Markets

Energy Sector Update for 05/09/2018: SD,ENB,ENB.TO,USAC,WPX

Top Energy Stocks

XOM +2.37%

CVX +1.68%

COP +1.65%

SLB +2.13%

OXY +5.44%

Energy stocks rallied this afternoon, with the NYSE Energy Sector Index rising over 2.4% while shares of energy companies in the S&P 500 also were up more than 2.1% as a group. West Texas Intermediate crude oil for June delivery settled $2.08 higher at $71.14 per barrel in New York while the global benchmark Brent crude July contract was advancing $2.27 to $77.12 per barrel. June natural gas futures rose a penny to $2.74 per 1 million BTU. Among energy-related ETFs, United States Oil was speeding more than 2.1% higher while United States Natural Gas declined just 0.1%. The Philadelphia oil-service sector index was up more than 2.7%.

In industry news:

Domestic crude oil prices climbed back above $71 per barrel on Wednesday, rising over 3% following U.S. President Donald Trump's announcement Tuesday he was scuttling the Iran nuclear deal and will soon re-impose "maximum" economic sanctions on the world's fifth largest oil producer. Oil futures extended their gains this afternoon after the U.S. Energy Information Administration reported a larger-than-expected drop of 2.2 million barrels in American inventories during the week ended May 4 to 433.8 million, or about 17% below year-ago levels. The EIA report largely mirrored the American Petroleum Institute survey released late Tuesday that found a 1.85-million-barrel decline in commercial supplies last week while industry experts polled by S&P Global Platts had been expecting a decline of just 400,000 barrels for today's EIA inventory report. The federal agency also said gasoline inventories fell by 2.2 million barrels last week while distillate fuels supplies fell 3.8 million barrels and propane/propylene stocks rose 700,000 barrels during the seven days ended May 4.

Among energy stocks moving on news:

+SandRidge Energy ( SD ) advanced Wednesday, climbing as much as 5% today, after announcing a long-term agreement with privately held Advantage Midstream LCC to bring gas conversion services to SandRidge properties in the North Park basin in northern Colorado. SandRidge is expecting the deal will help it better utilize and extract value from its natural gas holdings while Advantage will own and operate the system and market all liquid fuels produced at the plant. Financial terms and other details of the strategic pact were not disclosed.

In other sector news

+ USA Compression Partners ( USAC ) rose over 1% on Wednesday, climbing to within 8 cents of its 52-week high at $18.33 a share despite reporting a surprise Q1 net loss, reversing a net profit during the same quarter last year, and revenue trailing Wall Street estimates. The oilfield-services company swung to a net loss of $0.23 per share during the three months ended March 31 compared to $0.02 per share in net income during the same quarter last year and missing the Capital IQ consensus expecting a $0.10 per share Q1 profit this year. Total revenue increased to $77.7 million from $66 million during the year-ago period but also lagged the $78.4 million Street view. USA Compression also is projecting an FY18 net loss between $30 million to $50 million, or about $0.32 to $0.53 per share, based on its 93.85 million shares outstanding. The Street has been expecting the company to produce $0.52 per share in net income for the 12 months ending Dec. 31.

+ Enbridge (ENB,ENB.TO) jumped almost 3% higher on Wednesday after saying its U.S. indirect subsidiary agreed to sell its American natural gas and natural gas liquids gathering, processing and transportation businesses in Texas, Oklahoma and Louisiana to an affiliate of ArcLight Capital Partners for $1.120 billion in cash. The transaction with AL Midcoast Holdings LLC is expected to close during the July-to-September quarter, subject to closing adjustments and receipt of customary in the third quarter of 2018, subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions. Proceeds from the sale will be used to accelerate efforts to strengthen the parent companyy's balance sheet and bolster its financial flexibility.

+ WPX Energy ( WPX ) was fractionally higher during Wednesday trading after the crude oil and natural gas producer launched a $400 million public offering of senior unsecured notes due 2026. Net proceeds from the bond sale will be used to reacquire a portion of its 6.00% senior notes due 2022 and 8.25% senior notes due 2023 through cash tender offers as well as the planned redemption of its 7.50% senior notes due 2020. Any remaining funds will be used for general corporate purposes, including repaying other outstanding debt.

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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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