Oil Contracts Recover as Market Digests Last Night's API Data
SECTOR COMMENTARY:
The energy sector is set for a mixed-to-higher start, supported by strength in crude but capped by losses in the major equity futures which are lower after rating agency Fitch downgraded the U.S government’s credit rating to AA+ from AAA. As earnings season heats up, several E&Ps and oil field service names reported second quarter financial results ahead of today’s session.
Following modest losses in crude yesterday, oil contracts have recovered their declines and are trading higher as the market digests last night’s API data which showed a notable drawdown in crude stocks. According to the API, U.S crude inventories fell by 15.4 million barrels in the week ended July 28. Along with expectations of a decrease in crude inventories within the U.S, crude stocks have also begun to drop in other regions, which supports the current narrative that supply is expected to tighten throughout the latter half of 2023. The market will be waiting for today’s EIA report to see if last night’s inventory data matches today’s release, as this would mark the largest drop in U.S. crude inventories according to records dating back to 1982. Yesterday, the U.S Energy Department announced they have pulled an offer that was made on July 7th to buy 6M barrels of crude for the SPR, citing the decision was based on market conditions.
Natural gas futures are trading lower for the third-consecutive day as record levels of output and forecasts for lower demand in the next two weeks than previously expected.
BY SECTOR:
US INTEGRATEDS
Venezuela's oil exports rose in July to the highest level in almost 3-1/2 years, fueled by the signing of new supply contracts and more shipments by U.S. producer Chevron, according to internal documents and tanker tracking data.
INTERNATIONAL INTEGRATEDS
Eneva is interested in a potential partnership with state-run oil firm Petrobras on its Bahia Terra cluster in northeastern Brazil, the firm's chief financial Marcelo Habibe said on Tuesday.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Berry announced second quarter 2023 results, including net income of $26 million or $0.33 per diluted share, Adjusted Net Income(1) of $12 million or $0.15 per diluted share, cash flow from operating activities of $63 million and Adjusted EBITDA(1) of $69 million.
Chesapeake Energy reported 2023 second quarter financial and operating results. Net income of $391 million, or $2.73 per diluted share (all per share amounts stated on a diluted basis); adjusted net income of $92 million, or $0.64 per share. Increased base dividend approximately 4.5%; announced total quarterly dividend of $0.575 per common share to be paid in September 2023. Completed approximately $125 million of share repurchases during second quarter; returned approximately $515 million YTD through second quarter via dividends and share repurchases.
Devon Energy reported quarterly adjusted earnings of $1.18 per share for the quarter ended in June. The mean expectation of twenty four analysts for the quarter was for earnings of $1.18 per share. Revenue fell 38.6% to $3.45 billion from a year ago; analysts expected $3.74 billion. Devon Energy Corp's reported EPS for the quarter was $1.07.
EQB and its wholly owned subsidiary Equitable Bank announced that Chief Risk OfficerRon Tratch will be leaving Equitable as of August 31 , 2023.
Gran Tierra Energy announced the Company’s financial and operating results for the quarter ended June 30, 2023. Gran Tierra incurred a net loss of $11 million, compared to a net loss of $10 million in the Prior Quarter and net income of $53 million one year ago, which was primarily due to the $13 million of realized foreign exchange loss mainly associated with the strengthening of the Colombian peso by 9% in the Quarter and the payment of the Company’s 2022 income taxes in the Quarter, which are paid in Colombian pesos. The Company’s net income over the last 12 months was $51 million. Gran Tierra incurred a net loss of $0.33 per share, compared to a net loss of $0.28 per share in the Prior Quarter and net earnings of $1.44 per share one year ago. Gran Tierra incurred a net loss of $0.33 per share, compared to a net loss of $0.28 per share in the Prior Quarter and net earnings of $1.42 per share one year ago. During the Quarter, pursuant to Gran Tierra’s current normal course issuer bid (“NCIB”), Gran Tierra purchased 20,439 shares, for a total purchase price of $107,810, at a weighted average price of approximately $5.27 per share.
Gran Tierra Energy announced the Company’s 2023 mid-year reserves as evaluated by the Company’s independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. in a report with an effective date of June 30, 2023. The company announced highest reserves in company history - 94 MMBOE 1P, 150 MMBOE 2P and 212 MMBOE 3P, it achieved 270% 1P, 433% 2P and 599% 3P Reserves Replacement, incurred F&D Costs Excluding Change in FDC of $8.55 (1P), $5.33 (2P) and $3.86 (3P) per boe, net present value before tax discounted at 10% Increased to $2.2 Billion (1P), $3.3 Billion (2P), and $4.5 Billion (3P), and Net Asset Value per Share of $25.45 Before Tax and $14.93 After Tax (PDP), $49.54 Before Tax and $27.28 After Tax (1P), and $84.39 Before Tax and $45.55 After Tax (2P).
Magnolia Oil & Gas announced its financial and operational results for the second quarter of 2023. Magnolia reported second quarter 2023 net income attributable to Class A Common Stock of $91.5 million, or $0.48 per diluted share. Second quarter 2023 total net income was $104.6 million and total adjusted net income(1) was $97.2 million. Diluted weighted average total shares outstanding decreased by 5% to 211.4 million(2) compared to second quarter 2022. The Company repurchased 2.3 million of its Class A Common Stock during the second quarter for $44.8 million.
NOG’s Board of Directors has declared a cash dividend in the amount of $0.38 per share, representing a ~3% increase from the prior quarterly dividend. The dividend is payable on October 31, 2023, to stockholders of record as of the close of business on September 28, 2023.
Pioneer Natural Resources reported financial and operating results for the quarter ended June 30, 2023. Pioneer reported second quarter net income attributable to common stockholders of $1.1 billion, or $4.55 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, non-GAAP adjusted income for the second quarter was $1.1 billion, or $4.49 per diluted share. Cash flow from operating activities for the second quarter was $1.7 billion.
Pioneer Natural Resources announced that its Board of Directors declared a quarterly base-plus-variable cash dividend of $1.84 per common share. The dividend is payable September 21, 2023, to stockholders of record at the close of business on September 6, 2023.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
ProPetro Holding announced financial and operational results for the second quarter of 2023. Total revenue increased 3% sequentially to $435 million compared to the prior quarter. Repurchased 2.3 million shares during the quarter, representing 2% of outstanding shares, for $17.5 million at a 27% discount to the share price as of July 31, 2023.
Newpark Resources announced results for the second quarter ended June 30, 2023. Industrial Solutions segment revenue of $48.1 million, -2%; year-to-date $103.9 million, +23%. Fluid Systems segment revenue of $135.2 million, -7%; year-to-date $279.4 million, -2%. Net Income of $1.7 million, or $0.02 per diluted share. Adjusted Net Income of $6.8 million, or $0.08 per diluted share. Repurchased $5 million of common equity under our share repurchase authorization; a total of $20 million repurchased year-to-date.
U.S. Silica Holdings announced that its Industrial and Specialty Products segment will increase prices for most of its non-contracted diatomaceous earth and clay aggregate products used primarily in automotive, industrial, chemicals, energy/oil & gas, recreation, and other applications.
Valaris reported second quarter 2023 results. Net loss of $27 million, Adjusted EBITDA of $15 million and Adjusted EBITDAR of $59 million; Increased 2023 share repurchase target from $150 million to $200 million in conjunction with the VALARIS DS-7 contract award; Repurchased $65 million of shares through June 30, 2023 and $94 million to date. Net loss was $27 million compared to net income of $49 million in the first quarter 2023. Adjusted EBITDA decreased to $15 million from $29 million in the first quarter primarily due to higher reactivation expense. Adjusted EBITDAR increased to $59 million from $55 million in the first quarter. Revenues decreased to $415 million from $430 million in the first quarter 2023. Excluding reimbursable items, revenues decreased to $390 million from $408 million in the first quarter.
DRILLERS
No significant news.
REFINERS
Phillips 66 announced second-quarter 2023 earnings of $1.7 billion compared with earnings of $2.0 billion in the first quarter. Excluding special items of $69 million, the company had adjusted earnings of $1.8 billion in the second quarter, compared with first-quarter adjusted earnings of $2.0 billion.
MLPS & PIPELINES
EnLink Midstream reported financial results for the second quarter of 2023. Reported net income of $89.9 million and net cash provided by operating activities of $315.7 million for the second quarter of 2023. Generated adjusted EBITDA, net to EnLink, of $333.6 million for the second quarter of 2023, representing 11% growth compared to the second quarter of 2022. Repurchased approximately $60 million of common units in the second quarter of 2023. EnLink is ahead of pace to complete the 2023 unit repurchase authorization of $200 million.
MARKET COMMENTARY
Wall Street futures tumbled while European equities also plunged after ratings agency Fitch unexpectedly downgraded the U.S. government's top-tier credit rating, citing fiscal deterioration. Japan's Nikkei posted its sharpest one-day drop as a surprise cut on the U.S. credit rating weighed on sentiment. Meanwhile, Chinese and Hong Kong stocks ended lower as some investors booked profits in the absence of concrete and forceful measures by Beijing to shore up a faltering economy. Gold prices climbed as the dollar weakened. Oil surged, buoyed by U.S. crude and fuel product inventory data that reflected robust demand.
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 Rich Pontillo.
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Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.
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