Energy Market Commentary February 14, 2017: Nasdaq Advisory Services



Energy stocks are poised for a higher opening on support from higher commodity prices and from momentum as broader markets continue to reach new all-time highs. Only a handful of energy companies reported results today but key themes include earnings beats and higher production guidance. Investors will focus on the Credit Suisse Energy Summit taking place in Vail this week.

Crude oil prices are higher on both sides of the Atlantic, lifted by data showing declining OPEC output that indicates a 90% compliance level with recent agreements to cut output. If the rate of output reduction continues at the same pace for the next six months, the global oil market could cross to a deficit by the second half of the year when the demand is stronger, according to Citi Futures analyst Tim Evans. Further support for oil prices came from the U.S. Dollar Index, which retreated from three-week highs, as National Security Advisor Flynn's resignation underscored the unpredictability of Trump's administration, adding to the air of caution as markets await Federal Reserve Chair Janet Yellen's congressional testimony. Meanwhile, analysts expect the U.S. to report more crude builds in data to be released later today and tomorrow, though gasoline stocks are expected to decline, which should keep a lid on oil’s gains today.

Natural gas futures are extending yesterday’s losses, trading at their lowest levels since November, as current forecasts indicate that February could be one of the warmest on record. That puts the front-month into technically oversold territory for the first time since early January and down about 25% from a recent high of $3.994 on December 28, making gas a cheaper fuel than coal for more power generators.


Reuters - Shell and Pavilion Gas will start supplying Singapore with liquefied natural gas later in 2017 under contracts awarded last year.

(Late Monday) Reuters - Total’s 225,000-barrel-per-day capacity refinery and gasoline-producing fluidic catalytic cracking unit were both running at 84 percent of capacity on Monday.


  • GPOR reported 4Q’16 EPS of $0.34 versus Thomson Reuters I/B/E/S estimate of $0.22.
  • NBL reported 4Q’16 EPS of $0.26 versus Thomson Reuters I/B/E/S estimate of ($0.10).

(Late Monday) Press Release - The board of directors of Apache declared the regular cash dividend on the company's common shares. The dividend on common shares is payable May 22, 2017, to stockholders of record on April 21, 2017, at a rate of 25 cents per share.

(Late Monday) Press Release - Callon Petroleum announced the closing of its previously announced acquisition of oil and natural gas assets in the southern Delaware Basin from American Resource Development.

(Late Monday) Press Release - Chesapeake Energy is budgeting planned total capital expenditures in the range of $1.9 – $2.5 billion in 2017, compared to total capital expenditures of approximately $1.65 – $1.75 billion in 2016, excluding 2016 proved property acquisitions and the repurchase of volumetric production payment transactions.

Press Release - Denbury Resources announced that its 2017 capital budget, excluding acquisitions and capitalized interest, is currently estimated at approximately $300 million, 44% over 2016 capital spending levels.

(Late Monday) Reuters - Gulfport Energy reported fourth quarter and year-end 2016 results. Its 4Q16 loss per share was $1.86 and adjusted earnings per share of $0.34.

(Late Monday) Press Release - Noble Energy announced results for the fourth quarter of 2016, including a reported net loss attributable to Noble Energy of $252 million, or $0.59 per diluted share. The adjusted income attributable to Noble Energy for the quarter was $113 million, or $0.26 per diluted share, which excludes the impact of certain items typically not considered by analysts in formulating estimates. Full-year sales volumes have been raised to 415 - 425 MBoe/d, up nearly 5 percent from last year, after adjusting for 2016 divestment impacts.

MUFG Securities Americas upgraded Pioneer Natural Resources to ‘Overweight’ from ‘Neutral.’

Press Release - Williams Companies announced that Micheal G. Dunn has been appointed Executive Vice President, Chief Operating Officer of Williams, effective Feb. 27, 2017.


Press Release - Canadian Natural Resources increased proved reserves by 4% with strong finding, development and acquisition costs of $3.72/BOE for proved reserves, including the change in future development capital.

Press Release - A decline in production costs throughout 2016 helped to mitigate losses at MEG Energy. MEG's confidence is reflected in its $590 million capital budget for 2017, which is significantly higher than 2016's capital spending of $137 million. Industrial Info is tracking $8.45 billion in projects involving MEG.


Guggenheim Securities upgraded Patterson-UTI Energy to ‘Buy’ from ‘Neutral.’


Societe Generale upgraded Noble Corporation to ‘Buy’ from ‘Hold.’


(Late Monday) Reuters - Phillips 66's 247,000-barrel-per-day Alliance, Louisiana, refinery was restarting a gasoline-producing fluidic catalytic cracking unit and shutting a coker and alkylation unit on Monday.


Press Release - DCP Midstream Partners reported net income attributable to partners was $75 million in the fourth quarter of 2016, or $0.38 per basic and diluted limited partner unit and $312 million for the year ended December 31, 2016, or $1.64 per basic and diluted limited partner unit. Distributable cash flow was $120 million in the fourth quarter of 2016, and $537 million for the full year 2016 resulting in a distribution coverage ratio of 1.0 times in the fourth quarter of 2016 and 1.11 times for the year ended December 31, 2016. Adjusted EBITDA was $151 million in the fourth quarter of 2016 and $594 million for the year ended December 31, 2016.

GMP Securities upgraded Keyera to ‘Buy’ from ‘Hold.’

(Late Monday) Press Release - Noble Midstream Partners reported its EBITDA was $38 million in the fourth quarter, or $27 million attributable to the Partnership, an increase of 16% increase over the prior year quarter, driven by increased gathering and fresh water delivery volumes. Fourth quarter revenues were $48 million and total operating expenses were $14 million, resulting in operating income of $34 million, an increase of 23% from the prior year quarter. It also increased the Partnership’s first full quarter distribution to $0.3925, a 4.7% increase from the minimum quarterly distribution.

(Late Monday) Press Release - Noble Midstream Partners announced its 2017 capital budget and provided 2017 guidance and a long-term outlook. Its capital budget was $270 - $300 million, or $155 - $175 million attributable to the Partnership.


U.S. stock index futures pointed to a mixed on Tuesday as traders eyed earnings, data and Federal Reserve Chair Janet Yellen's testimony before the Committee on Banking, Housing, and Urban Affairs, due to commence at 10 a.m. ET. Equities continued their assault on record highs Monday, with the three major indexes closing at new all-time highs. The S&P 500 also broke above $20 trillion in market cap. In Europe, the pan European Stoxx 600 Index was around 0.13 percent lower on Tuesday.

Nasdaq Advisory Services Energy Team Advisory Services Tamar Essner
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