Crude Slips on Supply Concerns
SECTOR COMMENTARY
Energy stocks are set to open lower, with premarket activity being influenced by a near 2% decline in oil prices. Meanwhile, U.S. stock futures are higher on a delay in U.S. tariffs on China and the ECB announcing a fresh stimulus program. In sector news, a handful of analyst rating recommendations from Wells Fargo and Cowen were instituted across oilfield services and drillers.
Crude futures are near overnight lows, with weekly volatility continuing amid cross currents of headlines including a larger than expected inventory drawdown yesterday against a potential easing of Iranian oil sanctions. This morning’s weakness stems from fresh concerns of oversupply coming into the market by next year, particularly from non-OPEC members. In its monthly report, the IEA left 2019 and 2020 oil demand growth estimates unchanged, and added that “soon, the OPEC+ producers will once again see surging non-OPEC oil production with the implied market balance returning to a significant surplus and placing pressure on prices.” Additionally, futures declined as a meeting of the OPEC+ alliance yielded no discussion about deepening supply cuts but focused instead on bringing Nigerian and Iraqi output down to their agreed quotas.
Natural gas futures are lower by 1%. Weekly inventory levels due out later this morning are expected to increase by 81 bcf.
U.S. INTEGRATEDS
Press Release - ExxonMobil announced the global launch of its Mobil EV offering at the 2019 IAA, which features a full suite of fluids and greases designed to meet the evolving drivetrain requirements of battery electric vehicles. In combination, plug-in hybrids, battery electric and fuel cell vehicles are predicted to exceed 20 percent of the world’s light-duty fleet by 20401.
INTERNATIONAL INTEGRATEDS
Press Release - Air Liquide Philippines and Pilipinas Shell, a subsidiary of Royal Dutch Shell, have signed a long-term contract for a supply of Hydrogen to Shell’s Tabangao refinery in Batangas, Philippines. The new venture will secure for the Tabangao refinery a continuous supply of Hydrogen for its processing needs.
U.S. E&PS
Press Release - Alta Mesa Resources, Alta Mesa Holdings, LP, Alta Mesa Holdings GP, LLC, OEM GP, LLC, Alta Mesa Finance Services Corp., Alta Mesa Services, LP and Oklahoma Energy Acquisitions, LLC, or collectively “the Companies”, announced that they have filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. The Companies’ midstream platform, Kingfisher Midstream, LLC and its subsidiaries are not debtors and are not part of the Chapter 11 reorganization process.
Press Release - Alta Mesa Resources announced that its Board of Directors has approved several leadership changes, in addition to prior personnel decisions that the Companies have made. These changes, which are effective immediately, will help provide a more optimal management structure for the future and reduce general and administrative costs. Jim Hackett, who recently held the title of Interim Chief Executive Officer, has resumed his former role as Executive Chairman and will remain involved with the Board and management team in the restructuring process. Mark Castiglione, who was previously Interim Executive Vice President Strategy and Corporate Development, has been promoted to Chief Executive Officer. Randy Limbacher, formerly Interim President, has accepted the role of Executive Vice President of Strategy, and will provide strategic counsel to the management team and Board. John Campbell, formerly Interim Chief Operating Officer, has become President and Chief Operating Officer. Kim Warnica will continue as Executive Vice President, General Counsel, Chief Compliance Officer and Secretary, while John Regan will remain Executive Vice President and Chief Financial Officer.
(Late Wednesday) Press Release - Talos Energy announced that it has received a two-year contract term extension as well as regulatory approvals for additional exploration activities on Block 7, located in the offshore portion of Mexico's prolific Sureste Basin. Talos is the operator of Block 7 in a consortium with its partners Sierra Oil & Gas, a Wintershall DEA company, and Premier Oil plc.
OILFIELD SERVICES
(Late Wednesday) Press Release - Baker Hughes, a GE company announced the pricing of a secondary offering of 115 million shares of BHGE Class A common stock, par value $0.0001 per share by General Electric Company and GE Oil & Gas US Holdings I, Inc., GE Holdings (US), Inc. and GE Oil & Gas US Holdings IV, Inc. (collectively, together with GE, the “selling stockholders”) at a price to the public of $21.50 per share. The underwriters will have a 30-day option to purchase up to an additional 17.25 million shares of Class A common stock from the selling stockholders. The offering is expected to close on September 16, 2019, subject to customary closing conditions.
Wells Fargo upgraded C&J Energy Services to ‘Outperform’ from ‘Market Perform.’
(Late Wednesday) Press Release - ION Geophysical announced a new 2D multi-client program offshore West Africa. The industry-supported NamibeSPAN program covers the underexplored Namibe basin offshore southern Angola. The dataset integrates ION BasinSPAN programs in the area, forming a contiguous regional exploration framework in excess of 65,000 km along the West African coast. The program is the conjugate tie with offshore Brazil. The extension of the program into the Namibe basin provides valuable insight along both margins and is a framework to identify known discoveries as potential exploration analogues. ION expects acquisition to begin imminently with initial deliverables available for the upcoming license round later this year.
Wells Fargo downgraded Oil States International to ‘Market Perform’ from ‘Outperform.’
Wells Fargo downgraded Patterson-UTI Energy to ‘Underperform’ from ‘Market Perform.’
DRILLERS
Wells Fargo downgraded Helmerich and Payne and Nabors Industries to ‘Underperform’ from ‘Outperform.’
MARKET COMMENTARY
Futures for Wall Street’s major indexes rose and major Asian bourses ended higher amid hopes of a thaw in Sino-U.S. trade frictions as the two countries granted concessions ahead of planned talks. European shares edged lower and the euro was slightly up against the dollar. Gold rose, but gains were capped by improving demand for riskier bets.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio