Crude on Track for Weekly Gain after Solid Demand from the U.S.
The energy sector is poised for a lower start, pressured by mild weakness in the underlying commodities while the major market indices trade firmly lower. Futures tracking the S&P 500 index tumbled after data showed consumer prices rose more-than-expected in May, quashing hopes of a peak in inflation and fanning worries over the Federal Reserve's aggressive efforts to tame it.
WTI and Brent crude oil futures are up in early trading and are on track for another weekly gain supported by solid fuel demand in the United States, although fresh COVID-19 alerts in Shanghai and Beijing curbed gains. Oil output at Libya's Sarir field has also been reduced after the ports of Ras Lanuf and Es Sider were closed and as a group threatened to close Hariga port. The prospect of reaching a nuclear deal with Iran and the lifting of U.S. sanctions on the Iranian energy sector also seemed to be receding, supporting the oil rally. Iran dealt a near-fatal blow to chances of reviving the nuclear deal as it began removing essentially all the International Atomic Energy Agency monitoring equipment installed under the deal.
Natural gas futures fell this morning, reversing earlier gains as the NOAA's 6-10 day outlook shows above-normal temps for most of the eastern and southern US, especially for parts of the Lower MS Valley and Southeast later in the period. Below-normal temps are seen for the northwestern US.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Oil production at the BP-led Azeri–Chirag–Gunashli project in Azerbaijan fell 7.4% year on year to 8.8 million tonnes from January through May, the energy ministry said.
On 3 May 2022, the Directors of BP announced that the interim dividend for the first quarter of 2022 would be US$0.0546 per ordinary share (US$0.3276 per ADS). This interim dividend is to be paid on 24 June 2022 to shareholders on the share register on 13 May 2022. The dividend is payable in cash in sterling to holders of ordinary shares and in US dollars to holders of ADSs. The board has decided not to offer a scrip dividend alternative in respect of the first quarter 2022 dividend. Dividend reinvestment plans have been made available for this dividend for ordinary shareholders and ADS holders (subject to certain exceptions) to receive additional bp shares.
The Brazilian government selected Gileno Gurjao Barreto as its nominee to chair state-run oil giant Petrobras' board. The Mines and Energy Ministry also confirmed Caio Mario Paes de Andrade as its nominee to be Petrobras' chief executive. The ministry also picked eight other names for board directors, including current members Jose Joao Abdala Filho, Marcelo Gasparino da Silva, Ruy Flaks Schneider and Marcio Andrade Weber. Bolsonaro's firing of previous CEO Jose Mauro Ferreira Coelho in a row over fuel pricing meant that the firm's board was dismissed as well, according to Petrobras.
Repsol's Board of Directors approved the sale of a 25% stake in Repsol Renewables to the consortium formed by the French insurance company Crédit Agricole Assurances and Switzerland-based Energy Infrastructure Partner (EIP) for €905 million. The transaction, a new milestone in the fulfillment of the multi-energy company's 2021-2025 Strategic Plan, values Repsol's renewable business at €4.383 billion, including debt and minority holdings.
Reuters reported that Saudi Aramco has notified at least five North Asian refiners, mostly Chinese, that it will be supplying less than contracted volumes of crude oil in July, several sources with knowledge of the matter said.
For the first time in the endurance event’s history, the 62 race cars competing in the 90th 24 Hours of Le Mans (June 11-12, 2022) will be supplied with a 100% renewable fuel developed and produced by TotalEnergies: Excellium Racing 100. This zero-oil fuel will deliver a reduction in CO2 emissions of at least 65% over its lifecycle.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Callon Petroleum announced that it has priced $600 million aggregate principal amount of its 7.500% senior unsecured notes due 2030 in a private offering that is exempt from registration under the Securities Act of 1933, as amended. The sale of the notes is expected to close on June 24, 2022, subject to customary closing conditions. On June 9, 2022, the Company delivered a redemption notice with respect to all $460.2 million of its outstanding 6.125% Senior Notes due 2024 and all $319.7 million of its outstanding 9.00% Second Lien Senior Secured Notes due 2025. The net proceeds from the offering, along with borrowings under the senior secured revolving credit facility, are expected to be used to redeem all of the 2024 Notes and all of the Second Lien Notes. The 2024 Notes and the Second Lien Notes will be redeemable on July 9, 2022, which redemptions will settle on Monday, July 11, 2022. This announcement is not an offer to purchase or a solicitation of an offer to sell the 2024 Notes or the Second Lien Notes, and it does not constitute a notice of redemption of the 2024 Notes or the Second Lien Notes.
As per SEC filing, at the 2022 annual meeting of stockholders of Earthstone Energy, the Company's stockholders approved the Company’s proposal for the election of three individuals to serve as Class I directors of the Company for three-year terms expiring in 2025.
Matador Resources announced that one of its wholly-owned subsidiaries has entered into a definitive agreement with a wholly-owned subsidiary of Summit Midstream Partners, LP to acquire Summit’s Lane Gathering and Processing System in Eddy and Lea Counties, New Mexico for $75 million, subject to customary transaction adjustments. In connection with the transaction, the Company will assume certain takeaway capacity on the Double E Pipeline, a FERC-regulated natural gas pipeline operated by Summit. The acquisition is subject to customary closing conditions and is expected to close in the second quarter of 2022.
Matador Resources announced that its Board of Directors amended the Company’s dividend policy pursuant to which the Company intends to pay quarterly cash dividends on its common stock of $0.10 per share, which is an increase from its prior policy of $0.05 per share initiated in October 2021. The Company anticipates that the Board will implement such amended policy in connection with the declaration of its next quarterly dividend, which is expected during the third quarter of 2022.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Granite Construction announced that its Board of Directors has declared a quarterly cash dividend of $0.13 per common share. The dividend is payable on July 15, 2022 to all shareholders of record at the close of business on June 30, 2022.
Schlumberger and Subsea 7 announced that they have signed an agreement to renew Subsea Integration Alliance for a further seven years. Subsea Integration Alliance is a worldwide non-incorporated alliance between Subsea 7 and Schlumberger’s OneSubsea subsea technologies, production and processing systems business, to jointly design, develop and deliver integrated subsea development solutions through the combination of subsurface expertise, subsea production systems (SPS), subsea processing systems, subsea umbilicals risers and flowlines systems (SURF), and life-of-field services.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Frontline Ltd. announced that it has agreed to acquire in privately negotiated transactions with certain shareholders of Euronav N.V. a total of 7,708,908 shares in Euronav, representing 3.82% of the outstanding shares in Euronav, in exchange for a total of 10,753,924 shares in Frontline, which is equivalent to 1.395 Frontline shares for every one share of Euronav. Settlement is expected to take place on or about 14 June 2022 by delivery of existing Frontline shares through a share lending arrangement with Frontline's main shareholder Hemen Holding Ltd. Under the share lending agreement, Frontline will issue a total of 10,753,924 new shares to Hemen as a result of these transactions. Following completion of the issue of the new Frontline shares, Frontline will have a total of 222,622,889 shares issued and outstanding.
Summit Midstream Partners, LP announced that its wholly owned subsidiary, Summit Midstream Holdings, LLC, has entered into a definitive agreement to sell Summit Midstream Permian, LLC, which owns the Lane Gathering and Processing System in the Delaware Basin to a wholly owned subsidiary of Matador Resourcesfor a cash sale price of $75 million, subject to customary transaction adjustments. Matador will also assume Summit Midstream Marketing, LLC's, a wholly owned subsidiary of SMP Holdings, take-or-pay firm capacity on the Double E Pipeline associated with the Lane G&P System. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2022.
MARKET COMMENTARY
U.S. stock index futures fell, mirroring global stocks in anticipation of U.S. data that will likely show heightened inflationary pressures. Gold edged down, as the dollar and Treasury yields rose. Oil prices were up supported by solid fuel demand in the United States.
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