Energy Market Commentary: Equities Remain Fragile Amid Recent Sell-Off

Friday, February 09, 2018

Sector Commentary

Energy stocks are set to open marginally higher, though equities remain fragile amid the recent market sell-off. Broader equity futures are also higher, however, they have been paring gains in the last 90 minutes.

WTI crude oil prices are dangerously close to falling below the $60-level, with prices recently hovering around $60.30. Prices have now fallen for a sixth day with today’s weakness, and were on track for their biggest weekly losses in 10 months, as record-high U.S. crude output added to concerns about a sharp rise in global supplies. The drop came amid a rout in global equity markets sparked by inflation fears.

Natural gas futures were lower by 2% as futures continue to test 6-week lows as the winter drawdown season winds down.


RBC Capital Markets upgraded Chevron to ‘Sector Perform’ from ‘Underperform’.


Press Release - Cenovus Energy intends to sell light oil properties located in the Puskwa and Simonette areas of Alberta, and oil sands properties located in the Panny, Godin, Peace River, Portage/Duncan, and Craigend areas of Alberta, Canada. The transaction will have an effective date March 1, 2018.

TD Securities upgraded Suncor Energy to ‘Buy’ from ‘Hold’.

JPMorgan upgraded Suncor Energy to ‘Overweight’ from ‘Neutral’.


Press Release - California Resources completed the private placement of 2.34 million shares, at a price of US$21.33 per share, for gross proceeds of approximately US$50 MM.

Societe Generale upgraded California Resources to ‘Buy’ from ‘Hold’.

(Late Thursday) Press Release - The independent directors of SandRidge Energy announced that, James Bennett, the Company's President and Chief Effective Officer, will depart from the Company, effective February 8, 2018. Julian Bott, the Company's Chief Financial Officer, will also depart from the Company, effective at the close of business on the date of filing the Company's 2017 Annual Report on Form 10 -K. Mike Johnson, the Company's Chief Accounting Officer, has agreed to serve as Interim Chief Financial Officer. The Board has also accepted the recommendation of its Nominating and Governance Committee to appoint Sylvia K. Barnes as an independent member of the Board.

B. Riley/FBR upgraded Southwestern Energy to ‘Buy’ from ‘Neutral’.

Ladenburg Thalmann downgraded Southwestern Energy to ‘Neutral’ from ‘Buy’.


Press Release - ARC Resources is pleased to report its 2017 year-end reserves and resources information. Replaced 320 per cent of total 2017 production, adding 144.6 MMboe of proved plus probable reserves through development activities. Over the last 10 years, ARC has replaced an average of 200 per cent or greater produced reserves through development activities. ARC's 2P reserve life index is 17.4 years.

(Late Thursday) Press Release - ARC Resources is pleased to report its fourth quarter 2017 financial and operating results. Fourth quarter production averaged 133,409 boe per day, net income was $73.9 million, and funds from operations totaled $221.1 million.

(Late Thursday) Press Release - Gran Tierra Energy announced that its indirect, wholly-owned subsidiary, Gran Tierra Energy International Holdings, has priced its offering of $300 million aggregate principal amount of 6.25% Senior Notes due 2025 in a private placement to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended, to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act and pursuant to certain prospectus exemptions in Canada.

Raymond James upgraded MEG Energy to ‘Market Perform’ from ‘Underperform’.


(Late Thursday) Press Release - CES Energy Solutions is pleased to announce that it will pay a cash dividend of $0.0025 per common share on March 15, 2018 to the shareholders of record at the close of business on February 28, 2018.

Press Release - CGG announced its Senior Notes will be delisted from the official list of the Luxembourg Stock Exchange and withdrawn from trading on the Euro MTF market of the Luxembourg Stock Exchange.

Press Release - Forum Energy Technologies announced fourth quarter 2017 revenue of $248 million, an increase of $49 million, or 25%, from the third quarter 2017. Net income for the quarter was $51 million, or $0.47 per diluted share, compared to a net loss of $15 million, or $0.15 per diluted share, for the third quarter 2017. Excluding $56 million or $0.51 per share of special items, the adjusted net loss was $0.04 per diluted share in the fourth quarter of 2017.

(Late Thursday) Press Release - Newpark Resources announced results for its fourth quarter ended December 31, 2017. Total revenues for the fourth quarter of 2017 were $204.4 million compared to $201.7 million in the third quarter of 2017 and $137.1 million in the fourth quarter of 2016. Income from continuing operations for the fourth quarter of 2017 was $7.9 million, or $0.09 per share, compared to $2.7 million, or $0.03 per share, in the third quarter of 2017, and a loss from continuing operations of ($0.1) million, or $0.00 per share, in the fourth quarter of 2016.


Raymond James downgraded Diamond Offshore Drilling to ‘Underperform’ from ‘Market Perform’.


Press Release - Valero Energy announced that Michael Ciskowski has decided to retire as the Company's Executive Vice President and Chief Financial Officer effective May 3, 2018.

MLPs & PipelinES

Press Release - Buckeye Partners reported its financial results for the fourth quarter and full year 2017. Buckeye reported net income attributable to Buckeye’s unitholders for the fourth quarter of 2017 of $126.3 million compared to net income attributable to Buckeye’s unitholders for the fourth quarter of 2016 of $107.7 million. Adjusted EBITDA for the fourth quarter of 2017 was $289.9 million compared to $255.1 million for the fourth quarter of 2016. Buckeye also announced today that its general partner declared a cash distribution of $1.2625 per limited partner unit for the quarter ended December 31, 2017. The distribution will be payable on February 27, 2018 to unitholders of record on February 20, 2018. This cash distribution represents a 2.0 percent increase over the $1.2375 per LP Unit distribution declared for the fourth quarter of 2016.

(Late Thursday) Press Release - Spectra Energy Partners announced that the board of directors of the general partner declared a quarterly cash distribution to unitholders of $0.73875 per unit, an increase of 1.25 cents over the previous level of $0.72625 per unit. The cash distribution is payable on February 28, 2018, to unitholders of record at the close of business on February 20, 2018. This quarterly cash distribution equates to $2.955 per unit on an annual basis.


Wall Street was set to open little changed on Friday after major indexes plunged in the previous trading session, confirming a correction for the market. Steep falls overnight in U.S. stocks also hurt Chinese shares, which suffered their worst day in almost two years. European equities posted limited losses. The dollar held steady against a basket of currencies, hurting the demand for gold.

Nasdaq Advisory Services Energy Team Tamar Essner
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