Oil

Crude Rebounds on Trade Optimism

WTI and Brent futures are just off morning highs, rebounding from overnight lows following President Trump’s trade comments.

SECTOR COMMENTARY

Energy stocks are set to rebound this morning following Friday’s sell-off, tracking strength in the underlying commodities and U.S. stock index futures which gained as President Trump moved to ease trade tensions with China.

In deal news, PDC Energy and SRC Energy announced they have entered into a definitive merger agreement under which PDC will acquire SRC in an all-stock transaction valued at ~$1.7B, including SRC's net debt of ~$685M. The deal is expected to close in the 4Q’19.

WTI and Brent futures are just off morning highs, rebounding from overnight lows following President Trump’s trade comments. Futures on both sides of the Atlantic sold off Friday in tandem with equities following announcements that the U.S. would raise the tariff on $250B of Chinese imports to 30% from 25% on October 1st and raise the current 10% tariff on an additional $300B of goods to 15% in September 1st. 

Natural gas futures are up ~1% in morning trading ahead of the front month’s contract expiration Wednesday. Futures are supported by gains in the crude complex while warmer weather forecasts this week should increase cooling demand.

U.S. INTEGRATEDS

(Sunday) Reuters - ExxonMobil shut production units at its 369,024-barrel-per-day (bpd) Beaumont, Texas, refinery after a power outage. 

INTERNATIONAL INTEGRATEDS

Press Release - Eni (40% Operator) and its partners, Pertamina (30%) and Neptune (30%), have been awarded by the Ministry of Energy and Mineral Resources the West Ganal exploration block in the Kutei Basin, offshore Indonesia, as a result of the second conventional oil and gas bidding round 2019. This award expands Eni’s position and upstream activities in the East Kalimantan’s Kutei Basin, which is one of the most promising hydrocarbon provinces in Indonesia.

Reuters - Petroleo Brasileiro SA Petrobras said it will begin its binding phase for sale of Onshore Rio Ventura Oil Fields in Bahia State.

(Late Friday) Press Release - A group led by investment firm Itausa Investimentos SA presented the highest bid to buy Petroleo Brasileiro SA Petrobras’ liquefied petroleum gas (LPG) unit Liquigas. Petrobras said in a filing the group headed by Itausa, which also includes local distribution companies Copagaz and Nacional Gás Butano, would be invited for contract negotiations.

Reuters - French energy group Total buys renewable energy company Vents d'Oc.

 CANADIAN INTEGRATEDS

Press Release - Husky Energy announced it has commenced production at its Dee Valley thermal project in Saskatchewan, the second of six 10,000-barrel-per-day thermal bitumen projects to be brought onstream from 2018 to 2022.            

U.S. E&PS

(Sunday) Press Release -  Kahn Swick & Foti, LLC and KSF partner, the former Attorney General of Louisiana, Charles C. Foti, Jr., remind investors with losses in excess of $100,000 that they have only until August 26, 2019 to file lead plaintiff applications in a securities class action lawsuit against EQT. Investor losses must relate to purchases of the Company’s shares between June 19, 2017 and October 24, 2018. The action, pending in the United States District Court for the Western District of Pennsylvania, also asserts claims under ss14(a) of the Exchange Act, on behalf of Rice Energy Inc. shareholders who held Rice shares on 9/25/17, and under ss11, 12(a)(2), and 15 of the Securities Act of 1933 as related to this acquisition.

Press Release - PDC Energy and SRC Energy announced they have entered into a definitive merger agreement under which PDC will acquire SRC in an all-stock transaction valued at approximately $1.7 billion, including SRC’s net debt of approximately $685 million as of June 30, 2019.  Under the terms of the agreement, SRC shareholders will receive a fixed exchange ratio of 0.158 PDC shares for each share of SRC common stock, representing an implied value of $3.99 per share based on the PDC closing price as of August 23, 2019.  The transaction, which is expected to close in the fourth quarter of 2019, has been unanimously approved by each company’s board of directors.  

CANADIAN E&PS

Press Release - Canacol Energy announced that it achieved a record 217 million standard cubic feet per day (38,070 barrels of oil equivalent per day) of natural gas sales on August 24, 2019.  This level of sales was achieved in part via the recently announced completion of the pipeline expansion between the Corporations gas processing facilities located at Jobo and the city of Cartagena at the end of July 2019. Average gas sales for the month of July 2019, prior to the completion of the pipeline expansion between Jobo and Cartagena, were approximately 122 MMscfpd.  Average gas sales for the first 15 days of August 2019 were approximately 151 MMscfpd as the new pipeline expansion was gradually brought online to the gas sales level of 217 MMscfpd.  The Corporation anticipates that it will maintain an average gas sales level of approximately 215 MMscfpd for the remainder of 2019.

REFINERS

Reuters - Marathon Petroleum’s Galveston Bay Texas Refinery FCCU may be shut for a week.

(Sunday) Reuters - The coker and small crude distillation unit (CDU) were shut on 8/24 by a transformer outage at Valero Energy’s 335,000-barrel-per-day (bpd) Port Arthur, Texas, refinery. The 75,000-bpd AVU 147 CDU and the 100,000-bpd coker were shut along with several other units on the south side of the refinery when the transformer failed. 

MLPS & PIPELINES 

(Late Friday) Press Release - Kinder Morgan Canada Limited and Pembina Pipelineprovided additional details to the previously announced arrangement agreement between both companies. The Arrangement Agreement provides for the payment by the Company to Pembina of a CDN$90.0 million termination fee if the Arrangement Agreement is terminated in certain specified circumstances, including, among other things, in the event that (i) the Board withdraws, modifies, qualifies or changes any of its recommendations or determinations with respect to the Arrangement in a manner adverse to Pembina; or (ii) the Board, in accordance with certain procedures set forth in the Arrangement Agreement,  accepts, recommends, approves or enters into an agreement to implement a superior proposal (as defined in the Arrangement Agreement). The Arrangement Agreement also provides for the payment by Pembina to the Company of a reverse termination fee of CDN$90.0 million (i) in the event the Arrangement Agreement is terminated in specified circumstances where the Competition Act Approval has not been received; or (ii) in the event the Cochin Purchase Agreement is terminated in specified circumstances relating to clearance of the Cochin U.S. Transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 

MARKET COMMENTARY

Wall Street futures were higher, mirroring European shares, after U.S. President Donald Trump said China wants to return to negotiating table that suggested an easing of trade tensions between the two countries. Asian equities ended in the red. The dollar rose against a basket of major currencies, while the Chinese yuan fell to an 11-year low. Gold prices pared earlier gains. Oil was trading in the positive territory. U.S. durable goods data is scheduled for release later in the day.

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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