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Energy Market Commentary February 10, 2017: Nasdaq Advisory Services

FRIDAY, FEBRUARY 10, 2017

SECTOR COMMENTARY

The energy sector is set to carry over yesterday’s rally into this morning’s session, lifted by further strength in the crude complex and broader equity futures a day after major indices again touched new record levels. Outside a handful of earnings, sector news is light again today while President Trump's promise yesterday to unveil a tax reform plan in the coming weeks continued to help lift equity markets.

WTI crude oil futures are up over 1.5% in early trading, marginally trailing Brent, building on yesterday’s gains on news that OPEC members' initial compliance with last year's landmark production cut deal reached a record high and despite strength in the dollar. The 11 OPEC members with production targets under the deal complied with a record 92% of the targeted volume in January, according to the average assessments of the six secondary sources OPEC uses to monitor its output, which were seen by Reuters. The International IEA also reported today that OPEC members' cuts in January equated to 90% of the agreed volumes.

After yesterday’s jump, natural gas futures reversed trends and are down over 3% this morning on forecasts for still warmer-than-normal weather over the next two weeks.

INTERNATIONAL INTEGRATEDS

Reuters - Eni has started production of the East Pole field located in a block deep offshore in Angola, with early output estimated at 38,000 barrels per day.

Press Release - Royal Dutch Shell's Chief Financial Officer, Simon Henry, will join miner Rio Tinto as non-executive director from July 1 after he leaves the oil major.

U.S. E&PS

  • EGN reported 4Q’16 EPS of ($0.27) versus Thomson Reuters I/B/E/S estimate of ($0.22).

(Late Thursday) Reuters - Williams Partners said its agreement with Anadarko Petroleum to sell 33.33% interest in ranch westex gas processing plant in delaware basin for $45 million cash.

(Late Thursday) Press Release - Anadarko Petroleum announced the election of Claire S. Farley to serve as an independent director of the company, effective Feb. 9, 2017.

(Late Thursday) Press Release - The board of directors of Anadarko Petroleum declared a quarterly cash dividend on the company's common stock of 5 cents per share, payable March 22, 2017, to stockholders of record at the close of business on March 8, 2017.

(Late Thursday) Press Release - Energen reported a loss of $54.5 million in its fourth quarter. On a per-share basis, the company said it had a loss of 56 cents. Losses, adjusted for non-recurring costs, came to 27 cents per share.

(Late Thursday) Press Release - Halcón Resources announced that it has priced $850 million in aggregate principal amount of senior unsecured notes due 2025 in a private offering. The Notes will bear interest at a rate of 6.75% per annum and will be issued at par. The Notes offering was increased from the previously announced $700 million aggregate principal amount.

Wells Fargo Securities upgraded QEP Resources to ‘Outperform’ from ‘Market Perform.’

Deutsche Bank initiated coverage of Williams Companies with a ‘Hold’ rating.

CANADIAN E&PS

(Late Thursday) Press Release - Athabasca Oil announced that it has commenced a cash tender offer for any and all of its outstanding Canadian dollar denominated 7.50% Senior Secured Second Lien Notes due 2017, upon the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated the date hereof.

(Late Thursday) Press Release - Athabasca Oil reported new term debt instrument - entered into agreements to issue senior secured second lien notes due 2022 in the amount of US$450 million. Proceeds will be directed towards the retirement of Athabasca's existing C$550 million second lien notes due November 2017 for which the Company has announced the commencement of a cash tender offer.

Credit Suisse upgraded Gran Tierra Energy to ‘Outperform’ from ‘Neutral.’

BMO Capital Markets upgraded Enerplus to ‘Outperform’ from ‘Market Perform.’

Raymond James upgraded Meg Energy to ‘Outperform’ from ‘Market Perform.’

(Late Thursday) Press Release - Pengrowth Energy is in talks to sell approximately $500-million in Alberta oil and gas assets to Infor Acquisition. Pengrowth has $1.6-billion of debt that includes a $400-million (U.S.) loan coming due in July.

OIL SERVICES

  • FET reported 4Q’16 EPS of ($0.16) versus Thomson Reuters I/B/E/S estimate of ($0.18).
  • NR reported 4Q’16 EPS of ($0.06) versus Thomson Reuters I/B/E/S estimate of ($0.08).

Susquehanna Financial upgraded Baker Hughes to ‘Positive’ from ‘Neutral.’

(Late Thursday) Press Release - Canadian Energy Services & Technology announced that it will pay a cash dividend of $0.0025 per common share on March 15, 2017, to the shareholders of record at the close of business on February 28, 2017.

(Late Thursday) Press Release - Forum Energy Technologies announced fourth quarter 2016 revenue of $147 million, an increase of $9 million, or 6%, from the third quarter 2016. Net loss for the quarter was $13 million, or $0.14 per diluted share, compared to a net loss of $18 million, or $0.20 per diluted share, for the third quarter 2016. Excluding $3 million or $0.02 per share of special items, the adjusted net loss was $0.16 per diluted share in the fourth quarter of 2016.

(Late Thursday) Press Release - Newpark Resources announced results for its fourth quarter ended December 31, 2016. Total revenues for the fourth quarter of 2016 were $137.1 million compared to $104.6 million in the third quarter of 2016 and $150.6 million in the fourth quarter of 2015. Net loss for the fourth quarter of 2016 was $0.1 million, break-even on a per share basis, compared to a net loss of $13.5 million, or $0.16 per share, in the third quarter of 2016, and a net loss of $83.1 million, or $1.00 per share, in the fourth quarter of 2015.

DRILLERS

  • NE reported 4Q’16 EPS of ($0.15) versus Thomson Reuters I/B/E/S estimate of ($0.22).

Noble Corporation reported a net loss attributable of $1.3 billion, or $5.36 per diluted share, on revenues of $410 million. Noble Corporation plc for the fourth quarter of 2016, would have been $37 million, or $0.15 per diluted share, on revenues of $394 million. The results compared to a net loss attributable to the Company for the third quarter of 2016 of $55 million, or $0.23 per diluted share, on revenues of $385 million.

(Late Thursday) Press Release - Precision Drilling said it was growing more confident that long-term stability is returning to the oil industry, and it expects to charge higher fees for its rigs if oil prices recover further.

(Late Thursday) Press Release - Transocean issued a quarterly Fleet Status Report that provides the current status of and contract information for the company's fleet of offshore drilling rigs. As of February 9, 2017, the company's contract backlog was $11.3 billion.

MLPs & PIPELINES

Press Release - Buckeye Partners reported its financial results for the fourth quarter and full year 2016. Buckeye reported income from continuing operations for the fourth quarter of 2016 of $108.9 million compared to income from continuing operations for the fourth quarter of 2015 of $135.1 million. Adjusted EBITDA from continuing operations for the fourth quarter of 2016 was $255.1 million compared to $244.5 million for the fourth quarter of 2015. Buckeye also announced that its general partner declared a cash distribution of $1.2375 per limited partner unit for the quarter ended December 31, 2016. The distribution will be payable on February 28, 2017 to unitholders of record on February 21, 2017.

(Late Thursday) Press Release - Western Gas Partners announced it has entered into an agreement with Williams Partners whereby WES will acquire WPZ's 50% non-operated interest in the assets of Delaware Basin JV Gathering in exchange for WES's 33.75% non-operated interest in two natural gas gathering systems located in northern Pennsylvania and $155 million in cash.

Deutsche Bank initiated coverage of Williams Partners with a ‘Buy’ rating.’

(Late Thursday) Reuters - Williams Partners agreed to acquire additional interests in two Marcellus shale gathering systems and sell ownership stake in delaware basin joint venture and ranch westex assets.

MARKET COMMENTARY

Hopes of business-friendly tax cuts in the United States coupled with upbeat Chinese trade data boosted riskier assets, pushing global stock markets higher. U.S. stock index futures and the dollar gained, while gold retreated further from this week’s three-month high. The day’s economic calendar carries import and export prices, U-Mich sentiment and federal budget. OPEC-led production cuts pushed the oil up.


Nasdaq Advisory Services Energy Team 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.

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