Crude Steadies as Renewed Lockdowns Curb U.S. Stimulus Optimism
SECTOR COMMENTARY
Energy stocks are poised for a mixed to lower start, weighed down by weakness in the crude complex while US stock index futures are lower with the exception of the NASDAQ as investors brace for the busiest week of corporate earnings which will include reports from the largest tech companies.
Oil prices are slightly lower but holding steadily as support from U.S. stimulus plans and jitters about supplies competed with worries about demand due to renewed lockdowns to prevent the coronavirus from spreading. However, prices are finding some support after Iraq said over the weekend they plan to cut oil output this month and next to make up from breaching its OPEC+ quota last year. Meanwhile, Brent March and RBOB Feb contracts expire Friday.
Natural gas futures are up ~3% as the February contract expires this afternoon. U.S. natural gas futures climbed on forecasts for colder weather and higher heating demand through early February than earlier expected. Also, LNG feedgas flows over the weekend continued their recovery from lows set Thursday with estimates putting them firmly back above 10 Bcf.
U.S. INTEGRATEDS
Press Release - Chevron Phillips Chemical, equally owned indirectly by Chevron and Phillips 66 announced two significant developments in its advanced recycling program which converts waste plastics into circular polyethylene. Since introducing Marlex Anew Circular Polyethylene in October, the company has received certification through the International Sustainability and Carbon Certification PLUS (ISCC PLUS) process and signed a long-term supply agreement with Nexus Fuels LLC (Nexus) as its first supplier of pyrolysis oil. The Nexus supply agreement and ISCC PLUS certification of both companies make Chevron Phillips Chemical well-positioned to further scale production of its circular polymer and deliver sustainable products for years to come. Chevron Phillips Chemical is targeting an annual production volume of 1 billion lbs. of Marlex Anew Circular Polyethylene by 2030.
INTERNATIONAL INTEGRATEDS
Reuters – Eni said it had bought Spanish energy retailer Aldro Energia to enter the Iberian market. Eni, which disclosed no financial details, said its gas and power unit had bought the whole of Aldro Energía Y Soluciones SLU from Grupo Pitma.
Reuters - Royal Dutch Shell said it was acquiring the owner of the UK's largest public electric vehicle charging network, ubitricity, for an undisclosed amount. The deal for the company that has over 2,700 on-street charge points in the country is expected to be completed late this year.
CANADIAN INTEGRATEDS
ATB Capital initiated coverage of Cenovus Energy with an ‘Outperform’ rating, Suncor Energy with an ‘Outperform’ rating, and Imperial Oil with a ‘Sector Perform’ rating.
U.S. E&PS
Press Release - Hess Corporation announced a 2021 Exploration & Production capital and exploratory budget of $1.9 billion, of which more than 80% will be allocated to Guyana and the Bakken. Net production is forecast to average approximately 310,000 barrels of oil equivalent per day in 2021, excluding Libya. Bakken net production is forecast to average approximately 170,000 barrels of oil equivalent per day in 2021. This forecast includes the impact of operating a two rig program beginning in the first quarter and a planned 45-day turnaround and expansion tie-in at the Tioga Gas Plant in the third quarter, which is expected to reduce full year 2021 Bakken net production by approximately 7,500 barrels of oil equivalent per day.
Stifel downgraded QEP and Centennial Resources to ‘Hold’ from ‘Buy’.
CANADIAN E&PS
ATB Capital initiated coverage of Canadian Natural Resources with an ‘Outperform’ rating.
Press Release - Obsidian Energy announced that it has extended the expiry of its offer to purchase all of the issued and outstanding common shares of Bonterra Energy Corp. until 5:00 p.m. (Mountain Daylight Time) on Monday, March 29, 2021.
Press Release - Paramount Resources announced amendments to its senior secured revolving bank credit facility to remove prior conditions on Facility availability in excess of $900 million. As a result, the full $1.0 billion Facility capacity is now available. Concurrent with the amendments, and to provide further liquidity, the Company completed a private placement of $35 million of senior unsecured convertible debentures. James H.T. Riddell, Paramount's Chairman and President and Chief Executive Officer, purchased $25 million of the Debentures. The $135 million of additional liquidity from the Facility amendments and issuance of Debentures provides the Company with ample financial flexibility as it moves forward with its 2021 capital plans as previously announced. Drawings on the Facility were approximately $815 million at December 31, 2020. The previously announced financial covenant relief remains in place.
OILFIELD SERVICES
Atlantic Equities upgraded Halliburton to ‘Overweight’ from ‘Neutral’.
BofA upgraded Schlumberger to ‘Buy’ from ‘Neutral’.
MARKET COMMENTARY
S&P 500 and Nasdaq futures rose as markets geared up for a busy week of earnings from mega-cap technology companies, against the backdrop of rising hopes for a fiscal package from the Biden administration. European stocks were mixed. Japan’s Nikkei ended higher, led by tech and pharma stocks. Gold prices edged up as the dollar remained under pressure. Oil prices were in the green as supply jitters offset fresh concerns about the hit to global fuel demand from renewed lockdowns to curb spikes in COVID-19 infections.
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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