Credit: Buckeye Partners hopes that investments in Permian crude oil will end an era of underperformance. Image source: Getty Images.
Tuesday, April 16, 2019
SECTOR COMMENTARY
Energy stocks are higher amid stronger oil prices and positive momentum in the broader markets following strong earnings reports. Corporate news is light across the sector. The sell-side made numerous ratings changes across all sub-groups, mostly downgrading stocks.
Oil prices are higher, recouping yesterday’s losses on little news other than positive momentum from the broader markets. US production and a possible boost to OPEC+ output from Russia along with cautious commentary on the economy from the IMF kept a lid on gains. Today’s inventory report in the US is expected to show large supply builds amid record low refinery utilization.
Natural gas prices are flattish in early trade, as the market digests the EIA monthly drilling report that includes and expected shale production increase.
U.S. INTEGRATEDS
Press Release - The Supreme Court of the Netherlands has ruled in favor of Chevron, rejecting the Republic of Ecuador’s attempts to annul decisions of an international arbitral tribunal in The Hague that ordered Ecuador to take all steps necessary to prevent enforcement of a $9.5 billion Ecuadorian judgment against Chevron anywhere in the world. The Ecuadorian judgment previously was found by the international arbitral tribunal and by U.S. courts to have been obtained through fraud, bribery and corruption.
(Late Monday) Reuters - Exxon Mobil restored production on the second-largest crude distillation unit (CDU) at its 502,500 barrel-per-day Baton Rouge, Louisiana, refinery which shut down following a restart on Sunday. The 110,000 bpd PSLA-9 CDU underwent a two-month overhaul that finished on Sunday when the unit restarted for the first time, the sources said. The unit shut down and was then brought back into production.
INTERNATIONAL INTEGRATEDS
RBC downgraded BP to ‘Outperform’ from ‘Top Pick.’
Reuters - Shell Australia, a subsidiary of Royal Dutch Shell, completed the sale of its interest in Greater Sunrise fields to three wholly-owned nominees of Timor Gap for $300 million.
Press Release - Shell Malaysia Trading Sdn Bhd, a subsidiary of Royal Dutch Shell, has launched a new cutting-edge fuel storage tank and an additional loading bay at Westports, Port Klang. The storage facility is to boost Shell Malaysia's capability to meet the growing demand for Shell fuels in the central region of Peninsular Malaysia.
(Late Monday) Press Release - Laredo Petroleum has settled its previously disclosed litigation with Shell Trading (US) Company, a subsidiary of Royal Dutch Shell. The litigation commenced in May 2017 and related to a crude oil purchase agreement previously entered into between Laredo and Shell effective as of October 1, 2016. Pursuant to such settlement, on April 12, 2019, Laredo received a one-time payment of $42.5 million from Shell and both parties dismissed their respective claims with prejudice. The cash payment will be recorded as non-operating income on Laredo’s consolidated statement of operations in connection with the litigation settlement.
CANADIAN INTEGRATEDS
Goldman Sachs upgraded Cenovus Energy to ‘Neutral’ from ‘Sell.’
U.S. E&PS
Raymond James downgraded Antero Midstream to ‘Outperform’ from ‘Strong Buy.’
Press Release - ConocoPhillips announced it has completed the previously announced transaction to sell its 30 percent interest in the Greater Sunrise Fields to the government of Timor-Leste for $350 million plus customary adjustments. The Sunrise and Troubadour gas and condensate fields, collectively known as the Greater Sunrise Fields, are located in the Timor Sea. The sale transaction covers ConocoPhillips’ interest in Production Sharing Contracts 03-19 and 03-20 and Retention Leases NT/RL2 and NT/RL4.
(Late Monday) Press Release - Chaparral Energy announced it has appointed Mr. Marcus (Marc) Rowland to serve as an independent director of the board effective April 10, 2019, to fill the vacancy resulting from the resignation of Mr. David Geenberg as a member of the board effective March 11, 2019. Chaparral’s Board of Directors, with the addition of Mr. Rowland, now includes eight members and will remain at eight directors eliminating the vacancy created by the resignation of Mr. Graham Morris on March 11, 2019.
MKM Partners downgraded EOG Resources, EQT and Hess to ‘Neutral’ from ‘Buy.’
(Late Monday) Press Release - Jones Energy announced that the Company, consistent with its prior announcement on April 3, 2019 regarding the Company’s entry into a comprehensive Restructuring Support Agreement with its First Lien and Unsecured Noteholders, voluntarily filed petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
(Late Monday) Press Release - Laredo Petroleum has settled its previously disclosed litigation with Shell Trading (US) Company, a subsidiary of Royal Dutch Shell. The litigation commenced in May 2017 and related to a crude oil purchase agreement previously entered into between Laredo and Shell effective as of October 1, 2016. Pursuant to such settlement, on April 12, 2019, Laredo received a one-time payment of $42.5 million from Shell and both parties dismissed their respective claims with prejudice. The cash payment will be recorded as non-operating income on Laredo’s consolidated statement of operations in connection with the litigation settlement.
RBC upgraded Marathon Oil to ‘Outperform’ From Sector Perform.
(Late Monday) Press Release - Penn Virginia announced that Brian Steck has been appointed to the Company’s Board of Directors and David Geenberg has resigned from the Board, both effective immediately. The Penn Virginia Board will remain composed of six directors, five of whom are independent. The Company also announced that its 2019 Annual Shareholders Meeting will be held at 11:00 a.m. on July 31, 2019.
(Late Monday) Press Release - Talos Energy provided an additional update on the Zama appraisal program in Block 7, located in the offshore portion of Mexico's prolific Sureste Basin. Talos is the operator of Block 7 in a consortium with its partners Sierra Oil & Gas, a company of DEA Deutsche Erdoel AG, and Premier Oil Plc.
CANADIAN E&PS
Press Release - Obsidian Energy announced an operational update on the Cardium drilling program. After proving the viability of a quick cycle, light oil, primary production campaign in early 2018, the company began a dedicated execution program starting in July 2018 and carrying through to break-up in March 2019. All 19 wells have now been completed and are on production. These wells continue to perform as expected, demonstrating the repeatability of the development style as it drill the first of several core Cardium areas. The average drill, complete, equip, and tie-in costs of all 19 wells came in at $3.8 million per well and without any safety or environmental incidents.
(Late Monday) Press Release - TORC Oil & Gas confirmed that a dividend of $0.022 per common share will be paid on May 15, 2019 to common shareholders of record on April 30, 2019. The ex-dividend date is April 29, 2019, with payment to be made in cash or common shares at the election of the shareholder. Any common shareholder choosing to receive common shares rather than cash must submit his or her share dividend authorization form no later than 4:30 p.m. (Calgary time) on the fourth business day immediately prior to the record date for the declared dividend payment, being April 24, 2019. This dividend has been designated as an "eligible dividend" for Canadian income tax purposes.
OILFIELD SERVICES
(Late Monday) Press Release - McDermott International and its joint venture partner, Chiyoda International Corporation, a U.S.-based wholly-owned subsidiary of Chiyoda Corporation, Japan, announced that Train 1 of the Cameron LNG project in Hackberry, La., has reached the final commissioning stage. This includes the introduction of pipeline feed gas into Train 1 of the liquefaction export facility, the precursor for the production of liquefied natural gas (LNG).
(Late Monday) Press Release - Secure Energy Services announced the completion of two tuck-in acquisitions, providing the Corporation with a strategic midstream footprint in one of the largest crude oil storage and trading hubs in North America. The Corporation has acquired a 27% interest in a crude oil storage facility comprised of four above-ground 175,000 bbl tanks located in Cushing, Oklahoma ("the Facility"), and a 51% interest in an 80-acre parcel of undeveloped land adjacent to the Facility. The total purchase price of the acquisitions was US$10.4 million, paid in cash at closing on April 11, 2019.
DRILLERS
Morgan Stanley initiated coverage of Ensco Rowan at ‘Overweight.’
BTIG dropped coverage of Rowan Companies.
REFINERS
(Late Monday) Reuters - Delek reported electrical fault upset several units at Alon Big Spring, Texas refinery, and normal operation was restored within 12 hours. The company also reported emissions from FCCU, ESP bypass stack at Alon Big Spring, Texas refinery.
Goldman Sachs downgraded Delek US Holdings to ‘Neutral’ from ‘Buy.’
Goldman Sachs downgraded HollyFrontier to ‘Sell’ from ‘Neutral.’
MLPS & PIPELINES
Raymond James upgraded Energy Transfer to ‘Strong Buy’ from ‘Outperform.’
Raymond James downgraded Kinder Morgan, MPLX, ONEOK and Targa Resources to ‘Outperform’ from ‘Strong Buy.’
(Late Monday) Press Release - The SunCoke Energy Partners Board of Directors declared a first quarter 2019 cash distribution of $0.40 per limited partnership unit. The first quarter 2019 distribution will be payable on June 3, 2019, to unitholders of record on May 15, 2019.
(Late Monday) Press Release - Targa Resources Partners announced its monthly distribution on the Partnership’s 9.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units for April 2019. Targa Resources Partners also announced that the board of directors of its general partner has declared a monthly cash distribution of 18.75¢ per Series A Preferred Unit, or $2.25 per Series A Preferred Unit on an annualized basis, for April 2019. This cash distribution will be paid May 15, 2019 on all outstanding Series A Preferred Units to holders of record as of the close of business on April 30, 2019.
MARKET COMMENTARY
Futures pointed to a higher opening at the Wall Street as earnings season gathered pace. Equities around the world gained on reduced volatility in a shortened trading week and reassuring data out of China. The dollar edged up against a basket of major currencies, while gold prices fell. Brent hovered around $71, pressured by higher U.S. inventories and OPEC production. IBM and Netflix are reporting results after the close of markets, while manufacturing output data is also on the radar.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 3/26/19 - CNBC World Wide Exchange – Energy sector performance
- 3/18/19 - Bloomberg Daybreak Asia – OPEC meeting, Iran sanctions
- 2/20/19 - CNBC Squawk on Street– Shale growth vs. global growth demand
- 2/11/19 - CNBC World Wide Exchange – NOPEC & role of private producers
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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