SECTOR COMMENTARY
Energy stocks are trading flat in the pre-market on cues from the broader markets which were tepid after Trump said the U.S. was “not ready” to make a deal with China, before adding he expected one in the future. Trump also said tariffs on Chinese imports could go up “substantially.”
Oil prices advanced after last week’s hefty losses, which were the biggest weekly losses on record since December with WTI down by more than 6%. “Oil prices lack direction because the oil market currently finds itself caught between supply risks and concerns about demand,” Commerzbank said in a note. “A whole host of poor economic data from the major economic areas of the U.S., China and Europe, plus the entrenched situation in the trade talks, are not good news for the demand outlook.”
Natural gas prices are down 2% ahead of contract expiration and ahead of storage data expected later this week to show supply builds that are above seasonal averages.
U.S. INTEGRATEDS
(Monday) Reuters - GAIL has signed MoU with ExxonMobil to explore use of LNG for transportation and bunkering.
INTERNATIONAL INTEGRATEDS
Reuters - Petroleo Brasileiro is nearing the sale of two oilfields in a process that could fetch around $1 billion and aid the state-run oil firm in its bid to reduce debt. Petrobras, as the company is known, has set a June 5 deadline to receive final binding offers for its Pampo and Enchova oilfields off the coast of Rio de Janeiro, said two sources with knowledge of the matter, who requested anonymity to discuss confidential matters.
(Monday) Reuters - Brazilian Supreme Court Minister Edson Fachin has issued a ruling that calls for the suspension of some major divestments by Petroleo Brasileiro. The ruling, issued on May 24, calls for the suspension of the sale of Petrobras' TAG pipeline unit and eight of the companies' refineries. The efficacy of the ruling was not immediately clear, as Petrobras has already sold TAG to Engie SA.
(Monday) Reuters - Petroleo Brasileiro has set a June 7 deadline to receive non-binding proposals for its liquefied petroleum gas (LPG) distribution unit Liquigas. Petrobras, as the oil company is known, has been selling assets to reduce debt and re-focus on offshore exploration and production.
(Sunday) Reuters - Algeria will block Total from acquiring Anadarko's assets in Algeria. Occidental Petroleum has agreed to sell Anadarko Petroleum's assets in Algeria, Ghana, Mozambique and South Africa to Total for $8.8 billion if the U.S. oil company succeeds in completing its plan to take over Anadarko.
CANADIAN INTEGRATEDS
Press Release - Husky Energy will hold its Investor Day in Toronto to review and update its five-year plan. With a focus on generating increased free cash flow, Husky’s plan shows reduced capital spending to achieve an annual average of $3.15 billion for 2019 – 2023 versus the previously planned 2018 – 2022 annual average of $3.5 billion. Total capital spending over the 2019 – 2023 five-year period is reduced by about $1.7 billion, with total free cash flow before dividends expected to reach $8.7 billion at a flat $60 US WTI planning price. The Company will also report progress on key safety and operations integrity initiatives introduced last year.
U.S. E&PS
Reuters - ConocoPhillips expects current weak global liquefied natural gas (LNG) prices to improve as growing demand soaks up the excess supply in the market.
MKM Partners upgraded EOG Resources, Hess Corp, and Matador Resources to buy from neutral.
KeyBanc started Extraction Oil & Gas at ‘Sector Weight.’
Reuters - Occidental Petroleum snatched up some of the richest shale oilfields in Texas when it beat out rival Chevron in a bidding war to acquire Anadarko Petroleum. It also quadrupled its debt - to $40 billion - at a time when investors are calling for spending cuts and higher dividends. That means the acquisition's success will depend on how quickly Occidental can sell off some of Anadarko's assets and focus on optimizing and integrating the assets it keeps - especially prime U.S. shale fields.
(Sunday) Reuters - Algeria will block Total from acquiring Anadarko's assets in Algeria. Occidental Petroleum has agreed to sell Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa to Total for $8.8 billion if the U.S. oil company succeeds in completing its plan to take over Anadarko.
OILFIELD SERVICES
(Monday) Press Release - Enerflex announced that D. James Harbilas, Executive Vice President and Chief Financial Officer (“CFO”), will resign effective June 7, 2019 to pursue another opportunity. Ben Park, Enerflex’s Vice President, Corporate Controller, has been appointed interim CFO and will continue to provide financial management and guidance to the Company until a permanent successor is named.
Press Release - Fluor announced executive appointments to its leadership team as it continues to strengthen the company’s management as well as drive an enhanced focus on excellent execution and performance. D. Michael Steuert has been appointed chief financial officer (CFO) effective June 1, 2019, succeeding Bruce Stanski, who will support the office of the chief executive officer (CEO) focused on analyzing the company’s investments and joint ventures in line with the previously announced strategic review. Steuert served as Fluor’s CFO from 2001 to 2012. Fluor also announced the appointment of Mark E. Fields to the role of president leading the Energy & Chemicals business group.
(Monday) Reuters - Qatar Petroleum awarded McDermott Middle East an engineering and design contract for pipelines and other facilities in the project to expand the offshore North Field. The contract is a front end engineering design (FEED) contract.
Press Release - Petrofac’s Engineering and Production Services (EPS) business has been awarded two Operations and Maintenance (O&M) contract extensions for long-standing clients worth a combined value of approximately US$32 million. Petrofac secured a 12-month renewal from Total E&P UK (Total) for the supply of O&M support to its Alwyn and Dunbar platforms in the Northern North Sea – a role it has held for 14 years. The company has also been awarded a 12-month extension from a major International Oil Company (IOC), under which it will continue to provide offshore and onshore O&M support to one of its platforms in the Central North Sea.
(Monday) Press Release - PGS has initiated a refinancing seeking to raise approximately $525 million in a 5-year first lien term loan. In addition, the Company is seeking to raise approximately $150 million of 5.5-year second lien debt. Upon completion, proceeds will be used to repay the Company's existing $380 million term loan maturing in March 2021 and $212 million senior notes maturing in December 2020, and to reduce drawings under its revolving credit facility that are currently outstanding.
REFINERS
Press Release - Plains All American Pipeline announced a capital-efficient expansion and new joint venture of its existing Red River Pipeline system. Delek Logistics Partners has purchased from a Plains’ subsidiary a 33% ownership interest in a new Red River Pipeline Company joint venture for $128 million. Plains retained a 67% interest in the joint venture and will continue to operate the Red River system. In support of this expansion, Delek US increased its long-term throughput and deficiency (“T&D”) agreement on the Red River system from an existing 35,000 barrels per day to 100,000 barrels per day. The expansion enables additional volume pull-through from Cushing and the Permian to the U.S. Gulf Coast markets, providing additional supply optionality for shippers.
MLPS & PIPELINES
(Monday) Press Release - AltaGas announced the appointment of D. James Harbilas as Executive Vice President and Chief Financial Officer, effective June 10, 2019. Mr. Harbilas will be responsible for AltaGas' finance, treasury, corporate development and capital market functions. AltaGas also announced that Tim Watson, the Company's current Executive Vice President and Chief Financial Officer, will be leaving the Company. Mr. Watson will remain in his current role until June 9, 2019.
Press Release - Enterprise Products Partners L.P. today announced it is extending its ethylene pipeline and logistics system further into South Texas, a leading growth area for new crackers and ethylene derivative plants. The Baymark ethylene pipeline will originate in the Bayport area of southeast Harris County and extend approximately 90 miles to Markham, Texas in Matagorda County. The pipeline is supported by long-term customer commitments and is scheduled to begin service in the fourth quarter of 2020. The project is a joint venture between Enterprise and Lavaca Pipe Line Company, a subsidiary of Formosa Plastics Corporation, U.S.A. Enterprise will be the majority owner, operator, and commercial manager for the new pipeline.
(Late Friday) Reuters - Gibson Energy is loading 60 unit trains per month at the Hardisty, Alberta, crude-by-rail terminal and that will go up to 90 trains per month by the end of the summer. Each unit train can carry around 75,000 barrels. The Hardisty terminal is owned by USD Partners LP and used exclusively by Gibson.
Press Release - Plains All American Pipeline announced a capital-efficient expansion and new joint venture of its existing Red River Pipeline system. Delek Logistics Partners has purchased from a Plains’ subsidiary a 33% ownership interest in a new Red River Pipeline Company joint venture for $128 million. Plains retained a 67% interest in the joint venture and will continue to operate the Red River system. In support of this expansion, Delek US increased its long-term throughput and deficiency (“T&D”) agreement on the Red River system from an existing 35,000 barrels per day to 100,000 barrels per day. The expansion enables additional volume pull-through from Cushing and the Permian to the U.S. Gulf Coast markets, providing additional supply optionality for shippers.
MARKET COMMENTARY
Futures for Wall Street’s major indexes slipped on uncertainty over U.S.-China trade deal. After gains in Asia, European shares took a hit from concerns about the budget deficit in Italy. The dollar rose on safe-haven bid, pushing gold lower. Oil rose on tighter global supplies offsetting demand fears. Data on home prices is scheduled to be released later in the day.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 5/2/19 - CNBC Worldwide Exchange – Energy sector M&A
- 4/23/19 - Bloomberg Daybreak Asia – Iran sanctions implications
- 3/26/19 - CNBC World Wide Exchange – Energy sector performance
- 3/18/19 - Bloomberg Daybreak Asia – OPEC meeting, Iran sanctions
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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