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Markets

Futures On Both Sides Of The Atlantic Near Lowest Levels Since 2017

Friday, December 21, 2018

Sector Commentary

The energy sector is poised for a lower start, weighed down by further weakness in the crude complex while major equity indices continued to slide on growing worries of slowing global growth and the threat of a U.S. government shutdown.

WTI crude oil futures are down over 1% in early trading, failing better than Brent which is off nearly 2% ahead of the equity market open. Futures on both sides of the Atlantic are down near their lowest levels since the third quarter of 2017 and are headed for losses of more than 11% for the week on the backs of persistent global oversupply and growth concerns which kept buyers away from the market ahead of next week's holiday shortened trading. Prices found some support overnight after Saudi Arabia pledged to lower its output by 322K bpd from October levels, more than the 250K bpd announced at the OPEC meeting earlier this month but the gesture did little to ease the markets.

Natural gas futures jumped nearly 3% this morning, partially retracing yesterday's decline but the gains put the front month largely flat on the week.

US INTEGRATEDS

(Late Thursday) Press Release - Ecopetrol reported that it closed a deal with companies of the Shell and Chevron groups, which will allow it to expand its stake in Brazil's Pre-Salt Region. The agreement grants Ecopetrol a 10% stake in the Saturno block, located in the central region of the Santos basin, which was assigned to Shell and Chevron last September 28th in the Fifth Pre-Salt Round held by the Brazilian National Agency of Petroleum, Natural Gas and Biofuels.

INTERNATIONAL INTEGRATEDS

Press Release - Kosmos Energy and its partners announced that a Final Investment Decision (FID) for Phase 1 of the Greater Tortue Ahmeyim project has been agreed. The decision was made by Kosmos, BP , Petrosen and SMHPM following a meeting to agree final elements held in Nouakchott between President Mohamed Ould Abdel Aziz of Mauritania and President Macky Sall of Senegal.

Reuters - Petroleo Brasileiro will suspend any new divestment initiatives in oil exploration or production. The decision suspended an agreement between Petrobras, as the company is known, and the Brazilian government that helped shield the company from liability as it seeks to dispose of some $27 billion in assets in order to raise cash to pay its debts. The agreement also imposed transparency rules.

(Late Thursday) Press Release - Ecopetrol reported that it closed a deal with companies of the Shell and Chevron groups, which will allow it to expand its stake in Brazil's Pre-Salt Region. The agreement grants Ecopetrol a 10% stake in the Saturno block, located in the central region of the Santos basin, which was assigned to Shell and Chevron last September 28th in the Fifth Pre-Salt Round held by the Brazilian National Agency of Petroleum, Natural Gas and Biofuels.

Press Release - Total and Petrobras announced that they have achieved significant progress in the scope of their Strategic Alliance, signed in March 2017: The first concrete results of jointly implemented R&D projects. The transfer of rights of the remaining 10% from Petrobras to Total in the Lapa field for a consideration of US$50 million. The signing of a binding Master Agreement between Total Eren and Petrobras for the creation of a Joint Venture by July 31, 2019 to develop onshore projects in the solar and wind segments in Brazil.

Press Release - Total has agreed to develop joint activities in the downstream petroleum sector in Angola, with national company Sonangol. Already long-term partners in the upstream business, the two companies have decided to establish a Joint Venture company to develop a common retail and distribution activity in the country, the fourth largest market in sub-Saharan Africa.

U.S. E&PS

(Late Thursday) Press Release - Abraxas Petroleum provided the following operational update. In McKenzie County North Dakota, our four well Ravin NE Pad has been on production for 25 days and has averaged 1,182 barrels of oil and 2.1 million cubic feet of gas per day (1,532 barrels of oil equivalent per day, BOEPD) per well. Production is currently being restricted due to an aberration in the North Dakota crude oil market where December differentials are approximately $21 per barrel. However, we have been successful in locking in January differentials at less than $9 per barrel. The latest two Abraxas pads are not subject to our existing crude oil market agreement, which calls for a fixed differential of less than $5 per barrel through February 2019, and therefore are subject to spot market differentials. The gas from this pad is currently being flared due to third party delays in getting connected to a gas sales line. Abraxas owns an approximate 55% working interest in two of these wells and an approximate 29% percent working interest in the other two.

(Late Thursday) Press Release - Alta Mesa Resources announced the resignations of Harlan H. Chappelle, President and Chief Executive Officer, and Michael E. Ellis, Vice President and Chief Operating Officer-Upstream, effective December 26, 2018. Mr. Chappelle and Mr. Ellis will also resign as members of the Company's board of directors, effective immediately. James Hackett, Executive Chairman of the Board, has been named Interim Chief Executive Officer of the Company. The Company also announced that it has entered into an agreement with Meridian Energy LLC ("Meridian"), which is led by Randy L. Limbacher, John H. Campbell and Mark P. Castiglione. Meridian is a private equity portfolio advisory company. Mr. Limbacher will serve as the President, Mr. Campbell will serve as the Chief Operating Officer - Upstream and Mr. Castiglione will serve as the Chief of Staff to the President, on a consulting basis. The new leadership team will share details of the 2019 operating and financial plan early next year. Michael A. McCabe remains Vice President and Chief Financial Officer, as a search continues for his replacement.

Citigroup upgraded Cabot Oil & Gas , Continental Resources , Marathon Oil and Parsley Energy to 'Buy' from 'Neutral'.

(Late Thursday) Press Release - Halcón Resources announced it has closed on the previously announced divestiture of all of its water infrastructure assets across the Delaware Basin to a subsidiary of WaterBridge Resources for $200 million in cash. In addition to the $200 million received on December 20, the Company has an opportunity to earn potential incentive payments of up to $25.0 million per year for each of the next five years ($125 million total) subject to Halcón's ability to meet certain annual incentive thresholds which will be driven by, among other things, the Company's development program.

Press Release - Kosmos Energy and its partners announced that a Final Investment Decision (FID) for Phase 1 of the Greater Tortue Ahmeyim project has been agreed. The decision was made by Kosmos, BP, Petrosen and SMHPM following a meeting to agree final elements held in Nouakchott between President Mohamed Ould Abdel Aziz of Mauritania and President Macky Sall of Senegal.

Press Release - Ring Energy announced that it has entered into a Purchase and Sale Agreement with Tessara Petroleum Resources, a wholly owned subsidiary of The Carlyle Group L.P., to acquire assets located in Andrews County, Texas for 2,623,948 shares of common stock of the Company valued at $5.80 per share. The closing date of the transaction will be prior to year-end 2018, with an effective date of November 1, 2018.

Press Release - Sanchez Energy announced that it has received notice from the New York Stock Exchange that the company does not presently meet the NYSE continued listing standard which requires a minimum average closing price of $1.00 per share over a period of 30 consecutive trading days.

OILFIELD SERVICES

(Late Thursday) Press Release - U.S. SilicaHoldings and Liberty Oilfield Services announced that they have a settled an intellectual property lawsuit and related counterclaims involving U.S. Silica's Sandbox Logistics unit. In addition, Liberty and U.S. Silica have signed an amended and restated sand supply agreement for the purchase of sand from U.S. Silica.

MLPS & PIPELINES

Press Release - Seaway Crude Oil Pipeline Company, a 50/50 joint venture owned by affiliates of Enterprise Products Partners and Enbridge , announced the start of a binding open season to gauge shipper support for expanded crude oil capacity on its existing system originating in Cushing, Oklahoma and extending to the Texas Gulf Coast area. The expansion could provide approximately 100,000 barrels per day of incremental capacity, projected to be available by February 1, 2019. The final volume of capacity for committed and uncommitted service, as well as the points of origin and destination, will be determined based on the results of the open season.

Stifel downgraded Western Gas Partners to 'Hold' from 'Buy'.

MARKET COMMENTARY

U.S. stock futures were down with global equities also largely in the red, as investors' mood was soured by the threat of a U.S. government shutdown and further hikes by the Fed amidst slowing economic growth. Gold edged lower while the dollar gained some ground against its peers. Eyes will be on U.S. inflation numbers due later, which include the Fed's preferred measure of core inflation. Final reading of third-quarter gross domestic product and durable goods data are on the radar.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP

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.