Thursday, December 14, 2017
Energy stocks are set to open just below breakeven as yesterday's weakness in oil prices is carrying over this morning. A handful of analyst recommendation changes may swing some individual names, though commodity price movements will likely continue to dictate broader direction across the sector as traders increasingly become less active as the end of the calendar year nears.
Oil prices were lower for a third straight session, with futures continuing to reel from yesterday's unexpected large build in gasoline inventories. Additionally, the IEA increased its forecast for U.S. oil output growth in 2018. The IEA said "2018 may not be quite so happy for OPEC producers" as the OPEC extension is being met with increased U.S. production. The agency stated, "going into 1Q18, our balances imply that global oil stocks will increase by +300K bpd assuming stable OPEC crude production of 32.5M".
Natural gas futures were lower by approximately 1.7% amid modest December seasonal temperatures and after the 2018 strip price touched an all-time low dating back to 2015 earlier this week. Expectations of elevated natural gas production in 2018 are pressing down on the price curve, while inventory levels sit just below the 5-year average.
(Press Release) - Reference is made to the previous announcements by Statoil ASA regarding the Dividend Issue for the second quarter 2017. The subscription period expired on 4 December 2017 and subscriptions were made for a total of 17,509,536 Dividend Shares in the Dividend Issue, reducing the dividend payable by approximately USD 335 million for the Company. Approximately 49% of shareholders' total net dividend have been used to subscribe for shares in the Dividend Issue.
Press Release - Cenovus Energy plans to invest between $1.5 billion and $1.7 billion in 2018, with the majority of the budget allocated to sustain base production at the company's oil sands operations. The remaining capital will primarily support continued construction at the phase G oil sands expansion at Christina Lake, where costs are coming in below original expectations, and a targeted drilling program in the Deep Basin. This budget reflects Cenovus's focus on capital discipline, cost reduction and deleveraging.
Press Release - Cobalt International Energy announced that it and certain of its U.S. affiliates filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the "Chapter 11 Cases"). Cobalt expects to conduct business in the ordinary course, and its cash on hand is expected to provide Cobalt with adequate liquidity to fund its operations during the restructuring process. The Chapter 11 Cases are expected to facilitate the restructuring process and the proposed sale of Cobalt's assets.
Goldman Sachs upgraded ConocoPhillips to 'Buy' from 'Neutral.'
(Late Wednesday) Press Release -The Board of Directors of EOG Resources has declared a dividend of $0.1675 per share on EOG's Common Stock, payable January 31, 2018, to stockholders of record as of January 17, 2018. The indicated annual rate is $0.67.
(Late Wednesday) Press Release - EP Energy LLC, a wholly-owned subsidiary of EP Energy announced that it and its wholly-owned subsidiary, Everest Acquisition Finance Inc., as co-issuer (together with EP Energy, the "Issuers"), have amended certain terms of the previously-announced exchange offers (the "Exchange Offers") and consent solicitations (the "Consent Solicitations") that they launched on November 20, 2017 to exchange up to $1.2 billion aggregate principal amount (subject to change, the "Maximum Exchange Amount") of new 9.375% Senior Secured Notes due 2024 (the "New Notes") for the Issuers' outstanding Senior Notes listed in the table below (collectively, the "Old Notes"). The Issuers have negotiated these terms with a steering committee of holders of the 2020 Notes represented by Akin Gump Strauss Hauer & Feld LLP. Members of the steering committee have indicated that such terms are acceptable to them.
Goldman Sachs reinstated Kosmos Energy Ltd. at 'Neutral.'
(Late Wednesday) Press Release - Enerplus announced its 2018 exploration and development capital budget of $535 to $585 million which is focused on generating sustainable and profitable cash flow growth, while maintaining the Company's significant financial strength.
Press Release - Tidewater Midstream and Infrastructure Ltd. has agreed to issue $125-million of 6.75 per cent senior unsecured notes due Dec. 19, 2022, by way of private placement. The Notes will be issued at a price of $994.79 per $1,000 principal amount. The Private Placement is expected to close December 19, 2017, subject to the satisfaction of customary closing conditions.
MLPs & Pipelines
(Late Wednesday) Press Release - Keyera announced a cash dividend for December 2017 of 14.00 cents per common share. The dividend will be payable on January 15, 2018, to shareholders of record on December 22, 2017. The ex-dividend date is December 21, 2017. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada). For non-resident shareholders, Keyera's dividends are subject to Canadian withholding tax.
Press Release - LINN Energy announces the following strategic updates: Intends to commence a tender offer to purchase at least $250 million of its stock at a premium to the current market price prior to year-end 2017. Plans to separate LINN into three standalone companies by mid-2018. Provides an operational update on Roan Resources LLC ("Roan"), a Merge/SCOOP/STACK pure play company Proposed Tender Offer Prior to year-end 2017, the Company intends to commence a tender offer to purchase for cash at least $250 million of shares of its common stock at a premium to the current market price. LINN intends to use a portion of the available cash from the recently completed sales of its Williston and Washakie properties for a combined contract price of $485 million to finance the tender offer. Pro forma for the tender, the Company expects to have a positive cash balance to maintain operational flexibility.
U.S. stock index futures were higher with the big banks among early gainers after the Federal Reserve raised its interest rate for the third time in 2017. Adobe, Costco Wholesale and Oracle are scheduled to report after markets close. European shares and the euro dipped as cautious comments from Fed Chair Janet Yellen on persistently low inflation rattled investors. Asian markets closed mixed. Gold pulled back from a one-week high as the dollar pared losses.
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