Crude Mixed as U.S. Seeks to Coordinate International Stockpile Release
SECTOR COMMENTARY:
Energy stocks are set to open around breakeven, with higher broader futures and oil prices being weighed against recent weakness in oil prices and some profit taking amid strong YTD outperformance for the sector. News flow has a few remaining earnings releases in the sector, along with a handful of analyst recommendation changes.
Oil prices slid to six-week lows on Thursday before reversing course, as China said it was moving to tap reserves after a Reuters report that the United States was asking large consuming nations to consider a stockpile release to lower prices. The bid by the U.S. to cool markets, asking China to join a coordinated action for the first time, comes as inflationary pressures - partly driven by surging energy prices - start to produce a political backlash.
Natural gas futures are also higher, ahead of weekly inventory data. Analysts expect a build of 25 bcf.
BY SECTOR:
US INTEGRATEDS
According to Reuters, Exxon Mobil's bids on Wednesday for 94 shallow water blocks could be preparation for the company's first carbon capture and storage (CCS) project in the region, said one analyst. The bids are "potentially the first time federal Gulf of Mexico acreage has been leased for purposes other than the extraction of hydrocarbons," Rystad Energy oil analyst Colin White said.
INTERNATIONAL INTEGRATEDS
Equinor announced on 27 July 2021 a dividend per share of USD 0.18 for second quarter 2021. The NOK dividend per share is based on average USDNOK fixing rate from Norges Bank in the period plus/minus three business days from record date 12 November 2021, in total seven business days.
Shell is to buy a stake in a venture seeking to build a floating wind farm off the coat of Clare. The company has signed an agreement with Cork-headquartered Simply Blue Group to acquire a 51 per cent share of its Western Star venture. The project is targeting up to 1.35GW of energy, enough to power more than 1.1 million Irish homes, with 300MW-450MW expected in the first phase.
TotalEnergies established two operational partnerships with Australian carbon developers AgriProve and Corporate Carbon to develop natural below-ground carbon sinks in Australia and help prevent savanna fires, notably in Africa.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Talos Energy announced that it was named as the apparent high bidder in the Outer Continental Shelf Federal Lease Sale 257 on ten deepwater blocks comprising 57,600 gross acres, or 36,720 net acres, for a net total consideration of approximately $4.8 million. Nine of the blocks are in close proximity to the Company's operated Green Canyon and Mississippi Canyon facilities, while the remaining block offsets the Company's recent Puma West discovery. Talos was the one of the most active bidders behind ExxonMobil, bp, Chevron, Oxy and Shell. The acquired prospect inventory includes both low risk subsea tie-backs and high impact exploration opportunities. Royalty rates and other key economic terms of the new leases are consistent with historical standards and existing regulations. Leases for all blocks remain subject to normal-course, formal award by the Department of the Interior.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
KBR announced it has secured a contract for its PLINKESM nitric acid concentration and spent acid recycling technologies from Hanwha Solutions for its new production facilities at Yeosu, South Korea.
NOV announced that its Board of Directors has reinstated its regular quarterly cash dividend of $0.05 per share of common stock.
Schlumberger New Energy, the CEA and partners have announced the signature of pilot project agreements between Genvia and critical-industry leaders on the pathway to net zero in the cement and steel industries. Through these agreements, Genvia will scale up the next generation of electrolyzer technology, developed over two decades of R&D at the CEA, to produce clean hydrogen without CO2 emissions, accelerating the decarbonization of multiple industrial sectors.
TechnipFMC signed a Memorandum of Understanding with Orbital Marine Power (Orbital), a pioneer of tidal energy technology, to jointly collaborate in tidal energy to accelerate the global commercialization of Orbital’s technology and deliver the first commercial scale floating tidal field.
DRILLERS
Helmerich & Payne reported a net loss of $79 million, or $(0.74) per diluted share, from operating revenues of $344 million for the quarter ended September 30, 2021, compared to a net loss of $56 million, or $(0.52) per diluted share, on revenues of $332 million for the quarter ended June 30, 2021. The net losses per diluted share for the fourth and third quarters of fiscal year 2021 include $(0.12) and $0.05 of after-tax losses and gains, respectively, comprised of select items.
Nabors Industries announced that Nabors Industries, its indirect wholly-owned subsidiary, has commenced an offering of $700 million senior priority guaranteed notes due 2027. The Notes will be fully and unconditionally guaranteed by Nabors and certain of Nabors' indirect wholly-owned subsidiaries who also guarantee the Existing Senior Priority Guaranteed Notes
Seadrill Limited announced that a new, independent, seven-member Board of Directors will assume leadership of the new parent company of the Seadrill group upon emergence from Chapter 11. Seadrill received confirmation of its Plan of Reorganization on 26 October 2021 and is targeting emergence early in 2022.
REFINERS
No significant news.
MLPS & PIPELINES
Mizuho initiated coverage of Cheniere Energy with a Buy rating.
Stifel upgraded DCP Midstream to Buy from Hold.
Genesis Energy announced the closing of the sale of a 36% minority equity interest in its Cameron Highway Oil Pipeline System to an undisclosed financial party at an 8/8ths valuation of $1.16 billion, which results in gross proceeds to Genesis of approximately $418 million. Proceeds from the sale, net of fees and expenses, will be used to repay the full $300 million outstanding under its term loan with the remainder going to pay down outstanding amounts under the revolving portion of its senior secured credit facility and results in a pro forma bank leverage ratio of 4.96x. Genesis now owns 64% of CHOPS and will remain operator of the pipeline.
Summit Midstream Partners announced that Double E Pipeline, LLC, a joint venture in which SMLP owns a 70% equity interest and serves as operator, has commenced operations. Double E is a 135 mile FERC-regulated natural gas pipeline that provides natural gas transportation services from southeast New Mexico and west Texas to downstream pipeline interconnections in the Waha Hub region.
MARKET COMMENTARY
Futures for the Nasdaq rose as chipmaker Nvidia rallied on strong third-quarter earnings, while the S&P 500 and the Dow futures showed a mild recovery from inflation-related losses sustained this week. European shares were little changed as weakness in commodity-related stocks overshadowed upbeat earnings. In Asian equity markets, losses in metaverse-related shares and property developers dragged China stocks lower, while Japanese shares eased, with cyclicals and oil companies leading the decline, but they pared losses after a media report stated that Prime Minister Fumio Kishida's stimulus package will be larger than initially expected. The dollar paused for breath, slipping back from a 16-month peak as traders assessed whether its recent surge was starting to stall. Crude prices skidded as China said it was moving to release strategic reserves. Gold prices slipped.
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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