Energy stocks are set to open mixed to higher, weakened by moderate declines in the underlying commodities while U.S. stock index futures rose on hopes of further stimulus passed by Congress and as earnings season ramps up.
In sector news, ConocoPhillips announced they have agreed to buy U.S. shale oil producer Concho Resources for $9.7 billion in an all-stock deal. The announcement comes as many U.S. shale companies have been mired in losses due to weak crude prices and, unlike in past downturns, have struggled to raise new capital to restructure heavy debts.
Meanwhile, shares of Halliburton edged lower in pre-market trading after posting its fourth-straight quarterly loss. "The pace of activity declines in the international markets is slowing, while the North America industry structure continues to improve, and activity is stabilizing," Chief Executive Officer Jeff Miller said in a statement.
Oil prices are lower in early trading, weighed down by concerns over surging coronavirus cases globally and by Libya's plan to boost output, however, prices found some support by hopes of a U.S. fiscal package and expectations of a vaccine by the end of the year. Traders are focusing on the OPEC+ oil producer group's Joint Ministerial Monitoring Committee meeting later on today. The committee is expected to discuss the weakening demand outlook as well as increased output from Libya, but is unlikely to recommend immediate action.
Natural gas futures are off more than 2%, weighed down by less extreme weather for the next two weeks which should limit demand and as production rebounds from Gulf of Mexico shut-ins last week.
(Sunday) Reuters - Saudi Aramco and Saudi Basic Industries have decided to re-evaluate their $20 billion crude-oil-to-chemicals project and are now looking at integrating existing facilities instead. The decision comes as oil companies globally re-assess energy projects to conserve cash, with a collapse in demand caused by the coronavirus pandemic threatening to keep crude prices weak for a long time.
Press Release - ConocoPhillips and Concho Resources announced that they have entered into a definitive agreement to combine companies in an all-stock transaction. Under the terms of the transaction, which has been unanimously approved by the board of directors of each company, each share of Concho Resources (Concho) common stock will be exchanged for a fixed ratio of 1.46 shares of ConocoPhillips common stock, representing a 15 percent premium to closing share prices on October 13. The transaction combines two high-quality industry leaders to create a company with an approximately $60 billion enterprise value that will offer stakeholders a superior investment choice for sustainable performance and returns through cycles.Upon closing, Concho’s Chairman and Chief Executive Officer Tim Leach will join ConocoPhillips’ board of directors and executive leadership team as executive vice president and president, Lower 48. This transaction will enhance the company’s competitive position in Midland.
Simmons Energy upgraded Comstock Resources to ‘Overweight’ from ‘Neutral’.
(Late Friday) Press Release - Core Laboratories announced the Company, through its subsidiary, Core Laboratories (U.S.) Interests Holdings, completed a private placement of $60 million in aggregate principal amount of the Issuer's senior notes. The note purchase agreement was signed on 16 October 2020, and the notes will be funded at closing scheduled for 12 January 2021. The notes will be issued in two tranches, with $45 million due 12 January 2026 at an interest rate of 4.09% and $15 million due 12 January 2028 at an interest rate of 4.38%. Interest on the 2026 Notes and the 2028 Notes is payable semi-annually on June 30 and December 30 of each year, commencing June 30, 2021. The Notes were issued in a private transaction and will not be subject to the registration requirements of the Securities Act of 1933, as amended. The Notes are guaranteed by the Company and certain of its subsidiaries. The Company intends to use the net proceeds of the offering to reduce the Company's current balance under the existing credit facility.
(Late Friday) Press Release - Calfrac Well Services announced that Calfrac's Shareholders and Unsecured Noteholders have overwhelmingly approved the Company's Amended Recapitalization Transaction to be implemented pursuant to a Plan of Arrangement under Section 192 of the Canada Business Corporations Act. At the meeting of Shareholders held today, each of the resolutions in connection with the approval of the Amended Recapitalization Transaction was approved. Excluding Common Shares voted by Wilks Brothers, LLC, no more than 4% of the issued and outstanding Common Shares were voted against any of such resolutions. At the meeting of Unsecured Noteholders held today, the Amended Recapitalization Transaction was approved by approximately 99.8% of the votes cast.
Press Release - Fluor announced that UAMPS was awarded a funding vehicle that could provide up to $1.355 billion by the U.S. Department of Energy (DOE) for NuScale Power’s first prospective small modular nuclear reactor project. Fluor is poised to assist UAMPS and NuScale in bringing the world’s first clean energy, carbon-free SMR project to commercialization. Fluor and NuScale are working with UAMPS in the development of the Carbon Free Power Project, a 720-megawatt plant in Idaho using 12 NuScale SMRs, which once completed, will provide reliable, cost competitive, base load, carbon-free electricity to UAMPS member participants.
Press Release - Halliburton announced a net loss of $17 million, or $0.02 per diluted share, for the third quarter of 2020. This compares to a net loss for the second quarter of 2020 of $1.7 billion, or $1.91 per diluted share. Adjusted net income for the third quarter of 2020, excluding severance and other charges, was $100 million, or $0.11 per diluted share. This compares to adjusted net income for the second quarter of 2020, excluding impairments and other charges, of $46 million, or $0.05 per diluted share. Halliburton's total revenue in the third quarter of 2020 was $3.0 billion, a 7% decrease from revenue of $3.2 billion in the second quarter of 2020. Reported operating income was $142 million in the third quarter of 2020 compared to reported operating loss of $1.9 billion in the second quarter of 2020. Excluding impairments, severance and other charges, adjusted operating income was $275 million in the third quarter of 2020, a 17% increase from adjusted operating income of $236 million in the second quarter of 2020.
Press Release - TechnipFMC has been awarded a significant Engineering, Procurement, Construction and Installation contract by Equinor for the Breidablikk Pipelay, including option for the Subsea Installation scope located in the area close to the Grane Field, North Sea. The Breidablikk project is a tie-back to the existing Grane platform. TechnipFMC’s scope includes provision of flexible jumpers and rigid pipelines as well as pipeline installation work.
(Late Friday) Press Release - Transocean announced that it received formal notice from the New York Stock Exchange (the “NYSE”) of non-compliance with NYSE continued listing standards. Transocean received the notice because the average closing price of its shares fell below the minimum of $1.00 per share during a consecutive 30 trading-day period. The Company is in compliance with all other NYSE continued listing standards.
MLPS & PIPELINES
Credit Suisse upgraded AltaGas to ‘Outperform’ from ‘Neutral’.
(Late Friday) Press Release - DCP Midstream announced that the board of directors of its general partner declared a third quarter 2020 common unit distribution of $0.39 per unit, or $1.56 per unit on an annualized basis. This quarterly common unit distribution will be paid November 13, 2020 to common unitholders of record at the close of business on October 30, 2020.
U.S. stock index futures climbed as remarks from House Speaker Nancy Pelosi revived bets that a coronavirus relief package was imminent. European stocks rallied after upbeat quarterly results by top companies. Asian equities ended in the green on hopes of a coronavirus vaccine by the end of this year, though China’s weaker-than-expected GDP data kept gains in check. A weaker dollar pushed gold prices higher. Oil prices fell as concerns over rising coronavirus cases globally dampened prospects for a quick demand recovery. International Business Machines is among the companies scheduled to report results after the closing bell.
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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