Oil pumpjacks in a desert landscape
Oil

Crude Slips After Russia Says It Needs More Time Before Committing to OPEC+ Cuts

Oil prices are off ~1% as Russia said it would need more time before committing to output cuts along with OPEC and other producers amid falling demand for crude as China battled the coronavirus epidemic.

SECTOR COMMENTARY

Energy stocks are set to open lower, weighed down by weakness in the underlying commodities and broader equity futures which pared half of its declines following a better-then-expected jobs report. Nonfarm payrolls surged 225k in January, well above economists’ expectations of 158k, however unemployment edged higher to 3.6%, but for the right reason as the labor force participation rate increased 0.2% to 63.4%, matching its highest level since June 2013. Sector news is relatively quiet heading into the weekend, with a few oilfield services operators reporting corporate earnings.

Oil prices are off ~1% as Russia said it would need more time before committing to output cuts along with OPEC and other producers amid falling demand for crude as China battled the coronavirus epidemic. Russian Foreign Minister Sergei Lavrov said on Thursday that Moscow supported cooperation with other producers, in remarks which appeared to boost prices in early trading. Futures on both sides of the Atlantic are heading for their fifth consecutive weekly loss and traders will be looking ahead to the weekly rig count released later today as the next major catalyst.

Natural gas futures are lower by about a quarter of a percent, tracking declines in the crude complex and despite yesterday’s larger-than-expected storage draw.

U.S. INTEGRATEDS

(Late Thursday) Reuters - India's Reliance Industries and Chevron defended their business with Venezuela from White House criticism, noting that their marketing agreements and operations in the OPEC nation have been approved by Washington. The White House imposed sanctions early last year on state-run oil company PDVSA as part of efforts to oust President Nicolas Maduro. The socialist president remains in power despite deep unpopularity and a years-long economic crisis.

INTERNATIONAL INTEGRATEDS                    

Press Release - BP announced that Tufan Erginbilgic, chief executive of BP’s Downstream segment, has decided to leave the company at the end of March 2020.

(Late Thursday) Press Release - Shell and Dunkin' just announced a national expansion of their partnership with the Fuel Rewards program. The "Sip Dunkin', Save at Shell" partnership allows Fuel Rewards members with Gold Status and DD Perks Rewards Program members to save 10 cents per gallon every time they purchase five beverages at a Dunkin' location.

Reuters - Total rejected a force majeure notice from a liquefied natural gas (LNG) buyer in China, the first global energy supplier to publicly push back against a firm trying to back out of a contract amid the coronavirus outbreak. The move by the Chinese buyer is likely to increase concerns that Chinese importers, or even exporters of product parts to global firms, could use force majeure certificates to get out of long-term contract obligations, trade sources said. Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control. The effect is aleady being felt in the spot crude oil and LNG market as sales have slowed into China, the world's top energy consumer, increasing supplies and depressing energy prices.        

U.S. E&PS

KeyBanc Capital upgraded Berry Petroleum to ‘Sector Weight’ from ‘Underweight’.

Press Release - Gulfport Energy announced Ms. Valerie Jochen has been appointed to Gulfport’s Board of Directors, effective February 6, 2020.

(Late Thursday) Press Release - Parsley Energy, LLC, a subsidiary of Parsley Energy, and Parsley's wholly owned subsidiary, Parsley Finance Corp., announced the pricing of their previously announced private offering of $400 million in aggregate principal amount of senior unsecured notes due 2028. The 2028 Notes, which are priced at par, will mature on February 15, 2028 and will pay interest at an annual rate of 4.125%. Parsley Inc. will not guarantee the 2028 Notes.

Alliance Global Partners assumed coverage of Ring Energy at ‘Buy’.

CANADIAN E&PS

(Late Thursday) Press Release - ARC Resources reported its fourth quarter and year-end 2019 financial and operational results as well as its year-end 2019 reserves results. During the year ended December 31, 2019, ARC generated funds from operations of $697.4 million ($1.97 per share), paid $212.4 million ($0.60 per share) in dividends to shareholders, and maintained its strong financial position. ARC invested $691.5 million during the year, demonstrating excellent capital execution by bringing the Sunrise Phase II gas processing facility to full capacity and advancing strategic infrastructure projects at Dawson and Ante Creek that will deliver profitable liquids growth over the long term. Average daily production for 2019 was a record 139,126 barrels of oil equivalent per day, and ARC replaced 164 per cent of 2019 production(4), adding 83 MMboe of proved plus probable reserves through development activities to total 910 MMboe, which included replacing 198 per cent of 2019 oil and NGLs production and 153 per cent of 2019 natural gas production. ARC added 65 MMboe of proved producing reserves through development activities to total 258 MMboe.

(Late Thursday) Press Release - Frontera Energy provided an exploration update in relation to prospects in Colombia in the Lower Magdalena Valley, including its exploration joint venture with Parex Resources involving the VIM-1 block.

(Late Thursday) Press Release - Parex Resources announced the results of its annual independent reserves assessment as at December 31, 2019 and to provide an operational update.  The financial and operational information contained below is based on the Company’s unaudited expected results for the year ended December 31, 2019. On a debt adjusted basis, production per share grew 34% and proved plus probable reserves per share increased by 18%. We exited 2019 with working capital of approximately $340 million and no debt. In 2020, we have multiple opportunities for continued growth and are expecting to generate significant free cash flow, in excess of capital expenditures and sufficient to support the Company’s share buyback program.   For the year ended December 31, 2019, Parex had added 27.6 million barrels of oil equivalent proved developed producing reserves, 36.4 MMboe proved reserves, and 33 MMboe 2P reserves replacing respectively 143%, 189% and 171% of total 2019 production (19.23 MMboe); Increased PDP reserves by 13% year-over-year, from 63 MMboe to 71 MMboe (98% crude oil); Grew 2P reserves 7% from 185 MMboe to 198 MMboe (97% crude oil);

OILFIELD SERVICES

Press Release - Baker Hughes announced that the Baker Hughes international rig count for January 2020 was 1,078, down 26 from the 1,104 counted in December 2019, and up 54 from the 1,024 counted in January 2019. The international offshore rig count for January 2020 was 245, down 12 from the 257 counted in December 2019, and up 3 from the 242 counted in January 2019.

(Late Thursday) Press Release - Fluor’s board of directors has declared a quarterly cash dividend of $0.10 per share on the company’s common stock, payable April 2, 2020, to shareholders of record on March 2, 2020.

(Late Thursday) Press Release - National Oilwell Varco reported fourth quarter 2019 revenues of $2.28 billion, an increase of seven percent compared to the third quarter of 2019 and a decrease of five percent compared to the fourth quarter of 2018. Net loss for the fourth quarter was $385 million, which included non-cash, pre-tax charges of $537 million. Adjusted EBITDA increased $26 million sequentially to $288 million, or 12.6 percent of sales. Revenues for the full year 2019 were $8.48 billion, operating loss was $6.28 billion, and net loss was $6.10 billion, or $15.96 per share. Adjusted EBITDA for the full year was $885 million, or 10.4 percent of sales.

(Late Thursday) Press Release - Newpark Resources announced results for its fourth quarter ended December 31, 2019. Total revenues for the fourth quarter of 2019 were $189.5 million compared to $202.8 million for the third quarter of 2019 and $247.7 million for the fourth quarter of 2018. Net loss for the fourth quarter of 2019 was $17.1 million, or ($0.19) per share, compared to net loss of $1.4 million, or ($0.02) per share, for the third quarter of 2019, and net income of $10.6 million, or $0.11 per diluted share, for the fourth quarter of 2018.

DRILLERS

(Late Thursday) Press Release - Noble announced that its report of drilling rig status and contract information has been updated as of February 6, 2020.  The report, titled "Fleet Status Report," can be found on the Company's Website www.noblecorp.com, under the "Investor Relations" section of the Website.

MARKET COMMENTARY

Coronavirus worries weighed on world equity markets, with U.S. stock index futures losing ground ahead on non-farm payrolls data. Underwhelming earnings reports also hurt sentiment in Europe. The euro fell on disappointing German industrial output numbers, while the dollar gained as investors expected the jobs data to confirm a healthy labour market. In commodities, gold was steady and oil prices erased gains to trade lower as Russia said it would need more time before committing to output cuts along with OPEC and other producers.

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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