Oil barrels stacked atop one another
Oil

Crude Slips After Report Reveals Increase in Crude, Fuel Inventories

The energy sector is poised for a lower start, tracking weakness in the crude complex and major equity futures which fell after record run for S&P 500 and Dow amid the drop in commodity prices, a flattening U.S. yield curve and fresh regulatory crackdown in China.

SECTOR COMMENTARY:

The energy sector is poised for a lower start, tracking weakness in the crude complex and major equity futures which fell after record run for S&P 500 and Dow amid the drop in commodity prices as well as a flattening U.S. yield curve and fresh regulatory crackdown in China dented optimism around strong quarterly earnings. Earnings season continued to ramp up for the space today with a handful of producers joining the services.

WTI and Brent crude oil futures slipped over 1% this morning, pressured by last night’s API report that showed crude oil stockpiles rose more than expected last week while fuel inventories increased unexpectedly. Traders will be looking to the official EIA report later this morning to confirm.

Natural gas futures jumped over 2.5% this morning, backed by forecasts calling for colder weather and higher heating demand over the next two weeks than previously expected. 

BY SECTOR:

US INTEGRATEDS

Valaris announced that it has been awarded a two-year contract with Esso Exploration Angola, an affiliate of ExxonMobil, offshore Angola for drillship VALARIS DS-9. The rig is currently preservation stacked in the Canary Islands, where it will be reactivated and then mobilized to Angola ahead of the anticipated contract commencement in June 2022.

INTERNATIONAL INTEGRATEDS                                            

Equinor reported adjusted earnings of USD 9.77 billion and USD 2.78 billion after tax in the third quarter of 2021. IFRS net operating income was USD 9.57 billion and the IFRS net income was USD 1.41 billion. In addition, the board of directors declared a cash dividend of USD 0.18 per share for the third quarter of 2021. In the quarter Equinor completed the market transactions of the first tranche of the share buy-back program for 2021 with a total value of USD 99 million. This corresponds to USD 300 million in total, including shares to be redeemed from the Norwegian State and annulled.

CANADIAN INTEGRATEDS

ATB Capital resumed coverage of Cenovus Energy with an Outperform rating, Suncor Energy and Imperial Oil with Sector Perform ratings.                      

U.S. E&PS

Continental Resources announced its third quarter 2021 production results and record free cash flow (non-GAAP). Third quarter 2021 total production averaged approximately 331.4 MBoepd. Third quarter 2021 oil production averaged approximately 157.2 MBopd. Third quarter 2021 natural gas production averaged approximately 1,046 MMcfpd. The Company generated approximately $1.02 billion of cash flow from operations and a Company record $669 million of free cash flow (non-GAAP) for the third quarter 2021. Non-acquisition capital expenditures attributable to the Company for third quarter 2021 totaled approximately $384 million. The Company has reduced its total debt to $4.74 billion and with a cash balance of $694 million, this equates to net debt (non-GAAP) of $4.05 billion as of September 30, 2021.

Hess Corporation reported net income of $115 million, or $0.37 per common share, in the third quarter of 2021, compared with a net loss of $243 million, or $0.80 per common share, in the third quarter of 2020. On an adjusted basis, the Corporation reported net income of $86 million, or $0.28 per common share, in the third quarter of 2021, compared with an adjusted loss of $216 million, or $0.71 per common share, in the prior-year quarter. The improvement in adjusted after-tax results compared with the prior-year period was primarily due to higher realized selling prices in the third quarter of 2021, partially offset by the impact of lower net production, including curtailed production in the Bakken related to the Tioga Gas Plant maintenance turnaround and reduced Gulf of Mexico production due to Hurricane Ida.

Matador Resources reported financial and operating results for the third quarter of 2021. Third quarter 2021 net income (GAAP basis) was $203.6 million, or $1.71 per diluted common share, a 92% sequential increase from net income of $105.9 million in the second quarter of 2021, and a significant year-over-year increase from a net loss of $276.1 million in the third quarter of 2020. Third quarter 2021 adjusted net income (a non-GAAP financial measure) was $148.6 million, or $1.25 per diluted common share, a 22% sequential increase from adjusted net income of $121.7 million in the second quarter of 2021, and an almost 13-fold year-over-year increase from adjusted net income of $11.6 million in the third quarter of 2020.

Benchmark upgraded Matador Resources to Buy from Hold.

Range Resources announced its third quarter 2021 financial results. GAAP revenues for third quarter 2021 totaled $303 million, GAAP net cash provided from operating activities (including changes in working capital) was $192 million, and GAAP net earnings was a loss of $350 million ($1.44 per diluted share).  Third quarter earnings results include a $652 million derivative fair value loss due to increases in commodity prices. Non-GAAP revenues for third quarter 2021 totaled $795 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $276 million.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $130 million ($0.52 per diluted share) in third quarter 2021.

CANADIAN E&PS

ATB Capital resumed coverage of Canadian Natural Resources and MEG Energywith Outperform ratings.

OILFIELD SERVICES

Baker Hughes and Baker Hughes Holdings LLC announced it will transfer the listing of its Class A common stock and listed bonds from the New York Stock Exchange to the Nasdaq Global Select Market. Baker Hughes expects to commence trading as a Nasdaq-listed company upon market open on December 7, 2021. Baker Hughes' Class A common stock will continue trading under the ticker symbol "BKR" after the transfer.

Liberty Oilfield Services announced third quarter 2021 financial and operational results and acquisition of PropX. Revenue was $654 million, representing a 12% sequential increase, and net loss was $39 million, or $0.22 fully diluted loss per share for the quarter ended September 30, 2021. Liberty also announced it has acquired PropX for an aggregate purchase price of approximately $90.0 million, subject to normal closing adjustments, consisting of $13.5 million in cash and the equivalent of 5.8 million shares of Liberty’s common stock valued at $76.5 million based on a 30-day average closing share price of $13.08 on October 25, 2021.

NOV reported third quarter 2021 revenues of $1.34 billion, a decrease of 5 percent compared to the second quarter of 2021 and a decrease of 3 percent compared to the third quarter of 2020. Net loss for the third quarter of 2021 was $69 million, or 5.1 percent of sales, which included $12 million in pre-tax charges related to COVID-19 operational disruptions on a project in a Southeast Asian shipyard and $24 million in Other Items. Adjusted EBITDA (operating profit excluding depreciation, amortization, and Other Items) decreased sequentially to $56 million, or 4.2 percent of sales.

RPC announced its unaudited results for the third quarter ended September 30, 2021.For the quarter ended September 30, 2021, RPC generated revenues of $225.3 million, an increase of 93.3 percent compared to $116.6 million in the third quarter of 2020 due primarily to higher activity levels in all service lines as well as pricing improvements. Operating profit for the third quarter of 2021 was $8.0 million compared to an operating loss of $31.8 million in the third quarter of the prior year. Net income for the third quarter of 2021 was $5.3 million, or $0.02 diluted earnings per share, compared to a net loss of $16.4 million, or $0.08 loss per share in the third quarter of the prior year.  The adjusted net loss in the third quarter of 2020 was $20.0 million, or $0.09 adjusted loss per share.

DRILLERS

Nabors Industries reported third quarter 2021 operating revenues of $524 million, compared to operating revenues of $489 million in the second quarter of 2021. The net loss from continuing operations attributable to Nabors shareholders for the quarter was $122 million, or $15.79 per share. The third quarter included a $13 million after tax expense, or $1.63 per share, related to the purchase of technology in the energy transition space. This compares to a loss of $196 million, or $26.59 per share, in the second quarter. The second quarter results included charges of $81 million after taxes, comprised mainly of an impairment of assets in Canada related to the sale of our Canada drilling rigs, and a tax reserve for contingencies in our International segment. Third quarter adjusted EBITDA was $125 million compared to $117 million in the second quarter.

REFINERS

No significant news.

MLPS & PIPELINES

According to SEC filing, as of October 21, 2021, a subsidiary of International Seaways entered into a technical amendment to a credit agreement dated as of March 27, 2019, as amended from time to time, comprising $360 million of secured debt facilities, with Nordea Bank ABP, New York Branch, as administrative agent thereunder, and a technical amendment to a credit agreement dated as of December 23, 2019, as amended from time to time, comprising $525 million of secured debt facilities, with Nordea Bank ABP, New York Branch, as administrative agent thereunder. The amendments correct an administrative error and omission in each credit agreement in respect of appraisal reporting requirements.

Phillips 66 and Phillips 66 Partners announced that they have entered into a definitive agreement for Phillips 66 to acquire all of the publicly held common units representing limited partner interests in the Partnership not already owned by Phillips 66 and its affiliates. The agreement, expected to close in the first quarter of 2022, provides for an all-stock transaction in which each outstanding PSXP common unitholder would receive 0.50 shares of PSX common stock for each PSXP common unit. The Partnership’s preferred units would be converted into common units at a premium to the original issuance price prior to exchange for Phillips 66 common stock.

MARKET COMMENTARY

Wall street futures slipped on a flare up in U.S. China tensions, signs of further regulatory crackdowns from Beijing and a rise in short-dated treasury yields. Asian indexes ended lower and European shares were also trading in the red. The dollar was up against a basket of currencies while gold prices fell. Oil prices fell after data showed crude oil stockpiles rose more than expected. Automaker Ford Motor Co is expected to report earnings after market closes.


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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