Energy Sector Update for 03/07/2018: BAS,FELP,TGA,TGL.TO,OBE

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Energy stocks followed Wall Street lower Wednesday, with the NYSE Energy Sector Index falling more than 1.3% while shares of energy companies in the S&P 500 also were down almost 1.1% as a group. Crude oil for April delivery settled $1.45 lower at $61.15 per barrel in New York while the benchmark Brent crude April contract was declining $1.17 to $64.62 per barrel. April gas futures rose 3 cents to $2.78 per 1 million BTU. Among energy-related ETFs, United States Oil was down nearly 2.0% while United States Natural Gas was up almost 1.1%. The Philadelphia oil-service sector index also was down almost 1.5%.

In industry news:

U.S. crude oil inventories rose by 2.408 million barrels during the seven days ended March 2, reaching 425.9 million barrels, the U.S. Energy Information Administration said Wednesday morning. That topped Wall Street expectations for a 2.190-million-barrel rise last week although the new supply total was down 19.4% compared with year-ago levelsand also trailed the American Petroleum Institute estimate of a 5.661-million-barrel build. Gasoline inventories fell 800,000 barrels to 251.0 million last week while distillate supplies fell 600,00 barrels to 137.4 million.

Among energy stocks moving on news:

-Basic Energy Services ( BAS ) declined Wednesday after the oilfield-services company said it will not proceed with a $300 million offering of senior secured notes, concluding current rates and available structure in the market lacked sufficient flexibility to be attractive. The company had been seeking the additional funds to refinance its $165 million loan facility maturing. It is continuing talks with potential lenders to secure a new five-year, asset-based revolving credit facility with up to $150 million in borrowing capacity, the company said, adding if the new facility becomes effective, it will replace Basic's existing $120 million asset-based credit line.

In other sector news

+ Foresight Energy ( FELP ) was hanging on to a small gain Wednesday afternoon, easing from a 4.5% opening advance to a session high of $3.95 per unit, after narrowing its Q4 net loss compared with year-ago levels as revenue rose. The thermal coal producer recorded a $0.49 per unit during the three months ended Dec. 31, improving on a $0.65 per unit loss during the year-ago period. Revenue grew to $284.6 million from $252.9 million last year, exceeding the two-analyst consensus looking for $264.8 million in quarterly revenue. of two analysts rated by Capital IQ. The company also declared a $0.0565 per unit distribution from retained excess cash flow, down from $0.061 per unit during its previous distribution and payable March 30 to investors of record on March 20.

- TransGlobe Energy (TGA,TGL.TO) was fractionally lower during Wednesday U.S. trade, recovering from a nearly 2% decline to $1.27 a share earlier in the session after the oil and natural gas producer narrowed its Q4 net loss as oil prices improved and sales nearly tripled compared with year-ago levels. The company recorded a net loss of $0.03 per share during the three months ended Dec. 31, 2017, paring a $0.49 per share loss during the year-ago period. Petroleum and natural gas sales climbed 198% to just under $73.0 million from $24.5 million last year. Analyst estimates were not available.

- Obsidian Energy ( OBE ) was down over 5%, bouncing back from a 9% decline to a session low of 89 cents a share, after reporting a 10% year-over-year increase in Q4 production and reaffirming its FY18 production outlook. The company averaged 31,447 barrels of oil equivalent per day during the three months ended Dec. 31, up 10% from the same period in 2016, adjusted for A&D. The company also said its total FY18 forecast remains unchanged, expecting to produce between 29,000 to 30,000 barrels per day this year. It also is expecting a 5% production growth rate and its operating costs in a range of $13.00 to $13.50 per barrel.

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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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