Tuesday, September 05, 2017
Sector Commentary
The energy sector is poised for a mixed to higher start after the extended holiday-weekend, lifted by gains in the crude complex and pressured by geopolitical concerns that weighed on the major equity indices. In sector news, several large refiners across the Gulf Coast announced they are restarting their operations after closing down following Hurricane and Tropical Storm Harvey.
WTI crude oil futures added to Friday’s rally while Brent continued to build onto last week’s gains, lifted by the reports that refiners, shipping channels and pipelines were starting to resume their operations along the Gulf which will spur demand for crude. The latest update from the DOE had eight U.S. oil refineries with 2.1 million barrels per day of refining capacity, or 11.4% of the U.S. total, were shut as of Monday afternoon, down substantially from 25% last week. Port operations across the Gulf Coast were opening, although many still had restrictions on vessel draft but the Coast Guard allowed some barge traffic to enter Port Arthur and is also considering allowing ships to start entering as soon as today. Meanwhile, gasoline futures dropped over 3.5% on the refinery news and is back to levels last seen before Harvey hit.
Natural gas futures are down over 2.5% this morning, pressured by a return of production after Harvey and below-seasonal temps across most of the country. Profit-taking into shoulder season after last week’s 6% gains also fueled losses this morning.
U.S. INTEGRATEDS
(Sunday) Reuters - ExxonMobil said on Monday its pipeline division was initiating supply of gasoline and other fuels to the Houston area after making "significant progress" on restarting the lines.
(Sunday) Reuters - Exxon Mobil said that its Hadrian South subsea production system and Galveston 209 platform in the U.S. Gulf of Mexico were back online after shutting due to storm Harvey.
(Sunday) Reuters - ExxonMobil is making progress restarting the 560,500-barrel-per-day Baytown, Texas, refinery.
(Saturday) Reuters - ExxonMobil was restarting its Baytown, Texas refinery, the nation's second largest, on Saturday six days after it was shut because of heavy rain from Tropical Storm Harvey.
(Late Friday) Reuters - Exxon Mobil plans to invest $200 million to boost natural gas output in Argentina's Vaca Muerta shale play.
INTERNATIONAL INTEGRATEDS
Reuters - Petrofac secured a 340 million euros contract along with a unit of Gazprom to develop onshore pipelines and a gas receiving terminal in Turkey.
(Late Monday) Reuters - A Petroleo Brasileiro refinery in Pasadena, Texas, restarted operations over the weekend after weather and flooding conditions improved following the passage of Hurricane Harvey.
(Sunday) Reuters - Petroleo Brasileiro will extend its current collective bargaining agreement with labor unions until November, when a new federal law takes effect.
Morgan Stanley upgraded Repsol to ‘Overweight’ from ‘Equal Weight’.
Deutsche Bank downgraded Repsol to ‘Sell’ from ‘Hold’.
(Late Monday) Reuters - Royal Dutch Shell said on Sunday that well operations have restarted after a full rig inspection at the Perdido oil platform in the U.S. Gulf Mexico, which was shut due to Tropical Storm Harvey.
(Late Monday) Reuters - Royal Dutch Shell is preparing a reformer and the large crude distillation unit for restart at its 325,700 barrel per day (bpd) joint-venture refinery in Deer Park, Texas.
(Saturday) Press Release - Raizen Energia S.A. intends to acquire gas station network located in Argentina, from Royal Dutch Shell. The transaction is estimated to be valued more than US$1,000 million, according to two people familiar with the plan said. According to the sources, YPF SA, Quinenco SA and Petrochina Co Ltd. also made bids to acquire gas station network in Argentina, from Shell.
(Late Monday) Reuters - PGNiG said on Monday it will buy 140,000 cubic metres of liquefied natural gas from Statoil on the spot market this month.
Deutsche Bank upgraded Statoil to ‘Hold’ from ‘Sell’.
(Late Monday) Reuters - Statoil: *Further improvements on Johan Sverdrup oilfield *Further reduce investment costs for first phase of development by NOK 5 billion ($642.29 million) to NOK 92 billion *Sverdrup development passed halfway mark over summer, and is now nearly 60% complete, ahead of plan and below budget *Phase 1 is expected to start up in late 2019 with production capacity estimated at 440,000 barrels of oil per day *Phase 2 is expected to start up in 2022, with full field production estimated at 660,000 barrels of oil per day.
(Late Monday) Press Release - Total signed an agreement to divest its remaining 15% interest in the Gina Krog field in Norway to Kuwait Foreign Petroleum Exploration Company. This agreement builds on the 2016 transaction between Total and KUFPEC concerning Norwegian North Sea assets, which included a 15% interest in Gina Krog. The overall consideration for both deals exceeds $600 million.
(Sunday) Reuters - Total plans to restart the 225,500 barrel per day (bpd) Port Arthur, Texas, refinery "soon".
(Sunday) Reuters - Total said on Sunday that power was restored to the 225,500-barrel-per-day refinery in Port Arthur, Texas, on Saturday for the first time since it was knocked out on Wednesday by Tropical Storm Harvey.
(Saturday) Press Release - Total is looking for a local partner to begin retailing petrol and diesel in the fast expanding Indian fuel market that already has a bunch of private and foreign oil giants competing with state firms.
CAnadian INTergrateds
Reuters - Cenovus Energy said on Tuesday it would sell its Pelican Lake heavy oil operations in Alberta for C$975 million.
U.S. E&PS
Press Release - Bill Barrett said that driven by a combination of early positive results from its enhanced completion program in the Denver-Julesburg Basin, strong results from a nine well recompletion program in the Uinta Oil Program and the expected timing of well completions during the second half of 2017, the Company is raising its 2017 production guidance range from 6.0-6.5 million barrels of oil equivalent to 6.4-6.6 MMBoe.
Press Release - Callon Petroleum announced that it has declared a cash dividend of $1.25 per share, on its 10.0% Series A Cumulative Preferred Stock.
Press Release - Carrizo Oil & Gas’ producing assets and facilities in the Eagle Ford Shale sustained no damage as a result of Hurricane Harvey. In preparation for the storm, the Company suspended its drilling and completions operations in the play, but crews were able to return to the field last week, and all of the Company’s operated Eagle Ford rigs and frac crews have resumed operations.
(Late Friday) Press Release - Cimarex Energy announced that its Board of Directors has declared a quarterly cash dividend on its common stock of $0.08 per share. The dividend is payable on December 1, 2017, to stockholders of record on November 15, 2017.
(Late Monday) Reuters - ConocoPhillips said on Monday its oil production in the Eagle Ford shale region had hit roughly 50 percent of its pre-hurricane rate of 130,000 barrels of oil equivalent per day, and expected it to reach 80 percent by the evening.
Press Release - EOG Resources updated certain guidance items for third quarter 2017 to reflect the impact of hurricane and tropical storm Harvey on its South Texas and Eagle Ford operating areas. Compared to its guidance issued with second quarter 2017 results on August 1, 2017, EOG reduced the midpoint of its third quarter 2017 U.S. crude oil and condensate volume guidance range by 15 thousand barrels of oil per day, while full year 2017 U.S. crude oil and condensate volume guidance remains unchanged.
Press Release - Gulfport Energy recently turned-to-sales one gross (0.98 net) Woodford well located in the wet gas window in central Grady County. The Pauline 8-27X22H has a lateral length of 7,658 feet and a 24-hour initial peak production rate of 11.6 MMcf per day and 828 barrels of oil per day.
(Saturday) Reuters - Occidental Petroleum loaded and shipped its first crude oil cargo from its Western Gulf Coast terminal since operations at the Port of Corpus Christi, Texas, were disrupted by Hurricane Harvey,
(Saturday) Press Release - As previously disclosed, PetroQuest Energy has not paid six full quarterly dividends with respect to the Company’s 6.875% Series B Cumulative Convertible Perpetual Preferred Stock due to restrictions contained in the Company’s credit facilities.
(Late Friday) Press Release - Range Resources announced that its Board of Directors declared a quarterly cash dividend on its common stock for the third quarter. A dividend of $0.02 per common share is payable on September 29, 2017 to stockholders of record at the close of business on September 15, 2017.
Press Release - Stone Energy announced drilling results from the deep water Rampart Deep well at Mississippi Canyon Block 116. Stone generated the prospect and owns a 40% non-operated working interest in the well.
Press Release - W&T Offshore announced that the Bureau of Ocean Energy Management has rescinded its four orders issued in 2016 that instructed W&T to provide additional supplemental bonding of $260.8 million.
(Saturday) Press Release - Whiting Petroleum announced that it closed the previously announced sale of its Fort Berthold Indian Reservation area assets located in Dunn and McLean Counties, North Dakota. The purchase price was $500 million, subject to closing and post-closing adjustments. The Company used the proceeds from the sale to pay $500 million down on its revolver.
CANADIAN E&PS
(Late Friday) Reuters - Canadian Natural Resources is nearing a deal to buy Cenovus Energy's heavy oil project in Pelican Lake, Alberta, for about C$1 billion.
OIL SERVICES
(Saturday) Press Release - The Parliamentary Secretariat for Consumer Protection and Valletta 2018 Baker Hughes, a GE company awarded second major contract for ENI East Africa?s Coral South. Eni East Africa SpA operates as a subsidiary of EniSpA.
Evercore resumed Basic Energy Services at ‘Outperform’.
Evercore resumed Key Energy Services at ‘In Line’
Press Release - Patterson-UTI Energy announced that it has entered into an agreement to acquire Multi-Shot, LLC d/b/a MS Energy Services, on a debt-free basis for total consideration of approximately 8.8 million shares of Patterson-UTI common stock and $75 million of cash. Based in Conroe, Texas, MS Energy is a leading directional drilling services company in the United States.
Press Release - Patterson-UTI Energy announced that C. Andrew Smith, will join Patterson-UTI as Chief Financial Officer on September 8, 2017.
Press Release - Patterson-UTI Energy reported that for the month of August 2017, the Company had an average of 162 drilling rigs operating. For the two months ended August 31, 2017, the Company had an average of 162 drilling rigs operating.
JPMorgan upgraded Patterson-UTI Energy to ‘Overweight’ from ‘Neutral’.
Press Release - McDermott International announced that Philippe Barril has been appointed to its Board of Directors, effective September 1, 2017.
Press Release - Genesee & Wyoming and SEACOR Holdings announced the formation of a 50/50 joint venture to own and operate CG Railway, a subsidiary of SEACOR recently acquired through its acquisition of International Shipholding Corporation. Terms of the joint venture were not disclosed.
DRILLERS
Press Release - Pacific Drilling announced that it has received notice from the New York Stock Exchange that the Company is considered to be “below compliance” with NYSE’s continued listing standards for a listed company. The two NYSE continued listings standards applicable to the Company that it is at risk of failing to satisfy are maintenance of: Average market capitalization of not less than $15 million over a 30 trading-day period, which is a minimum threshold standard that does not allow for any plan/cure period; and Average closing price of its common stock of not less than $1.00 over a consecutive 30 trading-day period.
Barclays started RPC at ‘Equal Weight’.
REFINERs
Janney Capital downgraded Calumet Specialty Products Partners to ‘Neutral’ from ‘Buy’.
(Late Monday) Reuters - HollyFrontier closed a reformer unit at its 150,000-barrel-per-day (bpd) El Dorado, Kansas, oil refinery after a fire on Monday.
(Sunday) Reuters - Phillips 66 said on Sunday 600 people were at the 247,000 barrel per day (bpd) Sweeny, Texas, refinery assessing and repairing damage from Tropical Storm Harvey in preparation for restarting the plant.
(Sunday) Reuters - Phillips 66 requested a Jones Act waiver to allow it to use foreign vessels to move crude or products to and from its 260,000-barrel-per-day Alliance refinery in Louisiana after Hurricane Harvey.
(Saturday) Reuters - Phillips 66 is preparing to resume operations at its Sweeny refinery as well as its Beaumont terminal in Texas.
(Late Friday) Reuters - Phillips 66 *says its Freeport Terminal is operational; operations suspended at Phillips 66-operated Gulf Coast Fractionators plant in Mont Belvieu due to a lack of available storage at the Mount Belvieu Hub *says currently assessing, making repairs & other preparations to begin the process of resuming operations at Sweeny Refinery in Old Ocean, Texas, Beaumont Terminal, Pasadena refined products terminal.
Press Release - Marathon Petroleum announced that the company's Board of Directors, based on a recommendation from its independent special committee, has determined that maintaining Speedway as a fully integrated business within MPC provides the best opportunity for enhancing long-term shareholder value. It also expects to repurchase $550 million in Q4.
Press Release - Marathon Petroleum recently divested some of its pipelines and storage assets to MPLX. The move helped Marathon Petroleum to garner proceeds of $1.05 billion from its master limited partnership, which it had spun off in 2012.
(Late Monday) Reuters - Valero Energy began restarting a unit at its 335,000 barrel per day (bpd) Port Arthur, Texas, refinery on Sunday night.
(Late Monday) Reuters - Valero Energy said on Monday its Corpus Christi and Texas City oil refineries had recovered to pre-hurricane levels of operation.
(Saturday) Reuters - Valero Energy was ramping up production at its Corpus Christi, Texas-area refineries in the wake of Hurricane Harvey.
MLPs & Pipelines
(Late Friday) Reuters - Energy Transfer announced operational update related to Hurricane Harvey *Energy Transfer Partners LP - energy Transfer's crude operations continue with minimal interruptions *Energy Transfer Partners LP - overall impact to its operations in Houston area and along Gulf coast from Hurricane Harvey has been minimal *Energy Transfer Partners LP - Energy Transfer's extensive natural gas pipeline system throughout Texas is operational and undamaged.
Press Release - Enterprise Products Partners announced that it has made significant progress in restoring service at substantially all of its major assets impacted by Hurricane Harvey.
(Sunday) Reuters - Magellan Midstream Partners said on Sunday that it was receiving West Texas crude oil at origin points in Colorado City and Crane, Texas.
(Late Friday) Reuters - MPLX entered into a membership interests and shares contributions agreement - SEC filing; MPLX LP - deals through series of intercompany contributions to partnership for about $420 million in cash and equity consideration valued at about $630 million; MPLX LP - partnership issued 13.7 million common units representing limited partner interests in partnership to general partner; MPLX LP - partnership also issued 377,778 general partner units to general partner in order to maintain 2 percent general partner interest in partnership; MPLX LP - partnership issued 1.4 million common units to MPLX Holdings
Press Release - Marathon Petroleum recently divested some of its pipelines and storage assets to MPLX. The move helped Marathon Petroleum to garner proceeds of $1.05 billion from its master limited partnership, which it had spun off in 2012.
(Saturday) Reuters - NuStar Energy said on Saturday its Corpus Christi North Beach terminal in Texas is fully operational.
Barclays reinstated Oneok at ‘Equal Weight’.
(Late Saturday) Press Release - Williams Partners announced that Transcontinental Gas Pipe Line Company, LLC filed an application with the Federal Energy Regulatory Commission seeking authorization for its Rivervale South to Market project, which would create 190,000 dekatherms per day of firm transportation capacity to northeastern markets in time for the 2019/2020 winter heating season.
MARKET COMMENTARY
U.S. stock index futures pointed towards a lower start for Wall Street after a long-holiday weekend during which North Korea triggered its most powerful nuclear test yet. Durable goods data is scheduled on the economic calendar. Asian markets closed on a mixed note as reaction to a rise in China's Caixin/Markit services purchasing managers' index remained mute. Most European indexes were trading higher as investors shook off North Korean jitters. Gold prices eased on profit booking. The euro was trading lower ahead of an European Central Bank meeting this week.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
