Crude Prices Lower on Data Indicating Weaker Chinese Demand
SECTOR COMMENTARY:
The energy sector is set to kick off 2023 mixed to lower, pressured by weakness in the underlying commodities but supported by low conviction strength in the major equity futures.
WTI and Brent crude oil futures are lower in early trading, weighed down by weak demand data out of China and a gloomy economic outlook. The Chinese government raised export quotas for refined oil products in the first batch for 2023, with traders attributing the increase to expectations of poor domestic demand amid the waves of COVID-19 infections. In further bearish news, China's factory activity shrank in December as surging infections rates disrupted production, also dampening demand. Adding to the gloomy economic outlook, IMF Managing Director Kristalina Georgieva said on Sunday that the United States, Europe and China - the main engines of global growth - were all slowing simultaneously, making 2023 tougher than 2022 for the global economy.
Natural gas futures are down a further 9% to start the year, as warmer forecasts drove the front month lower for the fourth-consecutive session.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Eni said it had set up a new company dedicated to sustainable transport, which would develop bio-refining, biomethane and offer mobility products and services in Italy and abroad. Eni Sustainable Mobility is directly controlled by Eni, which holds 100% of its share capital, the group said.
BW Offshore has signed a short-term extension for Abo FPSO with Nigerian Agip Exploration Ltd, a subsidiary of Eni, until 14 January 2023 to allow time to finalise terms for a further contract extension.
Bernstein upgraded Eni and Equinor to Outperform from Market Perform.
Brazil's new mines and energy minister Alexandre Silveira said that Petrobras would play a leading role in expanding the refining sector, and stressed the importance of developing renewable resources.
Petrobras lowered refinery gate aviation kerosene prices by an average 11.6% starting Jan. 1, it said on Monday, marking the second price cut in a row.
The incoming chief executive of Brazil's state-run oil company Petrobras said on Friday he planned to tweak the country's fuel price policy, but said investors need not worry. President-elect Luiz Inacio Lula da Silva on Friday named Senator Jean Paul Prates as the next CEO of Petroleo Brasileiro SA, as the company is formally known. Lula tweeted that Prates will "lead the company into a great future."
Repsol and ASAJA, the largest professional agricultural organization in Spain that represents more than 200,000 farmers and breeders, have signed a collaboration agreement to promote projects that focus on the circular economy to promote sustainability in rural areas. Both entities will share their knowledge and capabilities to seek solutions to improve the management of agricultural and livestock by-products in rural and sparsely populated environments where logistics can be a major obstacle. Repsol will analyze the potential of these wastes and by-products as new raw materials for the manufacture of renewable fuels and circular materials in its industrial complexes.
Maintenance at the Queensland Curtis liquefied natural gas (QCLNG) plant in the eastern part of Australia will be extended to Jan. 16 from a previously announced date of Jan. 7, according to a notice on the Australian Energy Market Operator's (AEMO) website. The 8.5 million tonnes-per-annum capacity liquefaction plant, operated by Shell, has two trains.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Seibert Williams Shank downgraded EQT Corp to Hold from Buy.
As per SEC filing, on December 30, 2022, Southwestern Energy repaid in full all outstanding indebtedness under Term Loan Credit Agreement, dated as of December 22, 2021, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, the financial institutions party thereto, as lenders and the other agents, arrangers and bookrunners identified therein. The Credit Agreement payoff amount included term loans in the principal amount of approximately $546 million, plus accrued but unpaid interest, fees, and expenses, which satisfied all of the Company’s indebtedness obligations thereunder.
SM Energy announced the retirement of Executive Vice President and General Counsel David Copeland. The retirement of Mr. Copeland from his current position will be effective December 31, 2022 and he will remain with the Company in an advisory role until July 1, 2023. The Company also announces that James Lebeck will take the position of Senior Vice President and General Counsel. Mr. Lebeck is expected to start his new role on or before January 30, 2023.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Baker Hughes announced it has been awarded a contract to be booked in the fourth quarter of 2022 by Malaysia Marine and Heavy Engineering (MMHE) to supply carbon dioxide (CO2) compression equipment to PETRONAS Carigali Sdn. Bhd.’s Kasawari offshore carbon capture and sequestration (CCS) project in Sarawak, Malaysia. The project is expected to be the world’s largest offshore CCS facility, with capacity to reduce CO2 emissions by 3.3 million tons per annum (MTPA).
As per SEC filing, on December 29, 2022, Baker Hughes, its operating subsidiary, Baker Hughes Holdings LLC, General Electric and EHHC NewCo LLC, Delaware limited liability company and a wholly owned subsidiary of Baker Hughes, entered into a binding term sheet. The Term Sheet sets forth the terms under which the Parties have agreed (i) that GE will cause its affiliates to deliver notice of exchange of all units it holds in BHH LLC, eliminating its ownership in BHH LLC, (ii) to settle certain disputes under that Tax Matters Agreement dated as of July 3, 2017, between GE, Baker Hughes, BHH LLC and NewCo LLC, as amended, (iii) to terminate the TMA, (iv) to provide certain going-forward rights and obligations with respect to each of the Parties effective upon execution of the Term Sheet, and (v) to work together to enter into definitive agreements consistent with the Term Sheet.
Cactus announced that it has entered into a definitive agreement to acquire FlexSteel Technologies Holdings and its affiliates through a merger with its holding company, HighRidge Resources and Atlas Merger Sub, LLC, a newly formed subsidiary of Cactus. Cactus is acquiring FlexSteel on a cash-free, debt-free basis, for total upfront consideration of approximately $621 million, subject to customary purchase price adjustments. The closing is expected to occur in early 2023 and is subject to regulatory approvals and other customary conditions. In addition to the upfront consideration, there is a potential future earn-out payment of up to $75 million to be paid in mid-2024 if certain revenue growth targets are met by FlexSteel. FlexSteel’s current President and CEO, Thirucherai Sathyanarayanan, will continue to lead the business, which generated revenue of approximately $265 million for the nine months ended September 30, 2022.
KBR announced that its proprietary Vinyl Acetate Monomer (VAM) technology has been selected by Asian Paints Limited for a grassroots production facility in India.
As per SEC filing, as previously disclosed in the Current Report on Form 8-K filed by ProFrac Holding with the Securities and Exchange Commission on December 28, 2022, ProFrac Holdings II, LLC, a Texas limited liability company and a subsidiary of ProFrac, entered into a Membership Interest Purchase Agreement with Performance Holdings I, LLC, a Louisiana limited liability company, and Performance Holdings II, LLC, a Louisiana limited liability company. Pursuant to the Purchase Agreement, ProFrac II LLC agreed, subject to the terms and conditions set forth therein, to acquire from the Performance Sellers 100% of the issued and outstanding membership interests of each of (i) Performance Proppants, LLC, a Texas limited liability company, (ii) Red River Land Holdings, LLC, a Louisiana limited liability company, (iii) Performance Royalty, LLC, a Louisiana limited liability company, (iv) Performance Proppants International, LLC, a Louisiana limited liability company and (v) Sunny Point Aggregates, LLC, a Louisiana limited liability company.
Weatherford International has appointed Arun Mitra as the Company’s Executive Vice President and Chief Financial Officer. Mr. Mitra’s appointment is effective immediately.
DRILLERS
Noble announced changes to its share capital. As a result of the changes, there are a total of 134,680,847 A ordinary shares of Noble issued and outstanding with a nominal value of USD 0.00001 each.
Patterson-UTI Energy announced that James "Mike" Holcomb has been promoted to the new position of Chief Operating Officer of Patterson-UTI Energy. Patterson-UTI Energy also announced that Mike Garvin has been promoted to President of Patterson-UTI Drilling Company LLC.
REFINERS
Reuters reported that Valero Energy’s Port Arthur, Texas refinery was operating at 90% of its 335,000 barrel-per-day capacity as of Friday, after restarting following a Dec. 23 shutdown because of frigid weather, said people familiar with plant operations.
MLPS & PIPELINES
As per SEC filing, Enterprise Products Operating LLC filed a prospectus supplement related to a potential two-part senior notes offering. Notes will be guaranteed by Enterprise Products Partners L.P., on an unsecured and unsubordinated basis.
Scorpio Tankers announced that it has purchased its common shares in the open market. Recently, the Company purchased 390,972 of its common shares in the open market at an average price of $52.82 per share as part of the Company’s securities repurchase program.
Targa Resources announced a definitive agreement to acquire Blackstone Energy Partners’ 25 percent interest in Targa’s Grand Prix NGL Pipeline for $1.05 billion in cash plus customary working capital adjustments. Targa will own 100 percent of Grand Prix upon closing.
Uniper brought Germany's first full cargo of liquefied natural gas (LNG) to the new LNG terminal, operated by Uniper, in Wilhelmshaven. The LNG ship Maria Energy, owned by Tsakos Energy Navigation, a major energy mover, was loaded in Calcasieu Pass, USA, at the liquefaction facility of the LNG supplier Venture Global Calcasieu Pass, LLC, on December 19, 2022.
MARKET COMMENTARY
Wall Street futures rose on the first trading day of 2023 as investors await key economic data and minutes from the Fed's last meeting, both due for release this week, for clues on the path of future interest rate hikes. Most Asian indexes ended higher while European shares were trading in the green. The dollar jumped against a basket of major currencies and Gold prices rallied to a more than six-month peak. Oil prices were weighed down by weak China demand data and a gloomy global economic outlook. S&P Global's final reading of U.S. manufacturing PMI for the month of December is scheduled for release later in the day.
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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