Investor Relations

Nasdaq Advisory Services Energy Commentary May 10, 2016

Tuesday, May 10, 2016

Sector Commentary

The energy sector is expected to recover some of yesterday’s losses as the crude complex exhibits strength this morning on support from continued supply outages and mean reversion. Energy corporate news is light as earnings season has mostly wound down. A handful of small and mid-cap E&Ps and service providers released results this morning, generally showing losses in-line with estimates.

Both Brent and WTI prices are higher, with the overseas benchmark outperforming NYMEX oil; however, crude prices remain lower by nearly 2% for the week, as the market is unsure how to interpret supply disruptions in Canada and Nigeria against a backdrop of global oversupply. The matter of oversupply was further amplified on Tuesday following comments from Saudi Aramco that the company would likely increase its output. Traders said that “speculative financial investors also appear to be switching sides ... they significantly reduced their net long positions in Brent for the first time in eight weeks," analysts at Commerzbank said, citing the rationale for yesterday’s price weakness. Yesterday’s data from Genscape also weighed on sentiment, as it suggested we could see a crude supply build of 1.4 million barrels, which far exceeded the 50K barrel increase that analysts are expecting to be shown when the API and EIA release later. Slowdown of Canadian imports is expected to materialize in a lower crude supply build.

Natural gas futures are higher by nearly 3% on warmer temperature forecasts for the next two weeks and on expectations that this week’s supply data will show a smaller injection relative to historical averages.

U.S. INTEGRATEDS

  • Reuters - Crude oil production at Exxon Mobil's Cepu oil block in Indonesia had peaked at
  • 185,000 barrels per day this week.
  • (Late Monday) Reuters - Exxon Mobil Torrance, California refinery is preparing to restart its major gasoline processing unit. It is anticipated that the restart will result in higher particulate matter emissions for about six hours.

INTERNATIONAL INTEGRATEDS

  • (Late Monday) Reuters - BP is scheduled to shut down a crude unit and a fluid catalytic cracker on Wednesday at its 160,000 barrel-per-day refinery in Toledo, Ohio for up to 70 days of planned maintenance. It also reduced production on Sunday night on the smallest crude distillation unit at the 413,500-barrel-per-day Whiting, Indiana.
  • (Late Monday) Reuters - Royal Dutch Shell has restarted production at a reduced rate at its Albian oil sands mining operation in Alberta, it said on Monday, even as many energy companies remain offline after a major wildfire ravaged the area.

Canadian INTEGRATEDS

  • (Late Monday) Press Release - ImperialOil confirmed it has completed a controlled shutdown of its Kearl operations due to ongoing uncertainties associated with inbound and outbound logistics. The physical plant and other assets are unaffected by the fires. A timeline for restart will be dependent on a number of factors.

U.S. E&PS

  • HK reported 1Q’16 EPS of $0.21 versus Thomson Reuters I/B/E/S estimate of ($0.05).
  • MRD reported 1Q’16 EPS of $0.10 versus Thomson Reuters I/B/E/S estimate of $0.13.
  • NOG reported 1Q’16 EPS of $0.01 versus Thomson Reuters I/B/E/S estimate of ($0.03).
  • OAS reported 1Q’16 EPS of ($0.18) versus Thomson Reuters I/B/E/S estimate of ($0.17).

  • (Late Monday) Press Release - Halcon Resources generated total revenues of $81.3 million for the first quarter of 2016. In addition, Halcón realized a net gain on settled derivative contracts of $107.7 million during the quarter.
  • Press Release - Memorial Resource Development’s total revenues for the first quarter 2016 were $81.1 million compared to $87.0 million for the first quarter 2015. Total revenues were lower primarily due to lower commodity prices, which were partially offset by increased production. Production increased 13.3 Bcfe primarily due to drilling activities in North Louisiana. The average realized sales price decreased $1.37 per Mcfe due to lower commodity prices. The volume and pricing variances resulted in an approximate $46.4 million increase and offset an approximate $52.3 million decrease in revenues, respectively
  • (Late Monday) Press Release - Northern Oil and Gas’ adjusted net income for the first quarter was $0.5 million, or $0.01 per diluted share. GAAP net loss for the quarter was $126.6 million, or a loss of $2.08 per diluted share, which was impacted by a combined $127.4 million of non-cash impairment charges, losses on the mark-to-market of derivative instruments and write-off of debt issuance costs. Adjusted EBITDA for the first quarter was $36.2 million.
  • Jefferies upgraded Oasis Petroleum to ‘Buy’ from ‘Hold.’
  • (Late Monday) Press Release - Oasis Petroleum reported first quarter of 2016 with a net loss of $64.5 million, or $0.40 per diluted share, as compared to a net loss of $18.0 million, or $0.17 per diluted share, for the first quarter of 2015. Excluding certain non-cash and non-recurring items and their tax effect, Adjusted Net Loss was $29.0 million, or $0.18 per diluted share, in the first quarter of 2016, compared to Adjusted Net Income of $24.8 million, or $0.23 per diluted share, in the first quarter of 2015.

CANADIAN E&PS

  • Canaccord Genuity upgraded Athabasca Oil to ‘Buy’ from ‘Hold.’

OIL SERVICES

  • DWSN reported 1Q’16 EPS of ($0.40) versus Thomson Reuters I/B/E/S estimate of ($0.35).
  • EMES reported 1Q’16 EPS of ($1.42) versus Thomson Reuters I/B/E/S estimate of ($0.56).
  • KEG reported 1Q’16 EPS of ($0.41) versus Thomson Reuters I/B/E/S estimate of ($0.27).

  • Press Release - Dawson Geophysical Company reported unaudited financial results for its first quarter ended March 31, 2016. For the quarter ended March 31, 2016, the Company reported revenues of $47,055,000 as compared to $73,722,000 for the quarter ended March 31, 2015.
  • (Late Monday) Press Release - Emerge Energy reported net loss of $(34.2) million, or $(1.42) per diluted unit, for the three months ended March 31, 2016. For that same period, Emerge Energy reported Adjusted EBITDA of $(10.2) million and Distributable Cash Flow of $(14.8) million. Net income, net income per unit and Adjusted EBITDA for the three months ended March 31, 2015, were $9.5 million, $0.39 per diluted unit and $28.4 million, respectively. Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.
  • (Late Monday) Press Release - The FMC Technologies Board of Directors has appointed Douglas J. Pferdehirt, 52, President and Chief Executive Officer of FMC Technologies, effective September 1, 2016. Pferdehirt will succeed John T. Gremp, 64, who will continue to serve as Chairman of the Board of Directors while the company completes its transition to the new CEO.
  • (Late Monday) Press Release - Key Energy Services reported first quarter 2016 consolidated revenues of $111.1 million and a pre-tax GAAP loss of $81.9 million, or $0.51 per share.

DRILLERS

  • TDG-T reported 1Q’16 EPS of C$0.04 versus Thomson Reuters I/B/E/S estimate of (C$0.04).

  • Press Release - Noble Corporation plc announced an agreement with its client, Freeport-McMoRan Oil & Gas LLC, and FMOG's parent company, Freeport-McMoRan Inc. (Freeport), in connection with the drilling contracts for the drillships Noble Sam Croft and Noble Tom Madden, which were scheduled to terminate in July and November 2017, respectively.
  • (Late Monday) Press Release - Trinidad Drilling reported first quarter 2016 results. In the first quarter of 2016, adjusted EBITDA was $44.2 million, down 26.4% from the same period in 2015. During the quarter, Trinidad was able to lower its total long-term debt by $88.4 million. Trinidad's improved liquidity in the current quarter was driven by a $21.5 million distribution paid by the TDI joint venture in the first quarter, a weaker US dollar compared to the Canadian dollar which lowered the translated value of US dollar based Senior Notes, a decrease in the revolving facility of $50.5 million and the suspension of the Company's dividend.

REFINERS

  • (Late Monday) Reuters - CVR Energy said on Monday there is no fire at its 70,000 barrels per day refinery in Wynnewood, Oklahoma.
  • (Late Monday) Reuters - Phillips 66 warned of planned flaring at its 139,000-barrel-per-day Los Angeles-area refinery in Wilmington, California.

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  • Press Release - Cheniere Energy announced that its wholly owned subsidiary, Cheniere Corpus Christi Holdings intends to offer, subject to market and other conditions, $1.0 billion principal amount of Senior Secured Notes due 2024.
  • Press Release - EV Energy Partners reported its adjusted EBITDAX for the first quarter of 2016 was $20.2 million, a 62 percent decrease from the first and fourth quarters of 2015. EVEP reported Distributable Cash Flow of $(1.2) million for the first quarter of 2016. The decreases in Adjusted EBITDAX and Distributable Cash Flow were primarily attributable to lower realized commodity prices, lower realized hedge gains and the sale of midstream interests in the second quarter of 2015. The decreases were partially offset by the addition of producing properties acquired on October 1, 2015.
  • (Late Monday) Press Release - Tesoro Logistics announced that it, together with its wholly-owned subsidiary Tesoro Logistics Finance, has finalized the terms of its previously announced senior notes offering. The Partnership will issue $250 million aggregate principal amount of 6.125% senior notes due 2021 and $450 million aggregate principal amount of 6.375% senior notes due 2024. The offering size of the 6.375% senior notes due 2024 was increased from $350 million as previously announced to $450 million. The 6.375% senior notes due 2024 will be issued to the public at an offering price of 100.000% of the principal amount thereof. The 6.125% senior notes due 2021 will be issued to the public at an offering price of 100.250% of the principal amount thereof, plus accrued interest from April 15, 2016.

MARKET COMMENTARY

U.S. stock index futures pointed to a higher open on Tuesday, tracking European stocks higher, as sentiment was buoyed by corporate earnings. Investors also digested a rally in Japanese stocks as the yen fell lower Tuesday. Back in the U.S., data due for release include wholesale trade and Job Openings and Labor Turnover Summary (JOLTS), both due at 10 a.m. ET. Treasury yields held a touch higher in early morning trade.


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.

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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