping AS for the supply of a Seamap GunLink 4000 source controller upgrade for one of their vessels, and a commitment for an additional order for a GunLink 2500 upgrade on a second vessel. The upgrades will include adding dual near field hydrophone recording capability. Delivery of the first system upgrade is expected by January 31, 2021.
(Late Wednesday) Press Release - Oceaneering International reported a net loss of $79.4 million, or $(0.80) per share, on revenue of $440 million for the three months ended September 30, 2020. Adjusted net loss was $17.6 million, or $(0.18) per share, reflecting the impact of $68.7 of pre-tax adjustments associated with goodwill impairment, write-offs of fixed assets, inventory write-downs, restructuring expenses, and foreign exchange losses recognized during the quarter and $6.3 million of discrete tax adjustments.
Raymond James upgraded SECURE ENERGY Services to ‘Strong Buy’ from ‘Outperform’.
(Late Wednesday) Press Release - SECURE ENERGY Services reported its operational and financial results for the three and nine months ended September 30, 2020. For the three months ended September 30, 2020, there was a net loss attributable to shareholders of SECURE of $4.6 million, an increased loss of $3.9 million from the comparative period of 2019. For the nine months ended September 30, 2020, the Corporation's net loss of $47.4 million increased $46.4 million from the comparative period of 2019. In addition to lower Adjusted EBITDA, the net loss in the current year period also included $27.1 million of impairment and restructuring charges. The Corporation generated cash flows from operating activities of $38.5 million and $106.4 million during the three and nine months ended September 30, 2020, an increase of 7% and a decrease of 28% from the respective prior year comparative periods.
Press Release - U.S. Silica Holdings announced third quarter 2020 results, including a net loss of $14.0 million, or $(0.19) per basic and diluted share.
DRILLERS
Press Release - Precision Drilling announced that it is proceeding with a 20:1 consolidation of the common shares of the Company. Notice has been provided to the Toronto Stock Exchange, and the New York Stock Exchange and Precision’s common shares are expected to begin trading on the TSX and NYSE, on a consolidated basis, on or about November 12, 2020.
REFINERS
Press Release - PBF Energy reported a third quarter 2020 loss from operations of $342.7 million as compared to income from operations of $151.9 million for the third quarter of 2019. Excluding special items, third quarter 2020 loss from operations was $374.2 million as compared to income from operations of $165.8 million for the third quarter of 2019. PBF Energy's financial results reflect the consolidation of PBF Logistics LP.
(Late Wednesday) Reuters - PBF Energy’s 190,000 barrel-per-day (bpd) Chalmette, Louisiana, refinery was hit on Wednesday by a power interruption caused by Hurricane Zeta.
Press Release - The Board of Directors of Valero Energy has declared a regular quarterly cash dividend on common stock of $0.98 per share. The dividend is payable on December 9, 2020, to holders of record at the close of business on November 18, 2020.
MLPS & PIPELINES
Press Release - AltaGas reported third quarter 2020 financial results and provided an update on the Company's operations and outlook, including COVID-19 considerations. Normalized net income was $12 million ($0.04 per share) compared to normalized net loss of $62 million ($0.22 per share) in the third quarter of 2019, demonstrating marked improvements and reiterating AltaGas' focus on improving earnings durability.
Press Release - PBF Logistics announced third quarter 2020 net income attributable to the limited partners of $44.2 million, or $0.71 per common unit. During the quarter, the Partnership generated cash from operations of $61.7 million, EBITDA attributable to PBFX of $59.3 million, Adjusted EBITDA of $60.5 million and distributable cash flow of $48.5 million. Included in reported results for the third quarter are $1.2 million, or $0.02 per common unit, of non-cash unit-based compensation expense and continued environmental remediation costs associated with the East Coast Terminals. Also included in results for the third quarter is a $4.7 million, or $0.7 per common unit, net gain to the Partnership as a result of a contract termination at one of its storage facilities. The board of directors of PBF Logistics GP LLC, the Partnership's general partner, declared a regular quarterly cash distribution of $0.30 per common unit. The distribution is payable on November 30, 2020, to unitholders of record at the close of business on November 16, 2020.
Press Release - TC Energy announced net income attributable to common shares for third quarter 2020 of $904 million or $0.96 per share compared to net income of $739 million or $0.79 per share for the same period in 2019. For the nine months ended September 30, 2020, net income attributable to common shares was $3.3 billion or $3.55 per share compared to net income of $2.9 billion or $3.09 per share for the same period in 2019. Comparable earnings for third quarter 2020 were $893 million or $0.95 per common share compared to $970 million or $1.04 per common share in 2019. For the nine months ended September 30, 2020, comparable earnings were $2.9 billion or $3.05 per common share compared to $2.9 billion or $3.11 per common share for the same period in 2019. TC Energy's Board of Directors also declared a quarterly dividend of $0.81 per common share for the quarter ending December 31, 2020, equivalent to $3.24 per common share on an annualized basis.
Press Release - TC Energy announced that it will move forward with its Wisconsin Access Project to increase natural gas capacity, improve reliability, and reduce emissions on a highly utilized segment of its ANR Pipeline system.
MARKET COMMENTARY
Index futures were modestly higher after a better than expected GDP and weekly jobless claims reading. Apple, Alphabet, Amazon, Facebook and Twitter are scheduled to report quarterly earnings after the closing bell. European equities were up, buoyed by strong corporate earnings, though the sentiment remained fragile. Asian shares ended in the red weighed by concerns about fresh coronavirus lockdowns. The dollar index was slightly up, while gold prices were little changed as caution crept in ahead of the U.S. elections.
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