Investor Relations

Nasdaq Advisory Services Energy Commentary May 6, 2016

Friday, May 6, 2016

Sector Commentary

Energy stocks are expected to open lower, tracking broader equity futures and the underlying commodity as the April employment report disappointed investors. Energy earnings continued to trickle in with EOG Resources being the highest-profile company reporting this morning.

WTI crude oil futures are lower by more than 1% in early trading as traders looked beyond recent supply disruptions in Canada and Libya and focused on the global crude glut. “The failure of the oil price to react (to the Canadian and Libyan supply disruptions) could be interpreted as a sign of sense,” said analysts at Commerzbank. “This marks a shift in sentiment on the oil market which could also weigh further on prices in the near future.”

Natural gas futures continued heading lower this morning following yesterday's inventory report which showed a bigger supply injection than expected.

U.S. E&PS

  • BBG reported 1Q’16 EPS of ($0.28) versus Thomson Reuters I/B/E/S estimate of ($0.22).
  • BCEI reported 1Q’16 EPS of ($0.46) versus Thomson Reuters I/B/E/S estimate of ($0.64).
  • CRC reported 1Q’16 EPS of ($0.26) versus Thomson Reuters I/B/E/S estimate of ($0.31).
  • EOG reported 1Q’16 EPS of ($0.83) versus Thomson Reuters I/B/E/S estimate of ($0.84).
  • PDCE reported 1Q’16 EPS of ($0.22) versus Thomson Reuters I/B/E/S estimate of ($0.11).

  • (Late Thursday) Reuters - Anadarko Petroleum is in the process of selling assets in Wyoming, East Texas and Louisiana as part of its plan to raise $3 billion.
  • (Late Thursday) Reuters - Apache’s cost savings in the first three months of 2016 exceeded its own expectations and are likely to continue even if oilfield services costs rise, The cost cuts mean the company could achieve its goal of cash flow neutrality for 2016 with oil prices at $35 per barrel and natural gas prices at $2.35 per million British thermal units.
  • (Late Thursday) Press Release - Bill Barrett reported adjusted net loss for the first quarter of 2016 was $13.7 million, or $0.28 per share, compared with adjusted net loss for the first quarter of 2015 of $5.9 million or $0.12 per share. Adjusted net income (loss) removes the effect of unrealized derivative gains and losses and non-recurring charges such as impairment expenses, property sales and certain one-time items. EBITDAX was $39.4 million for the first quarter of 2016 compared to $63.2 million for the first quarter of 2015. Lower EBITDAX is primarily a result of lower commodity prices and a decline in production volumes as a result of asset sales.
  • (Late Thursday) Press Release - Bonanza Creek Energy reported net revenue for the first quarter of 2016 was $44.2 million, compared to $73.1 million for the first quarter of 2015. Crude oil accounted for approximately 78% of total revenue. Differentials for the Company's Rocky Mountain oil production during the quarter averaged approximately $8.36 per Bbl. For the first quarter of 2016, the Company reported average daily production of 24.3 MBoe per day, a 12% decrease from the first quarter of 2015, and a 15% sequential decrease from the fourth quarter of 2015.
  • (Late Thursday) Reuters - Chesapeake Energy said on Thursday it plans to drill more wells in the Utica shale basin over the next year or two, and could invest more in its Marcellus field as more pipelines are built.
  • (Late Thursday) Reuters - ConocoPhillips reported it has shut its Surmont operations.
  • (Late Thursday) Press Release - For the 3 months ended March 31, 2016, Energen reported a GAAP net loss from all operations of $(203.1) million, or $(2.34) per diluted share. Excluding mark-to-market derivatives losses, commodity price-driven impairments, loss on held-for-sale assets, and pension settlement expenses, Energen`s adjusted loss in the 1st quarter of 2016 totaled $(55.5) million, or $(0.64) per diluted share. This compares with adjusted income in the 1st quarter of 2015 of $6.8 million, or $0.09 per diluted share.
  • (Late Thursday) Press Release - EOG Resources reported a first quarter 2016 net loss of $471.8 million, or $0.86 per share. This compares to a first quarter 2015 net loss of $169.7 million, or $0.31 per share. Adjusted non-GAAP net loss for the first quarter 2016 was $455.4 million, or $0.83 per share, compared to adjusted non-GAAP net income of $16.8 million, or $0.03 per share, for the same prior year period. Adjusted non-GAAP net income (loss) is calculated by matching realizations to settlement months and making certain other adjustments in order to exclude one-time items.
  • Press Release - PDC Energy reported its net loss for the first quarter of 2016 was $71.5 million, or $1.72 per diluted share, compared to net income of $17.1 million, or $0.46 per diluted share, for the first quarter of 2015. Adjusted net loss, a non-U.S. GAAP financial measure defined below, was $37.0 million for the first quarter of 2016, compared to adjusted net income of $7.0 million for the comparable period of 2015.
  • (Late Thursday) Reuters - Energy Transfer Equity’s Chief Executive Kelcy Warren on Thursday delivered the most public and concrete renunciation of his once-coveted deal for rival Williams. Warren said tax issues would sink the $21 billion deal. It has been in doubt for months, with Williams alleging that Energy Transfer has been actively trying to break the deal as ETE has unveiled numerous issues with the tie-up.

CANADIAN E&PS

  • BNP-T reported 1Q’16 EPS of C$0.21 versus Thomson Reuters I/B/E/S estimate of (C$0.07).
  • ERF-T reported 1Q’16 EPS of (C$0.84) versus Thomson Reuters I/B/E/S estimate of (C$0.14).
  • VET-T reported 1Q’16 EPS of (C$0.76) versus Thomson Reuters I/B/E/S estimate of (C$0.60).

  • (Late Thursday) Press Release - Athabasca Oil has decided, in response to the elevated risk from the ongoing regional wildfires, to shut down the Hangingstone Project and evacuate all personnel.
  • (Late Thursday) Press Release - Bonavista Energy reported operating results for the three months ended March 31, 2016. Operating and cash costs improved to $5.75 per boe and $9.45 per boe in the first quarter of 2016 resulting in 18% and 14% improvement relative to the prior year period. It generated funds from operations of $59.3 million, in a quarter where realized natural gas, natural gas liquids and oil prices on a per boe basis and overall production revenues decreased by 24% and 36% respectively, when compared to the same period in 2015
  • National Bank Financial upgraded Canadian Natural Resources to ‘Outperform’ from ‘Sector Perform.’
  • Press Release - Enerplus reported a net loss of $173.7 million in the first quarter. Its first quarter earnings benefited from a combined gain of $152.2 million on property divestments and the repurchase of a portion of outstanding senior notes. These gains were offset by non-cash charges of $304.7 million related to asset impairment and a valuation allowance taken on its deferred tax asset as a result of the decline in 12-month trailing average commodity prices. Production averaged 97,860 BOE per day during the quarter, including approximately 45,000 barrels per day of crude oil and natural gas liquids. Total production was down 8% from the previous quarter primarily as a result of non-core divestment activity during the fourth quarter of 2015 and first quarter of 2016, in which we divested properties with associated production of approximately 9,100 BOE per day. Its first quarter funds flow was $41.7 million, down approximately 60% from the fourth quarter of 2015.
  • Press Release - Vermilion Energy reported its achieved average production of 65,389 boe/d during the first quarter of 2016, an increase of 7% as compared to 61,058 boe/d in the prior quarter, with significant increases recorded in our Irish and Canadian operations. Its fund flows from operations for Q1 2016 of $93.7 million represented a decrease of 31% quarter-over-quarter and 22% year-over-year. The company also declared dividends of $0.215 per common share per month during the first quarter of 2016, totaling $0.645 per common share for the quarter.

OIL SERVICES

  • MDR reported 1Q’16 EPS of $0.13 versus Thomson Reuters I/B/E/S estimate of $0.01.

  • Press Release - Baker Hughes announced that the international rig count for April 2016 was 946, down 39 from the 985 counted in March 2016, and down 256 from the 1,202 counted in April 2015. The international offshore rig count for April 2016 was 220, up 9 from the 211 counted in March 2016, and down 80 from the 300 counted in April 2015.
  • Piper Jaffray assumed coverage of Forum Energy Technologies with a ‘Neutral’ rating.
  • (Late Thursday) Press Release - McDermott International reported generated first quarter 2016 adjusted net income of $36.5 million, or $0.13 per adjusted fully diluted share, excluding restructuring charges of $6.4 million and impairment loss of $32.3 million, compared to an adjusted net loss of $4.1 million, or $0.02 per adjusted fully diluted share, excluding restructuring charges of $10.4 million in the prior-year first quarter.
  • (Late Thursday) Press Release - McDermott International announced that it has been awarded three separate projects by a major national oil company for the integrated engineering, procurement, construction, and installation services in multiple fields in the Arabian Gulf. In addition to this, there has also been an award of an additional scope on an existing contract, also being executed in the Arabian Gulf.
  • Press Release - CSI Compressco announced first quarter 2016 consolidated results. Adjusted EBITDA for the first quarter of 2016 was $25.4 million, with a net loss of $105.3 million inclusive of $100.2 million of non-cash charges for goodwill impairment and asset impairment. This compares to Adjusted EBITDA and net income of $32.1 million and $1.8 million, respectively, during the first quarter of 2015. Distributable cash flow for the quarter ended March 31, 2016 was $14.2 million. It announced that the board of directors of its general partner declared a cash distribution attributable to the first quarter of 2016 of $0.3775 per outstanding unit, which will be paid on May 13, 2016 to unitholders of record as of the close of business on April 29, 2016. CSI Compressco is managed by CSI Compressco GP, which is an indirect, wholly owned subsidiary of TETRA Technologies.
  • Seaport Global Securities upgraded Weatherford International to ‘Buy’ from ‘Neutral.’
  • Wells Fargo Securities downgraded Weatherford International to ‘Market Perform’ from ‘Outperform.’

DRILLERS

  • ATW reported 1Q’16 EPS of $1.78 versus Thomson Reuters I/B/E/S estimate of $1.56.
  • PACD reported 1Q’16 EPS of ($0.01) versus Thomson Reuters I/B/E/S estimate of ($0.07).

  • (Late Thursday) Press Release - Atwood Oceanics announced that it had earned net income of $122.4 million or $1.89 per diluted share, on revenues of $296.4 million for the quarter ended March 31, 2016 compared to net income of $39.1 million or $0.60 per diluted share on revenues of $307.8 million for the quarter ended December 31, 2015 and compared to net income of $122.7 million or $1.89 per diluted share, on revenues of $350.4 million for the quarter ended March 31, 2015. For the six months ended March 31, 2016, the Company earned net income of $161.5 million or $2.49 per diluted share, on revenues of $604.2 million compared to net income of $168.9 million or $2.60 per diluted share, on revenues of $702.1 million for the six months ended March 31, 2015.
  • Societe Generale upgraded Noble to ‘Buy’ from ‘Hold.’
  • (Late Thursday) Press Release - Pacific Drilling announced a net loss for first-quarter 2016 of $2.5 million or $0.01 per diluted share, compared to a net loss of $13.6 million or $0.06 per diluted share for fourth-quarter 2015 and net income of $51.7 million or $0.24 per diluted share

REFINERS

  • (Late Thursday) Press Release - Delek US Holdings announced financial results for its first quarter ended March 31, 2016. Delek US reported a first quarter net loss of $(29.2) million, or $(0.47) per basic share, versus a net loss of $(16.1) million, or $(0.28) per basic share, for the quarter ended March 31, 2015. On an adjusted basis, Delek US reported a net loss of $(53.3) million, or $(0.86) per basic share for the quarter ended March 31, 2016, compared to a net loss of $(10.1) million, or $(0.18) per basic share on an adjusted basis in the prior year period. Reconciliations of GAAP earnings to adjusted earnings are included in the financial tables attached to this release. Its Board of Directors had declared its regular quarterly cash dividend of $0.15 per share. Shareholders of record on May 24, 2016 will receive this cash dividend payable on June 14, 2016.

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  • DK reported 1Q’16 EPS of ($0.86) versus Thomson Reuters I/B/E/S estimate of ($0.53).

  • Press Release - Buckeye Partners reported its financial results for the first quarter of 2016. Buckeye reported income from continuing operations for the first quarter of 2016 of $135.0 million compared to income from continuing operations for the first quarter of 2015 of $112.0 million. Income from continuing operations attributable to Buckeye`s unitholders was $1.01 per diluted unit for the first quarter of 2016 compared to $0.88 per diluted unit for the first quarter of 2015. The diluted weighted average number of units outstanding in the first quarter of 2016 was 130.1 million compared to 127.6 million in the first quarter of 2015. Buckeye also announced today that its general partner declared a cash distribution of $1.20 per limited partner unit for the quarter ended March 31, 2016. The distribution will be payable on May 23, 2016 to unitholders of record on May 16, 2016. This cash distribution represents a 4.3 percent increase over the $1.15 per LP Unit distribution declared for the first quarter of 2015.
  • (Late Thursday) Press Release - Cheniere Energy reported a net loss attributable to common stockholders of $320.8 million, or $1.41 per share, for the three months ended March 31, 2016, compared to a net loss attributable to common stockholders of $267.7 million, or $1.18 per share for the comparable 2015 period.
  • (Late Thursday) Reuters - Energy Transfer Equity’s Chief Executive Kelcy Warren on Thursday delivered the most public and concrete renunciation of his once-coveted deal for rival Williams. Warren said tax issues would sink the $21 billion deal. It has been in doubt for months, with Williams alleging that Energy Transfer has been actively trying to break the deal as ETE has unveiled numerous issues with the tie-up.
  • (Late Thursday) Reuters - Inter Pipeline said it has resumed operation of Polaris diluent pipeline system in Fort McMurray, Alberta, area.
  • (Late Thursday) Reuters - Keyera said its South Cheecham rail and truck terminal, 75 km south of Fort McMurray, Alberta, has been evacuated and shut down as a precaution against the uncontrolled wildfire raging in the oil sands region.
  • (Late Thursday) Press Release - Pembina Pipeline reported its achieved adjusted EBITDA of $269 million, 12 percent or $28 million higher than the first quarter of 2015. Its Board of Directors also increased the monthly dividend by 4.9 percent from $0.1525 per common share per month to $0.16 per common share per month, effective for the dividend payable on May 13, 2016.
  • Press Release - PennTex Midstream Partners reported its operating revenues for the three months ended March 31, 2016 were $17.6 million and total operating expenses were $12.3 million, resulting in operating income of $5.3 million. In addition, the Partnership generated $4.1 million of deferred revenue primarily related to undelivered minimum volume commitments. The Partnership reported net income of $3.5 million, or $0.12 per common unit. For the three months ended March 31, 2016, the Partnership generated Adjusted EBITDA of $15.1 million and distributable cash flow of $13.3 million. The Partnership also announced a quarterly distribution of $0.2750 per unit, or $1.10 per unit on an annualized basis, for the first quarter 2016. The distribution will be paid on May 13, 2016 to unitholders of record as of May 2, 2016.
  • Mitsubishi UFJ Securities upgraded Phillips 66 Partners to ‘Overweight’ from ‘Neutral.’
  • Raymond James upgraded William Partners to ‘Outperform.’

MARKET COMMENTARY

U.S. stock indexes were set to start lower as investors were disappointed by weaker than expected payrolls data from April. Employers added 160,000 jobs, below the 205,000 expected by economists. The unemployment rate held steady at 5.0%, while average hourly earnings rose by an expected 0.3%. Weak corporate results from Immarsat and ArcelorMittal weighed on European markets and major Asian indexes closed in red. Gold edged higher as the dollar weakened against a basket of currencies. Oil prices traded lower on profit booking.


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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