Investor Relations

Energy Market Commentary June 1, 2016: Nasdaq Advisory Services

Wednesday, June 1, 2016

Sector Commentary

The energy sector is set to kick off the final month of trading in the second quarter lower, tracking global equity markets on continued weakness in the crude complex and weak macroeconomic data out of China and Europe that weighed on general risk appetite. With little sector news to offer any kind of catalyst, trading is again expected to be thin throughout the day.

Front-month WTI crude oil futures have extended their trend lower for the fifth-straight session but are faring better-than their UK counterpart this morning, falling on market expectations of OPEC inaction on output as its focus stays on retaining market share, while concerns about China's economy weighed on the demand outlook. Iran said on Wednesday it would not commit to any oil production action with fellow OPEC members when the group meets this week despite being close to pre-sanctions output and export levels while top oil exporter Saudi Arabia is expected to raise the prices for most crude grades it sells to Asia in July to track a stronger Dubai benchmark. Markets will also be looking to tomorrow’s inventory report, delayed a day because of the Memorial Day holiday in the U.S., which is expected to have dropped for a second straight week.

Natural gas futures continued their rebound for the third-consecutive day and are up over 2.3% in early trading, lifted by warming weather in key consuming regions that should boost demand.

U.S. INTEGRATEDS

Reuters - The Niger Delta Avengers attacked a Chevron oil facility.

INTERNATIONAL INTEGRATEDS

Reuters - Eni reported that it has been told the seizure of its Val d'Agri oil production assets has been temporarily lifted. It added that it has been given three months to make technical changes to the site it had proposed on May 20. After this period authorities will verify the changes and could decide to lift the seizure permanently.

(Late Tuesday) Reuters - Royal Dutch Shell said Motiva Port Arthur refinery experienced an operational upset on one of its units on Monday and has no off-site impacts. Shell did not identify the unit involved in the incident.

Reuters - Lundin Petroleum said that the Norwegian Ministry of Petroleum and Energy has granted approval for transaction where Lundin Norway will acquire from Statoil as an additional 15 percent interest in Edvard Grieg field.

Reuters - Total exits shale gas exploration in Dybvad in Northern Jutland, Denmark. Total abandoned the well in Aug, 2015. Moreover, Denmark will evaluate the project before deciding if it will issue new licenses for shale gas explorations.

Canadian INTEGRATEDS

Press Release - Husky Energy is positioned to increase free cash flow as a result of the structural changes that have taken root across the business while significantly lowering its cost base. As a result of the structural changes that have taken place, Husky can generate enough cash to maintain current production levels with WTI oil prices in the mid-$30s US. Oil prices above that point are expected to produce free cash flow. An increase in WTI oil prices from $40 to $50 US on an annualized basis is expected to generate about $800 million in free cash flow.

U.S. E&PS

Press Release - Range Resources announced that its Board of Directors declared a quarterly cash dividend on its common stock for the second quarter. A dividend of $0.02 per common share is payable on June 30, 2016 to stockholders of record at the close of business on June 15, 2016.

Press Release - Rex Energy announced that it has commenced a registered exchange offer to exchange up to $631,458,573 aggregate principal amount of its 1.00%/8.00% Senior Secured Second Lien Notes due 2020, which have been registered under the Securities Act of 1933, as amended, for up to $631,458,573 of its outstanding 1.00%/8.00% Senior Secured Second Lien Notes due 2020, which were previously issued in a private placement.

CANADIAN E&PS

(Late Tuesday) Press Release - Gran Tierra Energy is increasing its base 2016 capital budget by $33 million to $43 million to a revised total of $140 million to $150 million.

OIL SERVICES

Press Release - C&J Energy Services announced that, in connection with ongoing discussions with the lenders under its credit facilities, it has entered into a forbearance agreement with respect to the previously announced covenant violation, as well as with respect to the payment of interest and certain fees under the credit facilities.

Press Release - CGG GeoSoftware has completed the launch of a series of innovative new releases from across its reservoir characterization product portfolio. The delivery of Jason 9.5, HampsonRussell 10.1, InsightEarth 3.0.2, PowerLog 9.5, EarthModel FT 9.5 and VelPro 9.5. marks the next stage in GeoSoftware's strategy to offer a full suite of powerful and complementary software solutions that integrate multi-disciplinary workflows to overcome the most complex subsurface challenges in all types of reservoirs.

Credit Suisse downgraded Forum Energy and Superior Energy Services to ‘Neutral’ from ‘Outperform.’

Credit Suisse downgraded Newpark Resources to ‘Outperform’ from ‘Neutral.’

Credit Suisse downgraded Patterson-UTI Energy to ‘Underperform’ from ‘Neutral.’

Credit Suisse upgraded TETRA Technologies to ‘Outperform’ from ‘Neutral.’

DRILLERS

Credit Suisse downgraded Helmerich and Payne and Precision Drilling to ‘Underperform’ from ‘Neutral.’

Credit Suisse downgraded Nabors Industries to ‘Neutral’ from ‘Outperform.’

Press Release - Parker Drilling announced it has agreed to terms with its lenders on an amendment to its 2015 Secured Credit Agreement. The terms of the Amendment provide covenant relief and flexibility to help navigate the prolonged industry downturn. The Company has no borrowings outstanding under the facility and as of March 31, 2016 had $12.8 million of outstanding letters of credit.

MARKET COMMENTARY

Global equity markets started the new month on the back foot on Wednesday, undermined by lackluster economic data and an oil price slide that took the edge off energy and mining shares. The catalyst for the moves lower was Chinese manufacturing data that showed the economy still struggling to regain traction, while euro zone factory growth languished at a three-month low.


Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner.

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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