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Oil

Crude Sinks on U.S. Stockpile Build, Rising Coronavirus Cases

Crude oil futures dropped, giving up the previous day's gains as a surge in U.S. crude stocks and rising coronavirus infections in the U.S. and Europe that fanned fears of a supply glut and weaker fuel demand.

SECTOR COMMENTARY

The energy sector is poised for a sharply lower start, pressured by steep declines across the underlying commodities and in the major equity futures which fell as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from pandemic.

In deal news, EQT announced last night they entered into a definitive purchase and sale agreement with Chevron U.S.A. Inc. under which EQT will acquire Chevron's upstream and midstream assets located in the Appalachian Basin for $735 million. The firm also announced a 20M share common offering which was priced at $15.50 to finance the deal. Earnings season also continued to ramp up. Hess reported a wider-than-expected loss this morning and slightly lowered its full year production forecast, as its operations were affected by hurricanes in the Gulf of Mexico and lower production in South East Asia. The company also cut its exploration and production budget for the year to $1.8 billion from its original estimate of $1.9 billion.

WTI crude oil futures dropped over 4.5% this morning, trailing Brent which is only seeing slightly more reserved declines, giving up the previous day's gains as a surge in U.S. crude stocks and rising coronavirus infections in the United States and Europe that fanned fears of a supply glut and weaker fuel demand. Ahead of the official EIA data later this morning, last night’s API report projected that U.S. crude oil stocks surged 4.6 million barrels last week, significantly more than the 1.2 million barrels analysts had anticipated while Gasoline stocks jumped 2.6 million barrels, compared with analysts' expectations for a draw of 961,000 barrels.

On the final day of trading as the front month contract, November natural gas futures erased earlier declines and trading marginally higher in early trading, gaining ahead of tomorrow’s storage report and on cold weather forecasts while expectations for prices to remain high into cooling season, causing power plants to burn more coal, kept a lid on gains.

U.S. INTEGRATEDS

Truist Securities assumed coverage on Chevron with a ‘Buy’ rating.

(Late Tuesday) Press Release - EQT announced that it has entered into a definitive purchase and sale agreement with Chevron U.S.A. Inc. under which EQT will acquire Chevron's upstream and midstream assets located in the Appalachian Basin for $735 million, subject to customary adjustments at closing. The transaction is expected to close late in the fourth quarter of 2020, subject to customary closing conditions, with an effective date under the purchase and sale agreement of July 1, 2020.

Truist Securities assumed coverage on ExxonMobil with a ‘Hold’ rating.

Reuters - Exxon Mobil said its Vietnam unit has signed a memorandum of understanding with Vietnam's Hai Phong city and Japan power generation company JERA to potentially develop an integrated liquefied natural gas (LNG)-to-power project in Hai Phong.  

INTERNATIONAL INTEGRATEDS 

Reuters - BP sold a liquefied natural gas (LNG) cargo for delivery into Northeast Asia in December to trader Vitol at $7.65 per million British thermal units (mmBtu).

Reuters - Eni said its balance sheet remained strong after swinging to a net loss in the third quarter as the coronavirus epidemic took its toll. Eni said it recorded an adjusted net loss in the period of 0.15 billion euros, in line with an analyst consensus provided by the company for a loss of 0.18 billion euros.It said production in the period fell 10% to 1.7 million barrels of oil equivalent per day but confirmed its full-year target of 1.72-1.74 mboe/d.

(Late Tuesday) Press Release - Petrobras said it had agreed to buy the P-71 platform for $353 million, adding the purchase should allow it to start producing oil from its Itapu field in about one year.

Press Release - Total is pursuing its strategy to reduce greenhouse gases emissions in maritime transportation, by chartering four Aframax-type vessels equipped with Liquified Natural Gas propulsion. These vessels, each with a capacity of 110,000 tons of crude oil or refined products, will be delivered in 2023 and will join the time-chartered fleet of Total. The first two vessels will be chartered from shipowner Hafnia, and the remaining two from Viken Shipping.

Reuters - Total has made a second significant gas condensate discovery in the Outeniqua Basin, 175 km off the southern coast of South Africa.

U.S. E&PS  

Truist Securities assumed coverage on Antero Resources, Bonanza Creek Energy, Range Resources and Southwestern Energy with a ‘Hold’ rating.

Truist Securities assumed coverage on CNX Resources, ConocoPhillips, Comstock Resources, EQT and PDC Energy with a ‘Buy’ rating.

Press Release - Concho Resources announced third-quarter 2020 results, reporting a net loss of $61 million, or $0.31 per share. Adjusted net income (non-GAAP), which excludes certain non-cash and special items, for third-quarter 2020 was $282 million, or $1.43 per share.

Press Release - Concho Resources announced that its Board of Directors declared a quarterly dividend of $0.20 per share on the Company’s outstanding common stock. The quarterly dividend is payable December 18, 2020, to stockholders of record at the close of business on November 6, 2020.

Barclays downgraded Diamondback Energy to ‘Equal Weight’ from ‘Overweight’.

(Late Tuesday) Press Release - EQT announced that it has priced a public offering of 20,000,000 shares of its common stock at a price to the public of $15.50 per share (the Offering). The Company has granted the underwriters a 30-day option to purchase up to an additional 3,000,000 shares of its common stock.

(Late Tuesday) Press Release - EQT announced that it has entered into a definitive purchase and sale agreement with Chevron U.S.A. Inc. under which EQT will acquire Chevron's upstream and midstream assets located in the Appalachian Basin for $735 million, subject to customary adjustments at closing. The transaction is expected to close late in the fourth quarter of 2020, subject to customary closing conditions, with an effective date under the purchase and sale agreement of July 1, 2020.

Press Release - Hess Corporation reported a net loss of $243 million, or $0.80 per common share, in the third quarter of 2020, compared with a net loss of $212 million, or $0.70 per common share, in the third quarter of 2019. On an adjusted basis, the Corporation reported a net loss of $216 million, or $0.71 per common share, in the third quarter of 2020, compared with an adjusted net loss of $105 million, or $0.35 per common share, in the prior-year quarter.

Press Release - Matador Resources reported financial and operating results for the third quarter of 2020. Third quarter 2020 net loss (GAAP basis) was $276.1 million, or a net loss of $2.38 per diluted common share, an improvement from a net loss of $353.4 million in the second quarter of 2020, and a year-over-year decrease from net income of $44.0 million in the third quarter of 2019. Third quarter 2020 adjusted net income (a non-GAAP financial measure) was $11.6 million, or adjusted net income of $0.10 per diluted common share, a sequential increase from an adjusted net loss of $3.1 million in the second quarter of 2020, and a year-over-year decrease from adjusted net income of $37.9 million in the third quarter of 2019.

Press Release - Ring Energy released its operations update for the 3rd quarter of 2020 and additional information with respect to cash flow and reducing the outstanding amount of its senior credit facility. Restored production to 9,219 Barrels of oil equivalent per day, 88% oil, in the third quarter within the Company’s guidance range. Increased third quarter net daily production approximately 70% compared to the second quarter of 2020.

CANADIAN E&PS 

Press Release - Canadian Natural Resources announced that in connection with the Company’s 20% working interest in South Africa Block 11B/12B, the operator has made a significant gas condensate discovery on the Luiperd prospect, located in the Outeniqua Basin, 175 kilometers off the southern coast of South Africa. This discovery follows the previously announced Brulpadda discovery in 2019.

OILFIELD SERVICES 

(Late Tuesday) Press Release - Black Hills announced that its board of directors approved a quarterly dividend of 56.5 cents per share, a 3.0 cent per share, or 5.6%, increase over last quarter's dividend. Common shareholders of record at the close of business on Nov. 17, 2020, will receive 56.5 cents per share, payable Dec. 1, 2020.

Press Release - National Energy Services Reunited reported its financial results for the quarter ended September 30, 2020. Net income for the third quarter of 2020 is $11.7 million. Net income for the third quarter of 2020, second quarter of 2020, and third quarter of 2019, includes amortization expenses of approximately $4.0 million, $3.9 million, and $4.0 million, respectively, associated with intangible assets acquired primarily in the 2018 acquisitions of our two initial operating subsidiaries, NPS Holdings Limited and Gulf Energy S.A.O.C. (together, the “subsidiaries”). Adjusted net income for the third quarter of 2020 is $14.2 million and includes adjustments totaling $2.5 million mainly related to nonrecurring transaction and integration costs associated with the acquisition of SAPESCO in Egypt. The Company reported $0.13 of diluted earnings per share for the third quarter of 2020.

DRILLERS 

Press Release - RPC announced its unaudited results for the third quarter ended September 30, 2020. For the quarter ended September 30, 2020, revenues were $116.6 million, a decrease of 60.2 percent compared with $293.2 million in the third quarter of 2019. Operating loss for the third quarter of 2020 was $31.8 million compared to an operating loss of $92.6 million in the same period of the prior year. Adjusted operating loss for the third quarter of 2019 was $21.0 million.

MLPS & PIPELINES   

(Late Tuesday) Press Release - Delek Logistics Partners, LP declared its quarterly cash distribution for the third quarter 2020 of $0.905 per common limited partner unit, or $3.62 per common limited partner unit on an annualized basis. This distribution represents a 0.6% increase from the distribution for the second quarter 2020 of $0.90 per common limited partner unit ($3.60 per common limited partner unit annualized) and an 2.8% increase over Delek Logistics' distribution for the third quarter 2019 of $0.88 per common limited partner unit ($3.52 per common limited partner unit annualized). The third quarter 2020 cash distribution is payable on November 12, 2020 to unitholders of record on November 6, 2020.

Press Release - Enterprise Products Partners announced its financial results for the three months ended September 30, 2020. Net income and fully diluted earnings per unit for the third quarters of 2020 and 2019 included non-cash asset impairment and related charges of approximately $77 million, or $0.03 per unit, and $40 million, or $0.02 per unit, respectively. For the nine months ended September 30, 2020 and 2019, net income and fully diluted earnings per unit included $90 million, or $0.04 per unit, and $51 million, or $0.02 per unit, respectively, of non-cash asset impairment and related charges. Enterprise declared a $0.445 per common unit cash distribution with respect to the third quarter of 2020, which represents a 0.6 percent increase compared to the distribution paid for the third quarter of 2019. The cash distribution will be paid November 12, 2020 to common unitholders of record as of the close of business on October 30, 2020.

(Late Tuesday) Press Release - The board of directors of the general partner of MPLX has declared a quarterly cash distribution of $0.6875 per common unit for the third quarter of 2020, or $2.75 on an annualized basis. The distribution will be paid on Nov. 13, 2020, to common unitholders of record as of Nov. 6, 2020.

(Late Tuesday) Press Release - ONEOK announced higher third quarter 2020 financial results, higher natural gas liquids (NGL) volumes and updated its 2020. Its net income was $312.3 million, resulting in 70 cents per diluted share.

Press Release - TC Energy has awarded more than US$1.6 billion worth of contracts to six major American union contractors to execute pipeline construction across 800 miles in three states in the U.S. on the Keystone XL Pipeline in 2021.

MARKET COMMENTARY

Wall Street futures were lower, mirroring global shares, on concerns over possible strict lockdown measures due to the rapidly increasing coronavirus cases in the U.S. and Europe. The dollar index rose, with implied volatility gauges in the euro and the yen hitting multi-month highs ahead of next week’s U.S. elections. Gold prices were in the negative territory. Oil was down on fears of a supply glut and weaker fuel demand. Ford, Gilead and Visa are among the companies scheduled to report results after the markets close.


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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