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Energy Market Commentary May 19, 2017: Nasdaq Advisory Services

Friday, May 19, 2017

Sector Commentary

Energy stocks are higher in the pre-market on extension of gains in crude prices as well as positive momentum in broader index futures.

WTI prices topped $50, heading for a second straight week of gains, on growing expectations that OPEC will agree to extend production cuts at next week’s meeting and potentially deepen them as well. Some skepticism remains on the efficacy of the cuts following news yesterday that Saudi exports rose by 275K bpd in March from February. However, technical buying drove the momentum after both WTI and Brent yesterday closed above their 50 and 200 day moving averages. The market is looking ahead to results of the Iranian election as well as the rig count and CFTC data that are due later today.

Natural gas futures are moderately higher, but remain lower by more than 6% for the week as yesterday’s storage report showed a larger than expected build in supplies.

U.S. INTEGRATEDS

(Late Thursday) Reuters - ExxonMobil said that it will start importing its own gasoline into Mexico before the end of the year to supply the Mobil-brand gas stations it will be opening in Latin America's second largest economy.

(Late Thursday) Reuters - Exxon Mobil’s 502,500 barrel per day Baton Rouge, Louisiana, refinery returned the second largest crude distillation unit to full production.

INTERNATIONAL INTEGRATEDS

Press Release - The board of BP confirms that Melody Meyer was elected as a Non-Executive Director at the company's annual general meeting on 17 May.

(Late Thursday) Reuters - Operations were normal at BP’s 413,500 barrel per day Whiting, Indiana, refinery despite flaring over the midday into early afternoon on Thursday.

Press Release - Gazprom does not plan to involve Novatek in the development of the fields of the Tambeyskaya Group, it will do it on its own.

Press Release - Gazprom transfers oil and gas condensate field Tsentralnoye in the southern part of the Russian sector of the Caspian Sea to Gazprom Neft.

Reuters - Gazprom said it may increase its gas production forecast due to robust demand. Initial production plans for this year envisaged output of 430 billion cubic metres of gas.

Reuters - Statoil exercised the option for an additional well with Dolphin Drilling AS, a subsidiary of Fred. Olsen Energy, for use of the semi-submersible drilling unit Bideford Dolphin.

U.S. E&PS

Press Release - Callon Petroleum announced, subject to market and other conditions, it intends to offer an additional $150 million aggregate principal amount of its 6.125% senior unsecured notes due 2024 in a private placement to eligible purchasers under Rule 144A and Regulation S of the Securities Act of 1933, as amended.

(Late Thursday) Press Release - Cobalt International Energy entered into definitive documents in connection with, and consummated, a debt exchange transaction with certain holders of the Company’s outstanding 3.125% Convertible Senior Notes due 2024.

Press Release - Concho Resources announced that Joe Wright, the Company’s Executive Vice President and Chief Operating Officer, has been appointed to the Board of Directors. Mr. Wright announced his intention to retire as an officer of the Company in January 2019. In addition, Jack Harper, currently Executive Vice President and Chief Financial Officer, has been named President and Chief Financial Officer. Will Giraud will continue to serve as Executive Vice President until January 2019, when he will succeed Mr. Wright as Chief Operating Officer.

(Late Thursday) Press Release - RSP Permian announced the pricing of an underwritten public offering of 15,000,000 shares of its common stock for expected gross proceeds of approximately $585,000,000 before underwriting discounts and commissions and estimated offering expenses. The shares of common stock are being sold by Silver Hill Energy Partners Holdings, LLC and Silver Hill Energy Partners II. The Selling Stockholders have granted the underwriter a 30-day option to purchase up to an additional 2,250,000 shares of the Company's common stock.

Press Release - Williams Companies announced that Stephen W. Bergstrom has been elected Chairman of the Board, effective immediately. Mr. Bergstrom will replace Dr. Kathleen B. Cooper who will become Chair of the Board’s Nominating and Governance Committee.

OIL SERVICES

Raymond James downgraded Canadian Energy Services & Technology to ‘Outperform’ from ‘Strong Buy.’

MLPs & Pipelines

Press Release - Energy Transfer Partners announced its tender offer to purchase all of the outstanding common units representing limited partner interests in PennTex Midstream Partners not currently owned by ETP for $20.00 per common unit in cash. ETP currently owns approximately 32.4% of the outstanding PennTex common units. The tender offer will expire on June 19, 2017, unless the offer is extended in accordance with its terms.

Robert Baird downgraded PennTex Midstream Partners to ‘Neutral’ from ‘Outperform.’

RBC Capital Markets downgraded PennTex Midstream Partners to ‘Sector Perform’ from ‘Outperform.’

MARKET COMMENTARY

U.S. stock index futures pointed to a higher open on Friday as concerns over the stability of the U.S. administration ease. The Dow Jones industrial average recovered on Thursday from its worst day of 2017, gaining around 55 points. In Europe, the pan-European Stoxx 600 index was around 0.44 percent higher on Friday morning. In Asia, the Shanghai Composite in China closed 0.03 percent higher, while the Nikkei in Japan closed 0.19 percent higher.

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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