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Oil Extends Slide Lower Amid Concerns Over China’s Plan for Growth

SECTOR COMMENTARY:

The energy sector is poised for a lower start, pressured by weakness in the underlying commodities and in the major equity futures. Sector news is thin today but broadly the markets will be looking for the latest reads on the health of the manufacturing and services sectors.

WTI and Brent crude oil futures extended their slide lower for a second day, reeling as concern over China's plan for growth and uncertainty over the pace of U.S. interest rate cuts offset the prospect of a tighter market due to continued OPEC+ supply restraint. China’s Premier announced an ambitious 2024 economic growth target of around 5% today, similar to last year's goal and in line with analysts' expectations. A lack of big ticket stimulus items in the plan however fell short of market expectations. Atlanta Fed President Raphael Bostic was reported yesterday saying that the Fed is under no urgent pressure to cut interest rates given a "prospering" economy and job market. OPEC+’s plan to extend their voluntary oil output cuts of 2.2mm bpd into the second quarter is keeping a cap on declines. Attention will now shift to the next round of inventory data which analyst expect to show that crude stocks increased about 2.6 million barrels last week, while distillates and gasoline stockpiles declined.

Natural gas futures ticked lower following yesterday’s rally, pressured by moderating weather forecasts in key consuming regions. EQT’s announcement yesterday that they will cut 1.0 Bcfd of production through at least the end of this month and reports showing that estimated production fell to lows not seen since January freezeoffs, continued to offer support. 

BY SECTOR:

US INTEGRATEDS

Bunge and Chevron announced approval of a final investment decision for their joint venture Bunge Chevron Ag Renewables LLC to build a new oilseed processing plant adjacent to its existing processing facility located on the Gulf Coast in Destrehan, LA. The announcement was celebrated with a groundbreaking event at the site.

INTERNATIONAL INTEGRATEDS

Brazil's state-run oil company Petrobras said in a filing that it has finished an investigation over a contract with chemical company Unigel and found no irregularities.

Singapore's Temasek Holdings has shortlisted energy giants Shell and Saudi Aramcoamong a handful of companies to purchase most of the assets of liquefied natural gas trading firm Pavilion Energy, sources with knowledge of the matter said. 

CANADIAN INTEGRATEDS

No significant news. 

U.S. E&PS

Crescent Energy reported fourth-quarter earnings of $55.5 million. On a per-share basis, the Houston-based company said it had net income of 61 cents. Earnings, adjusted for one-time gains and costs, came to 58 cents per share. The oil and gas company posted revenue of $657.7 million in the period. For the year, the company reported profit of $67.6 million, or $1.02 per share. Revenue was reported as $2.38 billion.

Kosmos Energy announced that it intends to offer, subject to market and other conditions, $300 million aggregate principal amount of its convertible senior notes due 2030 in a private placement. The Company also expects to grant the initial purchasers an option to purchase up to an additional $45 million aggregate principal amount of notes, for settlement within a 13-day period beginning on, and including, the date on which the notes are first issued. The notes will be senior, unsecured obligations of the Company. The notes will rank pari passu with the Company’s existing senior notes and the Company’s revolving credit facility. The notes will be guaranteed (i) on a senior, unsecured basis by certain of the Company’s existing subsidiaries that guarantee on a senior basis the Company’s revolving credit facility and the Company’s existing senior notes, and (ii) on a subordinated, unsecured basis by certain of the Company’s existing subsidiaries that borrow under or guarantee the Company’s commercial debt facility and guarantee on a subordinated basis the Company’s revolving credit facility and the Company’s existing senior notes. Upon conversions of the notes, the Company will satisfy its conversion obligation by paying cash up to the aggregate principal amount of the notes to be converted, and paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes to be converted. The interest rate, conversion rate and other terms of the notes are to be determined upon pricing of the offering.

Talos Energy announced the completion of the acquisition of QuarterNorth Energy. After completing the acquisition, Talos has approximately 183.0 million shares of common stock outstanding, including approximately 24.4 million shares issued to the QuarterNorth shareholders as consideration for the transaction. Additionally, Talos has appointed QuarterNorth's designee, Joseph A. Mills, to the Talos Board of Directors. Talos plans to update its 2024 operational and financial guidance to reflect the acquisition closing timing in the coming days.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Flotek Industries announced that it has appointed Amy Blakeway as Senior Vice President, General Counsel, effective March 1, 2024. With over a decade of legal experience in the energy sector, Ms. Blakeway brings unique expertise that will further strengthen the leadership team and help advance the Company's growth strategy to drive market share gains through its differentiated chemistry and data solutions.

Ranger Energy Services announced its results for the fourth quarter and full year ended December 31, 2023. For the fourth quarter of 2023, revenue was $151.5 million, a decrease from $154.3 million in the prior year period, and a decrease from $164.4 million in the prior quarter. Revenue decreases from the prior year were attributable to reduced activity in our wireline and processing and ancillary services segments. Year-to-date revenue was $636.6 million, an increase of 5%, or $28.1 million from $608.5 million in the prior year due to pricing improvements across segments and increasing operating activity in select service lines. Fully diluted earnings per share was $0.09 for the fourth quarter of 2023 compared to $0.30 in the prior year period and $0.38 in the prior quarter. Fully diluted earnings per share for 2023 was $0.95 compared to $0.65 in the prior year. Adjusted EBITDA of $18.4 million for the fourth quarter of 2023 decreased $3.2 million from $21.6 million in the prior year period and decreased $5.6 million from $24.0 million in the prior quarter. 

Select Water Solutions announced the appointment of Chris George as Executive Vice President and Chief Financial Officer, effective immediately. The Company also announced that it expects to enter into a separation agreement with Nick Swyka, formerly Senior Vice President and Chief Financial Officer. In the interim, Mr. Swyka will continue to be employed by Select and provide assistance with respect to the transition of his former duties and responsibilities through his anticipated employment end date on March 29, 2024. Mr. Swyka's departure is not due to a conflict or disagreement with the Company or the Company's operations, policies or procedures. 

Zephirin Group downgraded TechnipFMC to Hold from Buy.

Wajax announced its 2023 fourth quarter and annual results. All monetary amounts are in Canadian dollars unless otherwise noted. Fourth quarter revenue of $542.6 million and record full year revenue of $2,154.7 million, up 0.2% and 9.8%, respectively, over 2022. Fourth quarter adjusted EBITDA of $47.2 million and record full year adjusted EBITDA of $197.4 million, up 11.5% and 19.0%, respectively, over 2022. Fourth quarter adjusted basic EPS of $0.83 and full year adjusted basic EPS of $3.88, down 0.4% and up 19.1%, respectively, over 2022; and Ended 2023 with backlog of $554.0 million, an increase of $85.2 million over 2022. Wajax also announced that its Board of Directors has approved a 6% increase in the Corporation's quarterly dividend. The Corporation has declared a dividend of $0.35 per share for the first quarter of 2024, payable on April 2, 2024, to shareholders of record on March 15, 2024.

DRILLERS

Seadrill Limited initiated a share repurchase program December14,2023 to repurchase up to $250 million of the Company's common shares in open-market transactions on the OSE and NYSE until no later than September 30, 2024pursuant to an agreement with Fearnley Securities AS and its subsidiary, Fearnley Securities, Inc.

REFINERS

No significant news.

MLPS & PIPELINES

Cheniere Energy announced that it intends to offer, subject to market and other conditions, Senior Notes due 2034. Cheniere intends to use the proceeds from the offering to retire all or a portion of the approximately $1.5 billion outstanding aggregate principal amount of Cheniere Corpus Christi Holdings, LLC’s senior secured notes due 2025. This press release does not constitute an offer to purchase or a solicitation of an offer to sell the CCH 2025 Notes or a notice of redemption under the indenture governing the CCH 2025 Notes. The Cheniere 2034 Notes will rank pari passu in right of payment with existing senior notes at Cheniere, including the senior notes due 2028.

Enbridge announced that the Canada Energy Regulator has approved the Mainline Tolling negotiated settlement effective until December 31, 2028. The settlement sets tariffs for crude oil and liquids shipments that start in Western Canada and are delivered across Canada and North America.

In alignment with the company's long-term succession plans, Plains All American Pipeline, L.P. and Plains GP Holdings announced an executive promotion and management succession for Plains Midstream Canada. Effective June 1, 2024, Michelle Podavin will be promoted to President, PMC, based in Calgary and will be responsible for the leadership and strategic direction of PMC's business. She will be report to Willie Chiang, Chairman of the Board and Chief Executive Officer of Plains. Dean Liollio, currently President, PMC, will return to Houston and assume the role of Senior Vice President, Special Projects, also reporting to Mr. Chiang. 

MARKET COMMENTARY

Wall Street futures fell ahead of U.S. service sector and factory orders data. Chinese shares steadied, while Hong Kong stocks tumbled as Beijing's pledges to transform the country's staggering economy failed to impress investors, causing European shares to move lower. Gold prices surged, driven by hopes of a June interest rate cut by the Federal Reserve. The dollar held steady against a basket of currencies. Oil prices extended losses.


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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