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Energy Market Commentary: Positive Momentum As Markets Continue Bullish Trends

Wednesday, October 18, 2017

Sector Commentary

Energy stocks are strengthening in the pre-market on modest positive momentum in crude prices while broader markets continue their bullish trends.

Shares of Encana will be in focus on its investor day which includes an updated 5 year plan. After two ratings upgrades yesterday, Chevron received two downgrades today, garnering pre-market trading .

WTI and global prices are moderately higher as the markets continue to monitor the geopolitical tensions between Iraq and Kurdistan and the US and Iran. Additionally, the API data was very bullish showing that crude supplies in the US feel by 7.1 million barrels, which was far bigger than the draw of 3.2 million expected by analysts, although official government data today will be a more important driver of price.

Natural gas futures are accelerating losses, down more than 2%, on the latest weather forecasts calling for warmer weather and less heating demand over the next two weeks than previously forecast a day ago.

U.S. INTEGRATEDS

BMO Capital Markets downgraded Chevron to 'Market Perform' from 'Outperform.'

Societe Generale downgraded Chevron to 'Hold' from 'Buy.'

Press Release - ExxonMobil Chemical, a subsidiary of Exxon Mobil , is now producing high-performance polyethylene on the first of two new lines at its plastics plant in Mont Belvieu, Texas. The Company also is making strides in its partnership with Saudi Basic Industries Corporation to build one of the world's largest ethane steam-cracker plants near Corpus Christi, Texas. Industrial Info is tracking both projects, the latter of which is valued at roughly $10 billion.

INTERNATIONAL INTEGRATEDS

(Late Tuesday) Reuters - Reliance Industries, along with partner BP , has submitted a $1.4 billion plan to produce 7 million cubic metres a day of natural gas from KG-D6 deep-sea fields in the Bay of Bengal. The Company will develop the "satellite fields" - D2, D6, D19 and D22 -in the gas-rich block along with two nearby gas fields D29 and D30.

(Late Tuesday) Reuters - Iraqi Oil Minister Jabar al-Luaibi has asked BP ''to quickly make plans to develop the Kirkuk oifields.'' Iraqi government forces took control of the oil-rich region of Kirkuk from Kurdish Peshmerga fighters who had occupied the area in 2-14, in the course of the war on Islamic State. BP said it will study the Kirkuk oilfields only when stability returns.

Citi upgraded Gazprom PAO to 'Buy' from 'Neutral.'

Societe Generale downgraded Petroleo Brasileiro Petrobras SA to 'Hold' from 'Buy.'

Reuters - Oil major Royal Dutch Shell has launched a fast-charging service for electric vehicles at three Shell service stations near London and in northern England, the company said on Wednesday.

Press Release - ROYAL Dutch Shell will begin construction of a new $10bn (£7.6bn) petrochemicals site in the gas-rich Marcellus shale basin in the US within the next 10 weeks as part of a radical growth plan.

Reuters - Statoil ASA has started production on the world's first floating wind farm. The 30MW wind farm, operated by Statoil in partnership with Masdar, is located 25 kilometers offshore Peterhead in Aberdeenshire, Scotland and will power approximately 20,000 households.

U.S. E&PS

(Late Tuesday) Press Release - Continental Resources announced its first-ever sale of Bakken oil specifically for delivery overseas. The Company has sold 1,005,000 barrels of Bakken crude oil for November delivery to Atlantic Trading and Marketing, which intends to export the oil to China.

(Late Tuesday) Press Release - Energy XXI Gulf Coast provided an update on operations. Due to Hurricane Nate's course through the Gulf of Mexico, the Company and third-party operators evacuated crews on October 5. The Company began restoring production once pipelines and onshore facilities were returned to service. At this time, the Company estimates about 3,000 net barrels of oil equivalent daily production remains curtailed due to the storm.

Press Release - Goodrich Petroleum announced that it has entered into a $250 million Senior Secured Revolving Credit Agreement with JP Morgan Chase Bank, SunTrust Bank, and SunTrust Robinson Humphrey. The Company also announced that it has entered into an additional swap of undeveloped acreage on a portion of its core North Louisiana Haynesville Shale acreage. The Company swapped approximately 900 net acres out of its Metcalf area of central Caddo Parish for a similar amount of acreage in its Bethany-Longstreet area in southern Caddo Parish.

Press Release - Halcón Resources announced near-term expected production data. Halcón estimates third quarter 2017 production associated with its Delaware Basin assets averaged approximately 4,750 boe/d. The Company expects fourth quarter 2017 production to average 7,500 to 9,500 boe/d. This guidance range accounts for the sale of the Company's Williston Basin non-operated assets that is expected to close on November 9, 2017 for approximately $104 million. Production generated from the Delaware Basin assets alone is expected to average 6,500 to 7,500 boe/d for the fourth quarter.

CANADIAN E&PS

Press Release - At today's investor day in New York, EnCana Corp. president and chief executive officer Doug Suttles, along with members of the executive and management teams, will outline the company's relentless focus on creating value and its updated five-year plan.

(Late Tuesday) Press Release - Packers Plus Energy Services has partnered with Gran Tierra Energy to optimize well performance as the Company advances its conventional development program in Colombia. Using a Packers Plus multi-stage completion system, the operator successfully stimulated the targeted reservoir through a horizontal wellbore with a 10-stage completion.

OIL SERVICES

Portzamparc upgraded CGG SA to 'Hold' from 'Sell.'

(Late Tuesday) Press Release - Hi-Crush Partners announced that the Board of Directors of its general partner has declared a quarterly cash distribution of $0.15 per unit on all common units, or $0.60 on an annualized basis, for the third quarter of 2017. Separately, the Board of Directors also approved a unit buyback program of up to $100 million.

DRILLERS

(Late Tuesday) Press Release - Transocean announced that the ultra-deepwater drillship, Deepwater Invictus, was awarded a two-year contract plus three one-year priced options with a subsidiary of BHP Billiton. The backlog associated with the firm contract is approximately $106 million. The contract is expected to commence in the second quarter of 2018.

MARKET COMMENTARY

The Dow is set to breach its 23,000 mark at open, while other major indexes were slightly higher. Abbott Laboratories is scheduled to report later in that day and data on Building Permits and Housing Starts for September are expected. Meanwhile, the U.S. Federal Reserve issues the Beige Book. A flurry of earnings helped European stocks gain, while Asian markets were little changed after China President Xi Jinping kicked off the twice-a-decade party congress with a wide-ranging speech. Gold fell on pressure from a firmer dollar amid speculation that the next U.S. Fed chair may be a policy hawk. Oil prices edged higher ahead of the weekly U.S. crude inventories data, which is expected to have fallen steeply.

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 . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.