The energy sector is poised for a mixed to lower start, tracking weakness in the crude complex and major equity futures which slid ahead of the release of details of an initial U.S.-China trade deal set to be signed today and as investors also digest the second round of bank earnings.
WTI crude oil futures were flat to lower in early trading, in line with Brent, weighed down by concerns that the Phase 1 trade deal between the United States and China may not boost demand as the United States intends to keep tariffs on Chinese goods until a second phase, reports from OPEC saying it saw lower demand for its oil in 2020 even as global demand rises and a bearish API report. U.S. Treasury Secretary Steven Mnuchin said late on Tuesday that tariffs on Chinese goods will remain in place until the completion of a second phase of a U.S.-China trade agreement, even as both sides are expected to sign an interim deal later today. Ahead of the official EIA report later this morning, the API report showed U.S. crude inventories rose by 1.1 million barrels last week, countering expectations for a draw of 474k barrels.
Natural gas futures dropped roughly 2.5% this morning, pressured by warming weather forecast in key consuming regions that will limit demand.
Press Release - Eni through Vår Energi, jointly owned by Eni (69.6%) and by HitecVision (30.4%), will participate in a total of new 17 licenses as a result of the Awards in Predefined Areas 2019 (APA) by the Ministry of Petroleum and Energy of Norway (MPE). Vår Energi has been granted the following 7 operatorships (OP) and 10 partnerships in licenses distributed over the three main oil and gas provinces in the Norwegian continental shelf (NCS): North Sea: PL 1043 (OP), PL 1042, PL 1035, PL 987 B, PL 984 BS, PL 917 B, PL 055 E; Norwegian Sea: PL 1070, PL 1065 (OP), PL 947 B; and, Barents Sea: PL 1080, PL 1079 (OP), PL 1078, PL 1075 (OP), PL 1074 (OP), PL 1073 (OP), PL 1072 (OP).
(Late Tuesday) Reuters - Petroleo Brasileiro SA Petrobras said it had ended its activities in Africa after closing the sale of a 50% stake in Petrobras Oil & Gas BV (PO&GBV), which holds some Nigerian oil assets. The company said in a filing that it had sold the PO&GBV stake for just under $1.5 billion to Petrovida Holding, which is formed by Vitol Investment Partnership II, Africa Oil Corp and Delonex Energy.
Citigroup, Credit Suisse, BofA, Goldman Sachs, HSBC and SMBC initiated coverage of Saudi Aramco with ‘Neutral’ Ratings.
JP Morgan initiated coverage of Saudi Aramco with an ‘Overweight’ rating.
Morgan Stanley initiated coverage of Saudi Aramco with an ‘Underweight’ rating.
(Late Tuesday) Reuters - Total's 225,500-barrel-per-day Port Arthur, Texas, refinery was cut in half following a malfunction. The 60,000-bpd coker malfunctioned on Monday night, January 13. By Tuesday morning, January 14, the unit was running on only one of its two production trains.
Press Release - Cimarex Energy announced that its Executive Vice President and Chief Operating Officer (COO), Joe Albi, has informed management and the Cimarex Board of Directors of his retirement as an officer and director of the company effective July 1, 2020. Mr. Albi has been with Cimarex since its formation in 2002, having joined Key Production Company at its outset in 1994. Key was transformed into Cimarex through a merger with Helmerich & Payne's exploration and production business in 2002. Mr. Albi rose through the ranks and was ultimately named Executive Vice President and COO as well as elected to the Board of Directors in September 2011. He is a graduate of the Colorado School of Mines with a B.S. in Petroleum Engineering and M.S. in Mineral Economics.
Robert W. Baird & Co initiated coverage of ConocoPhillips at ‘Outperform.’
(Late Tuesday) Press Release - EP Energy said that the Bankruptcy Court approved a disclosure statement for joint Chapter 11 plan of reorganization of EP Energy and affiliated debtors.
(Late Tuesday) Press Release - Sundance Energy announced that the Company’s bank group has completed its scheduled fall borrowing base redetermination under the Company’s senior secured revolving credit facility, resulting in unanimous approval for a borrowing base increase to $210 million with an elected commitment of $190 million presently available, and an increase in the facility’s maximum credit amount to $500 million. The Company also announced TD Securities as the new administrative agent under the revolving credit facility.
(Late Tuesday) Press Release - NuVista Energy announced a number of updates which demonstrate continued successful advancement of its Pipestone and Wapiti Montney play development. The NuVista operated Pipestone South Compressor Station has performed with high reliability since commencing operations late in the third quarter of 2019. After initial testing, the 11 new wells at Pipestone have been operating tubing-restricted with minimal production decline since early in the fourth quarter of 2019. Currently, the company is drilling at Bilbo (2-well pad), Gold Creek (3-well pad), Elmworth (4-well pad), and Pipestone North (12 well pad). During the fourth quarter of 2019, NuVista successfully drilled the next pad at Pipestone South and completion operations have already begun on these 6 wells. Most of the wells with the exception of Pipestone North are expected to be completed and started up prior to the spring breakup period of 2020. The Pipestone North pad is expected to be completed and started up in the mid-fourth quarter of 2020 commensurate with the startup of the new Pipestone North Compressor Station and the new pipeline and Hythe Gas Plant expansion being constructed by Veresen Midstream Limited Partnership.
Press Release - Surge Energy confirmed that a cash dividend to be paid on February 17, 2020 in respect of January 2020 production, for the shareholders of record on January 31, 2020 will be $0.008333 per share.
(Late Tuesday) Press Release - The Board of Supervisory Directors of Core Laboratories has announced a cash dividend of $0.25 per share of common stock payable in the first quarter of 2020. This first quarter dividend would mean a total payout of $1.00 per share of common stock, if maintained for the entire year. The quarterly $0.25 per share cash dividend will be payable on Friday, 14 February 2020, to shareholders of record on Friday, 24 January 2020. Dutch withholding tax will be deducted from the dividend at a rate of 15%.
Reuters – McDermott International discloses amended credit and LC agreements; notes update on forbearance agreement.
Press Release - PBF Energy announced that its indirect subsidiary, PBF Holding Company LLC, intends to offer, subject to market and other conditions, $1.0 billion in aggregate principal amount of senior unsecured notes due 2028 in a private offering. The Notes will be co-issued by PBF Finance Corporation, a wholly owned subsidiary of PBF Holding.
MLPS & PIPELINES
(Late Tuesday) Reuters - TC Energy said that it planned to start pre-construction work in February for its Keystone XL oil pipeline, the start of a busy planned work schedule for the long-delayed project in 2020. TC said in a filing with U.S. District Court in Montana that in February it would start mobilizing heavy construction equipment in Montana, South Dakota and Nebraska, and aim to begin building a 1.2-mile (1.93 km) segment spanning the U.S.-Canada border in April, subject to approvals.
World stocks eased and U.S. stock futures weakened, hours before the signing of an initial U.S.-China trade deal, as investor optimism dimmed after Washington said tariffs on Chinese goods would not be rolled back immediately. The jittery mood gave a boost to safe-haven assets such as gold, with the precious metal rising after two days of losses. The Japanese yen also gained against the dollar. Oil prices pared losses. Producer price index is scheduled to be released later in the day.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 - CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 - Bloomberg Day Break - Steady escalation of US-Iran tensions
- 12/5/19 - Bloomberg Balance of Power - OPEC's Limited Efficacy
- 9/17/19 - Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 - Discussion on Bloomberg TV about Impact of Abqaiq Attack
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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