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Energy Market Commentary February 17, 2017: Nasdaq Advisory Services

FRIDAY, FEBRUARY 17, 2017

SECTOR COMMENTARY

Energy stocks point to a lower open ahead of the Presidents' Day holiday weekend as markets take a breather from the record gains posted this week. Sector news is light this morning with few earnings reports, corporate announcements or significant sell-side ratings changes.

Crude futures are reversing yesterday’s gains as the market continues to digest positive news that OPEC may extend output agreement and deepen cuts, along with more bearish forces from a higher USD and the rising inventories in the U.S. Brent and WTI have traded within a $5 per barrel price range this year, in what has become the longest and most range-bound period since a price slump began in mid-2014. Attention will focus on the rig count data later this afternoon with traders expecting the theme of rising rig counts to persist.

Natural gas futures are moderately higher following the storage-related declines from yesterday, as the EIA reported a smaller than expected storage draw.

CANADIAN INTERGRATEDS

(Late Thursday) Press Release - Cenovus Energy is stockpiling cash as it warily restarts growth in the oil sands, underscoring industry caution as oil markets recover from a bruising slump. The company said it is doing engineering work on two deferred projects that could be revived in coming years, with potential to add up to 75,000 barrels a day of new capacity at its Northern Alberta operations.

U.S. E&PS

  • CRC reported 4Q’16 EPS of ($1.76) versus Thomson Reuters I/B/E/S estimate of ($1.64).

Press Release - California Resources Corporation, an independent California-based oil and gas exploration and production company, today reported a net loss of $77 million or $1.83 per diluted share for the fourth quarter of 2016. For the full year of 2016 net income was $279 million or $6.76 per diluted share, compared with a net loss of $3.6 billion or $92.79 per diluted share for the same period of 2015. Additionally, CRC announced 2016 reserves of 568 million barrels of oil equivalent (BOE) and 2017 capital investment plans of $300 million.

KLR Group upgraded Cimarex Energy to ‘Buy’ from ‘Hold.’

(Late Thursday) Press Release - Halcón Resources announced that it accepted and has repurchased $289.2 million of its outstanding 8.625% Senior Secured Notes due 2020 through a tender offer, and has $2.1 million aggregate principal amount of the 2020 Notes that remain subject to repurchase pursuant to the guaranteed delivery procedures, and will redeem all remaining outstanding 2020 Notes.

Bernstein discontinued coverage of Noble Energy.

CANADIAN E&PS

(Late Thursday) Press Release - ARC Resources confirms that an eligible dividend of $0.05 per share will be paid on March 15, 2017 to shareholders of record on February 28, 2017. The ex-dividend date is February 24, 2017. As at February 16, 2017, the trailing 12-month payments to investors, including the February 15, 2017 payment, total $0.60 per share.

OIL SERVICES

  • PES reported 4Q’16 EPS of ($0.34) versus Thomson Reuters I/B/E/S estimate of ($0.31).

Press Release - Pioneer Energy Services reported revenues for the fourth quarter of 2016 were $71.5 million, up 5% from revenues of $68.4 million in the third quarter of 2016 and down 32% from revenues of $104.5 million in the fourth quarter of 2015. Its net loss for the fourth quarter of 2016 was $36.1 million, or $0.53 per share, compared with net loss of $34.6 million, or $0.53 per share, in the prior quarter and net loss of $48.3 million, or $0.75 per share, in the year-earlier quarter.

Jefferies downgraded Superior Energy Services to ‘Hold’ from ‘Buy.’

REFINERS

  • CVI reported 4Q’16 EPS of $0.08 versus Thomson Reuters I/B/E/S estimate of ($0.14).

Press Release - CVR Energy, Inc. today announced full year 2016 net income of $24.7 million, or 28 cents per diluted share, on net sales of $4,782.4 million, compared to net income for full year 2015 of $169.6 million, or $1.95 per diluted share, on net sales of $5,432.5 million. Full year 2016 adjusted EBITDA, a non-GAAP financial measure, was $181.6 million compared to full year 2015 adjusted EBITDA of $498.8 million. For the fourth quarter of 2016, the company reported net income of $7.1 million, or 8 cents per diluted share, on net sales of $1,353.4 million, compared to a fourth quarter 2015 net loss of $45 million, or 52 cents per diluted share, on net sales of $1,010.6 million.

(Late Thursday) Reuters - Phillips 66 shut a gasoline-producing fluidic catalytic cracking unit for repairs on Wednesday at its 200,000-barrel-per-day Ponca City, Oklahoma, refinery.

MLPs & PIPELINES

MUFG Securities Americas terminated coverage of Columbia Pipeline Partners.

DA Davidson & Company discontinued Columbia Pipeline Partners.

(Late Thursday) Press Release - Enbridge Energy Partners reported its net income for the fourth quarter of 2016 increased $73.4 million over the same period from the prior year predominately due to an asset impairment of $62.5 million on the Berthold rail facility during the fourth quarter of 2015. There was no similar impairment during the current period. Adjusted net income of $103.7 million for the fourth quarter of 2016 was $6.8 million higher than the same period from the prior year.

(Late Thursday) Press Release - Inter Pipeline generated record financial results in 2016 as FFO increased by $74.7 million, or approximately 10 percent, to $848.8 million. The NGL processing business segment generated the majority of the increase, driven by a full quarter of cash flow from the recently acquired Williams Canada NGL midstream business and higher propane-plus frac-spread pricing at the Cochrane straddle plant. Fourth quarter results were also a record with FFO of $254.7 million, up approximately 21 percent or $43.3 million compared to the fourth quarter of 2015. In the fourth quarter, Inter Pipeline declared dividends of $145.1 million or $0.40 per share, resulting in a conservative payout ratio of 58 percent.

(Late Thursday) Reuters - Plains All American Pipeline said it expects its Wahsatch crude pipeline to remain down for several days, after shutting the line late last week as a precautionary measure.

Press Release - Spectra Energy Partners reported net income of $327 million, including net income from controlling interests of $301 million, for the fourth quarter ended December 31, 2016, with diluted earnings per limited partner unit of $0.70. For the year, net income was $1.24 billion, including net income from controlling interests of $1.16 billion, with diluted earnings per limited partner unit of $2.84. It also reaffirmed quarterly penny-and-a-quarter distribution increases through 2017 and coverage ratio within targeted range of 1.05 to 1.15 times fourth quarter 2016 ongoing DCF was $330 million, compared with $260 million in the prior-year quarter.

(Late Thursday) Reuters - TransCanada filed an application with Nebraska authorities on Thursday to route its Keystone XL pipeline through the state, saying it expected a decision this year for this crucial leg of the $8 billion project that had been stymied by environmental groups and other opponents.

MARKET COMMENTARY

U.S. stock index futures pointed to a lower open on Friday ahead of the Presidents' Day holiday weekend. While the Dow eked out another record closing high on Thursday, the S&P 500 and Nasdaq snapped a 7-day winning streak. In Europe, the pan European Stoxx 600 Index was around 0.24 percent lower on Friday morning.


Nasdaq Advisory Services Energy Team Advisory Services Tamar Essner
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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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