Energy Market Commentary June 21, 2016: Nasdaq Advisory Services

Tuesday, June 21, 2016

Sector Commentary

The energy markets are more cautious today following two straight days of gains as the market faces continued uncertainty ahead of Thursday’s Brexit vote. Broader index futures suggest a positive open for US markets, but futures prices are off their highs and European markets are barely higher with weak crude prices limiting the upside in equities.

Permian E&Ps will be in focus after Barclays initiated coverage on 4 names including Energen Corp, which also announced divestitures of $552 million to become a pure-play Permian producer.

Crude oil futures are lower in both Brent and WTI contracts, with both trading below $50, as they pare the gains of the prior two sessions ahead of Thursday’s Brexit vote. The USD is weaker this morning following a 2% “leave” lead though other factors are also depressing sentiment. Pressure also came following reports from Nigerian media that the government had signed a 30-day ceasefire with militants whose attacks have curtailed the country's crude oil exports. Later today, the API will report inventory data, which is expected to show a large draw in crude supplies; however, last week there was a very large discrepancy between the API and EIA figures.

Natural gas futures are also lower this morning on profit-taking following yesterday’s highest close since September as forecasts continue to show hotter temperatures in the coming two weeks but with Thursday’s inventory data expected to show another build.


(Late Monday) Reuters - A 300-ton crane at a Torrance, California, refinery that Exxon Mobil plans to sell fell onto a portion of a gasoline unit at the plant.


Press Release - Statoil will suspend the Songa Delta contract after work on the current well, Slemmestad, in the North Sea has been completed, Songa confirmed. The drilling contractor said the rig will go on 75% suspension rate from the end of June. The expected resumption of the work with Statoil is likely to be mid-August.

Press Release - Deutsche Bank downgraded Statoil “Sell” from “Hold.”


Goldman Sachs upgraded Cenovus to ‘Buy’ from ‘Neutral.’


Barclays initiated coverage of Energen, Laredo Petroleum, Matador Resources and Parsley Energy Inc with an ‘Equal Weight’ rating.

(Late Monday) Press Release - Energen announced that it has closed or signed purchase and sale agreements for its non-core Delaware Basin and San Juan Basin assets. Including all sales transactions with multiple, undisclosed buyers, the total gross proceeds of $551.7 million are subject to standard closing costs and transaction fees. Asset sales not yet closed are expected to close by mid-August.

(Late Monday) Reuters - Sailingstone Capital Partners reported a 10.84 percent stake in Range Resources as of June 20, 2016.

Press Release – Capital One Securities upgraded Marathon Petroleum to “Overweight” from “Equal Weight”

Press Release – Morgan Stanley upgraded Marathon Petroleum to “Overweight” from “Equal Weight”

Press Release - Rex Energy provided an update on its Moraine East Joint Development Agreement and Appalachian Basin operations. In the Moraine East Area, the company’s joint development partner, Benefit Street Partners has elected into the next 12 wells in the development program. BSP’s election increases the total capital commitment to date by BSP from $51.6 million to $98.1 million and BSP’s total well participation in the Moraine East Area to 30 wells. With the additional capital commitment from BSP, the company expects full year 2016 net operational capital expenditures to be approximately $35.5 million.

(Late Monday) Reuters - Williams Cos and Energy Transfer Equity sparred in court on Monday over a tax dispute that threatens to scuttle their $20 billion merger just one week before Williams shareholders vote on the deal to create one of the world’s largest pipeline companies.


Macquarie Research upgraded Athabasca Oil to ‘Outperform’ from ‘Neutral.’


Reuters - Pioneer Energy Services reported Quarter-To-Date utilization through May is 41%; current utilization is 42% based on a total fleet of 31 rigs for drilling. All rigs in Colombia are currently idle; the discussions about potential activity late in year and into 2017 have increased.

Press Release - Trican Well Service is pleased to announce that it has closed its previously announced offering of an aggregate of 43,125,000 common shares of Trican at a price of $1.60 per Common Share for aggregate gross proceeds to Trican of $69 million.

Press Release - Dr. Mario Ruscev has been appointed Corporate Executive Vice President and President Global Product Lines, of Weatherford International. In this position, Dr. Ruscev will provide leadership to Weatherford's product lines, as well as Global Supply Chain and will be responsible for the implementation of Company strategy and the further strengthening of Weatherford's integrated product line portfolio and operational team.


Keybanc Capital Markets upgraded Helmerich & Payne to ‘Overweight’ from ‘Sector Weight.’


Goldman Sachs downgraded Delek US Holdings to ‘Neutral’ from ‘Buy.’

Wolfe Research downgraded HollyFrontier and Valero Energy to ‘Peer Perform’ from ‘Outperform.’

Wolfe Research upgraded Tesoro to ‘Outperform’ from ‘Peer Perform.’

(Late Monday) Press Release - Tesoro, through its affiliates Tesoro Alaska Company and Tesoro Alaska Terminals, has closed the previously announced acquisition of Flint Hills Resources' wholesale marketing and logistics assets in Anchorage and Fairbanks, Alaska.


Press Release - Goldman Sachs upgraded Delek Logistics to “Buy” from Neutral.

(Late Monday) Reuters - Williams Cos and Energy Transfer Equity sparred in court on Monday over a tax dispute that threatens to scuttle their $20 billion merger just one week before Williams shareholders vote on the deal to create one of the world’s largest pipeline companies.

(Late Monday) Reuters - The City of Vancouver said on Monday it had taken legal action against the Canadian energy regulator's approval of Kinder Morgan's Trans Mountain pipeline expansion, which would increase the number of oil tankers passing through city waters.


U.S. stock index futures were indicating another positive start for major Wall Street indexes Tuesday as Brexit fears faded amid fresh polls that showed positive moves for the remain campaign. The U.S. dollar index traded mildly higher, with the euro near $1.129 and the yen weaker against the dollar at 104.4 yen. Sterling came off highs to trade near $1.468. Treasury yields were a touch lower, with the 2-year yield around 0.75 percent and the 10-year yield around 1.67 percent. Investors will also keep an eye on comments from Federal Reserve Chair Janet Yellen who is set to testify in front of the U.S. Senate Committee on Banking, Housing and Urban Affairs from 10:00 a.m. ET.

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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