Investor Relations

Energy Market Commentary June 3, 2016: Nasdaq Advisory Services

Friday, June 3, 2016

Sector Commentary

Energy stocks are expected to open mixed to lower, tracking the broader equity markets after a disappointing May Employment Report weighed on broader equity futures, treasury yields and the dollar. The report showed the economy produced the fewest jobs in six years, casting doubt on a rate hike by the Federal Reserve in June. With little sector specific drivers today, trading is again expected to be muted.

WTI crude oil futures are modestly lower in early trading but well off morning lows, as further declining U.S. oil stocks and a sharp decline in the dollar boosted market sentiment while OPEC’s rejection of production caps yesterday continued to weigh. But some supporting comments from the OPEC meeting today helped assuaged concerns over an intensified battle for market share between rivals Saudi Arabia and Iran.

Natural gas futures extended their recent rally and are up more than 1% in early trading boosted by expectations of higher cooling demand over the next two weeks.

INTERNATIONAL INTEGRATEDS

(Late Thursday) Reuters - BP agreed on Thursday to pay $175 million to shareholders who brought a class-action lawsuit that accused the oil company of misleading them by understating the severity of the 2010 oil spill in the Gulf of Mexico.

Press Release - InterOil announced that Glass Lewis has joined Institutional Shareholder Services and Egan Jones Proxy Services in recommending that InterOil shareholders vote "FOR" InterOil's director nominees by voting on the WHITE proxy card at the Corporation's Annual and Special Meeting of Shareholders to be held on June 14, 2016.

(Late Thursday) Press Release - Helix Energy Solutions Group announced that it has completed its contract renegotiations with Petrobras and has entered into amendments to its well intervention services contracts for its two chartered vessels, the Siem Helix 1 and the Siem Helix 2, offshore Brazil. The contract for the Siem Helix 1, originally scheduled to begin no later than July 22, 2016, was amended to commence between July 22, 2016 and October 21, 2016, and the day rate under the contract has been reduced to a level acceptable to both parties. The contract for the Siem Helix 2, originally scheduled to begin no later than January 21, 2017, was amended to commence between October 1, 2017 and December 31, 2017; the day rate under this contract was not changed.

Reuters - Statoil, on behalf of the Johan Sverdrup licence, awarded Rosenberg WorleyParsons a contract for fabrication of three bridges and two flare towers. Contract value is close to nok 600 million.

Reuters - Statoil agreed to acquire JX Nippon’s 45 pct equity share in, and operatorship of, the UK licence for the Utgard field. On conclusion of this transaction Statoil will increase its holding in UK licence P312 to 100 pct, having previously acquired stakes from First Oil in October 2015 and Talisman Sinopec in December 2015.

Reuters - Total has started preparations for the sale of its specialty chemicals and equipment division Atotech, which may be valued at about 3 billion euros.

U.S. E&PS

(Late Thursday) Press Release - Bill Barrett announced that it has agreed to a privately negotiated exchange with a holder of the Company's 7.625% Senior Notes due 2019. In the transaction, the holder has agreed to exchange approximately $84.7 million aggregate principal amount of the Notes for 10 million newly issued shares of the Company's common stock plus the cash payment of accrued and unpaid interest. As a result of this transaction, the Company reduced the principal amount of the nearest term Notes by 21% and net debt by 12%. Furthermore, the Company will realize annual interest savings of approximately $6.5 million.

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. The dividend will be paid on June 30,

2016 to stockholders of record as of June 15, 2016.

OIL SERVICES

Stephens downgraded Helix Energy Solutions Group to ‘Equal Weight’ from ‘Overweight.’

(Late Thursday) Press Release - Helix Energy Solutions Group announced that it has completed its contract renegotiations with Petrobras and has entered into amendments to its well intervention services contracts for its two chartered vessels, the Siem Helix 1 and the Siem Helix 2, offshore Brazil. The contract for the Siem Helix 1, originally scheduled to begin no later than July 22, 2016, was amended to commence between July 22, 2016 and October 21, 2016, and the day rate under the contract has been reduced to a level acceptable to both parties. The contract for the Siem Helix 2, originally scheduled to begin no later than January 21, 2017, was amended to commence between October 1, 2017 and December 31, 2017; the day rate under this contract was not changed.

(Late Thursday) Press Release - Mitcham Industries announced that it has priced an underwritten public offering of 320,000 shares of 9.00% Series A Cumulative Preferred Stock at a price of $25.00 per share, pursuant to a registration statement on Form S-1 previously filed with the U.S. Securities and Exchange Commission.

Press Release - Patterson-UTI Energy reported that for the month of May 2016, the Company had an average of 53 drilling rigs operating in the United States, and less than one rig in Canada. For the two months ended May 31, 2016, the Company had an average of 55 drilling rigs operating in the United States and less than one rig in Canada.

(Late Thursday) Press Release - Schlumberger has acquired Omron Oilfield and Marine.

Piper Jaffray upgraded Weatherford International to ‘Overweight’ from ‘Neutral.’

DRILLERS

Zephirin Group downgraded Pacific Drilling to ‘Sell’ from ‘Hold.’

mlpS

TD Securities resumed coverage of Gibson Energy with a ‘Hold’ rating.

National Bank Financial resumed coverage of Gibson Energy with a ‘Sector Perform’ rating.

(Late Thursday) Reuters - Magellan Midstream Partners has suspended service on a segment of its Magellan Southrefined products pipeline system in Houston as a safetyprecaution due to area flooding,

MARKET COMMENTARY

Wall Street was set to open lower on Friday after much weaker-than-expected jobs data for May that pointed to labor market weakness and raised doubts if the economy was healthy enough to absorb an interest rate hike in the coming months. The Labor Department said nonfarm payrolls increased by only 38,000 last month, the smallest gain since September 2010 and well below economists' forecast of 164,000. The jobless rate fell three-tenths of a percentage point to 4.7 percent, the lowest since November 2007. The decrease was in part due to a people dropping out of the labor force. Traders are now pricing in only a 6 percent chance of the Federal Reserve increasing rates in June, from a 20 percent probability just before the payrolls data, according to CME Group's FedWatch program.


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.

Other Topics

Energy