Oil pipelines against a sunset sky
Oil

Crude Slips on Surging Dollar, Demand Concerns

SECTOR COMMENTARY: 

The energy sector is set for a lower start pressured by weakness in the underlying commodities and in the major market indices. U.S stock futures slid as rising U.S. Treasury yields and interest rates weighed down on growth stocks amid fears of a sharp economic slowdown in China.  

WTI and Brent crude oil futures are down in early trading as a strong dollar and demand concerns from China’s prolonged COVID-19 lockdowns weighed on prices. China's export growth slowed to single digits, the weakest in almost two years, while imports grew 7% in April regardless of tighter and wider COVID-19 curbs which halted factory production. Refinery throughput last month is estimated to have fallen about 6%. A decline of that size has not been seen since the early days of the COVID-19 pandemic.

Natural gas futures rose this morning as demand for LNG exports continues to rise despite forecasts for milder weather in the next two weeks.

BY SECTOR:

US INTEGRATEDS 

Occidental Petroleum Corp. holder Berkshire Hathaway discloses 21.6% passive stake.

INTERNATIONAL INTEGRATEDS

BP has signed a ten-year offtake agreement with Clean Planet Energy, a UK-based company that is developing facilities to convert hard-to-recycle waste plastics into circular petrochemical feedstocks and also into ultra-low sulphur diesel (ULSD). Clean Planet Energy designs and builds facilities — which they refer to as ecoPlants — that are expected to process plastics typically rejected by traditional recycling centres and so would otherwise be sent to landfill or incineration.

RBC Capital Markets downgraded Equinor to Sector Perform from Outperform.

Repsol informed that, after the last of the aforementioned acquisitions, the Company reached the maximum number of shares to be acquired under the Buy-back Programme, i.e. 35,000,000 shares (representing approximately 2.29% of Repsol´s share capital as of the date of this communication). As a result of the foregoing, and in accordance with the terms of the aforementioned Buy-back Program, the Company also informs that the purpose of the Buy-back Programme has been fulfilled and that, therefore, its completion occurs before the deadline of validity (December 31, 2022). The acquisition of shares under the Buy-back Programme has been communicated on a regular basis, pursuant to the provisions of article 2.2 and 2.3 of the Commission Delegated Regulation (EU) No. 2016/1052. It also hereby informs that the execution of the share capital reduction, approved by the General Shareholders´ Meeting under item seven of the Agenda, is expected to be executed in the next few days. In this regard, the following shares will be redeemed: (i) 40,000,000 own shares included in the treasury shares as of 27 October 2021; and (ii) 35,000,000 own shares acquired under the Buy-back Programme.

Activist investor Daniel Loeb, who wants Royal Dutch Shell Plc to break apart, applauded the energy giant's decision to move its headquarters even as he sticks to views that a different corporate structure would make it more successful.

Saudi Arabia's lowered the price of its Arab Light crude grade to Asia and Europe for the month of June, according to a pricing document released by Saudi Aramco on Sunday. The price of the Arab Light benchmark sold in the United States in June was unchanged from the previous month, at $5.65 per barrel above the Argus Sour Crude Index (ASCI).

Iraqi News Agency reported that the Ministry of Oil announced signing of an agreement with France's Total to implement number of projects in Basra Governorate.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

ConocoPhillips submitted a plan to develop an oil discovery in the Norwegian North Sea for 10.5 billion Norwegian crowns ($1.10 billion), the U.S. petroleum company said.

Kosmos Energy announced its financial and operating results for the first quarter of 2022. For the quarter, the Company generated a net income of $1 million, or $0.00 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income of $142 million, or $0.30 per diluted share for the first quarter of 2022.

PDC Energy announced that it has completed its acquisition of Great Western Petroleum, LLC, a privately held company based in Denver. The acquisition was previously announced on February 28, 2022. The consideration paid was $543 million (less $50 million previously placed into escrow) and approximately 4 million shares of PDC common stock. In addition, the Company paid off the Great Western secured credit facility totaling $235 million and $312 million in principal amount of Great Western’s 12% senior secured notes due 2025.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

As per SEC filing, on May 5, 2022, Eagle Materials entered into Amendment No. 1, to that certain unsecured revolving credit facility agreement with the lenders identified therein and JPMorgan Chase Bank, N.A., as the administrative agent, issuing bank and swingline lender thereunder dated as of July 1, 2021. The Existing Credit Agreement provided the Company with senior unsecured revolving commitments in an aggregate principal amount of up to $750 million, with a letter of credit sub-facility of $40 million, with a swingline loan sub-facility of $25 million. Under the Existing Credit Agreement, the Revolving Loan Facility matured on July 1, 2026.The Amendment amended the Existing Credit Agreement, to, among other things, (1) provide the Company with a new senior unsecured term loan A credit facility in the aggregate principal amount of $200 million in addition to the Revolving Credit Facility that was established in the Existing Credit Agreement, (2) extend the maturity date of the Revolving Loan Facility to May 5,2027 and provide that the Term Loan Facility matures on May 5, 2027.  

Independence Contract Drilling Inc enters equity distribution agreement for up to $6.5M with Piper Sandler and Johnson Rice.

DRILLERS

Noble and The Drilling Company of 1972 A/S ("Maersk Drilling") provided an update on the ongoing merger control process for the business combination announced on 10 November 2021. On 9 May 2022, the UK CMA published its decision that there are reasonable grounds for believing that one of these Remedy Proposals might be accepted by the UK CMA. This one Remedy Proposal comprises the divestment of the rigs Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and Noble Lloyd Noble including all of the related support and infrastructure that the purchaser will need to run the Remedy Rigs as an effective standalone business. Relevant off-shore and on-shore staff are expected to transfer with the Remedy Rigs. On this basis, the Parties will seek to reach an agreement with a potential purchaser regarding the sale of the Remedy Rigs under the Remedy Proposal. The UK CMA will need to consider the purchaser a suitable purchaser.

REFINERS

HF Sinclair Corp Q1 EPS $0.99 ex-items vs FS $0.08, adj EBITDA $376.7M vs FactSet $212.5M, cash from ops $461M vs FS $249.7M, reinstates dividend at $0.40/share vs prior dividend of $0.35/share. Q1 EBITDA: Refining $207.7M. Lubricants and Specialty Products $145.3M. HEP $72.8M. Q1 throughput: 564.7 Mbbl/d vs FS 550.3 Mbbl/d. Q1 gross margin per barrel $12.69 vs FS $9.02

MLPS & PIPELINES

Holly Energy Partners, L.P. reported financial results for the first quarter of 2022. Net income attributable to HEP for the first quarter of 2022 was $49.6 million ($0.45 per basic and diluted limited partner unit), compared to $64.4 million ($0.61 per basic and diluted limited partner unit) for the first quarter of 2021. Results for the first quarter of 2021 reflect special items that collectively increased net income attributable to HEP by a total of $13.6 million. These items included a gain on sales-type leases of $24.7 million and a goodwill impairment charge of $11.0 million related to our Cheyenne assets. Excluding these items, net income attributable to HEP for the first quarter of 2021 was $50.8 million ($0.48 per basic and diluted limited partner unit).

International Seaways announced that its Board of Directors has unanimously adopted a limited duration stockholder rights plan. The Rights Plan is intended to enable all Company stockholders to realize the long-term value of their investment in the Company. The Rights Plan will reduce the likelihood that any person or group gains control of the Company through open market accumulation, or other tactics potentially disadvantaging the interests of all stockholders, without paying all stockholders an appropriate control premium or providing the Company’s Board of Directors sufficient time to make informed decisions in the best interest of all stockholders.

ONEOK Inc, Chairman John Gibson retires.

Overseas Shipholding Group reported results for the first quarter 2022. Shipping revenues for the first quarter 2022 were $104.0 million, an increase of $8.5 million from the fourth quarter 2021. Compared to the first quarter 2021, shipping revenues increased 28.0% from $81.3 million. Net loss for the first quarter 2022 was $509 thousand, or $(0.01) per diluted share, compared with net loss of $3.7 million, or ($0.03) per diluted share, in the fourth quarter 2021. Net loss was $15.9 million, or $(0.18) per diluted share, for the first quarter 2021. Time charter equivalent (TCE) revenues, a non-GAAP measure, for the first quarter 2022 were $93.9 million, an increase of $13.9 million from fourth quarter 2021. TCE revenues were up 43.4% compared to first quarter 2021.

MARKET COMMENTARY

U.S. stock index futures fell, mirroring lower global share, as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors' fears. The dollar rose on safe-haven demand, weighing on the appeal of non-yielding bullion. Oil prices slipped on demand concerns. Data on wholesale inventories is schedule for release later in the day.

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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