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Energy Market Commentary January 24, 2017: Nasdaq Advisory Services

TUESDAY, JANUARY 24, 2017

SECTOR COMMENTARY

Energy stocks are mixed this morning, with downward pressure from broader equity futures, coupled with strength in both crude oil and natural gas prices. Company-specific news remained light as earnings season does not begin in earnest until next week. Traders continue to focus on the implications of the new Trump presidency on various aspects of the energy market with particular focus on the prospects of a boarder adjustment tax.

Crude oil prices are up by nearly 1% on both sides of the Atlantic, as the dollar wallowed near its lowest levels since early December, kept under pressure by concern that Trump was focusing more on protectionism and less on pro-growth economic policies. Meanwhile, traders expect a bearish report from the API later tonight and the EIA tomorrow with forecasts calling for a build of 1.4 million barrels of crude while refined products are also expected to increase. On a more bullish side, traders noted statistics that indicate lower Arab Gulf region exports MTD vs the 9 month average, which suggests compliance with the OPEC agreement on output cuts.

Natural gas prices are up nearly 3% as some weather models indicate coming cold weather at the start of February.

INTERNATIONAL INTEGRATEDS

Press Release - Petróleo Brasileiro announced that its wholly-owned subsidiary Petrobras Global Finance B.V. increased the tender cap in its previously announced cash tender offers from US$4.0 billion to US$6.0 billion.

(Late Monday) Reuters - A Brazilian court has ruled that Petróleo Brasileiro can continue a process to sell several offshore oil fields in the country's northeastern region.

U.S. E&PS

Raymond James initiated coverage of Matador Resources with an ‘Outperform’ rating.

(Late Monday) Press Release - Rex Energy announced fourth quarter and full-year 2016 production and estimated pricing and provided an operational update. Its fourth quarter 2016 production growth of 12% year-over-year, driven by a 22% year-over-year growth in liquids production. It also said that its full-year 2016 production of 195.3 MMcfe/d, a year-over-year increase of six percent; December 2016 exit rate production of ~200.0 MMcfe/d represents an increase of ~9% as compared to December 2015 exit rate production.

Seaport Global Services upgraded Sanchez Energy to ‘Buy’ from ‘Neutral.’

Press Release - W&T Offshore announced that its Board of Directors has approved a 2017 capital expenditure budget of $125 million, excluding potential acquisitions. The Company has also provided production and expense guidance for 2017 and expects total production in 2017 to be approximately 4% higher than the mid-point of the Company's expected production in 2016.

CANADIAN E&PS

Press Release - MEG Energy announced that it has closed its previously announced public offering on a bought deal basis of 66,815,000 subscription receipts, including the 8,715,000 Subscription Receipts issuable on exercise of the over-allotment option granted by MEG to the underwriters in connection with the Offering, at a price of $7.75 per Subscription Receipt for aggregate gross proceeds from the Offering of approximately $517.8 million.

OIL SERVICES

(Late Monday) Press Release - GulfMark Offshore announced that its Norway subsidiary, GulfMark Norge AS has taken delivery of Arctic class PSV, Christened the “North Barents”, from Simek AS Shipyard in Norway.

(Late Monday) Press Release - Patterson-UTI Energy announced that based on a preliminary analysis of the financial results for the three months ended December 31, 2016, the Company expects revenues of approximately $247 million, Adjusted EBITDA of approximately $44.0 million and a net loss of approximately $78.1 million, or $0.53 per share.

Goldman Sachs initiated coverage of TechnipFMC with a ‘Buy’ rating.

DRILLERS

(Late Monday) Press Release - Ensco recently entered into an amendment to the ENSCO DS-10 drillship construction contract with Samsung Heavy Industries, the shipyard constructing the ENSCO DS-10. Under the terms of the Amendment, it said that the delivery date for the Drillship has been extended to March 31, 2019. Ensco may elect to take delivery of the Drillship earlier upon giving SHI 75 days’ advance notice. Notwithstanding the Extended Delivery Date, SHI agreed to complete construction of the Drillship by March 31, 2017.

(Late Monday) Press Release - Pacific Drilling announced that it reached agreement with its banking group to make certain amendments to its $500 million revolving credit facility and $1.0 billion senior secured credit facility.

REFINERS

(Late Monday) Reuters - Marathon Petroleum's Galveston Bay refinery in Texas City, Texas, plans to restart a sulfur recovery unit shut this week as part of a planned multi-unit overhaul that began on Jan. 9.

MLPs & PIPELINES

(Late Monday) Press Release - Natural gasoline traded at Enterprise Products Partners' Mont Belvieu, Texas, terminal fell 23 cents a gallon on Monday to 78 cents a Gallon.

MARKET COMMENTARY

U.S. stock index futures were mixed on Tuesday as a number of companies posted quarterly results.On the data front, Tuesday will see Purchasing Managers Index (PMI) released at 9:45 a.m ET with existing home sales and Richmond Fed survey data due at 10 a.m ET. In Europe, the pan-European Stoxx 600 index was around 0.1 percent higher on Tuesday morning. In Asia, the Shanghai Composite in China closed 0.2 percent higher, while the Nikkei in Japan closed 0.55 percent lower.


Nasdaq Advisory Services Energy Team Nasdaq's 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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