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Oil

Oil Falls on Larger-Than-Expected Build in U.S. Crude Stockpiles, Weak Euro Zone Data

Oil prices declined on Wednesday, pulled down by a larger-than-expected build in U.S. crude stocks and weak euro zone economic figures, after gaining for three sessions on expectations of an easing in U.S.-China trade tensions. 

SECTOR COMMENTARY

Energy stocks are pointed to a higher open as the record-setting rally in broader benchmarks keeps going but weaker oil prices are keeping a lid on performance.

Oil prices declined on Wednesday, pulled down by a larger-than-expected build in U.S. crude stocks and weak euro zone economic figures, after gaining for three sessions on expectations of an easing in U.S.-China trade tensions. API data showed a crude build that was nearly triple the amount expected. 

Natural gas futures are flat, maintaining recent strength, on colder weather forecasts.  

U.S. INTEGRATEDS  

Press Release - ExxonMobil and FuelCell Energy, Inc. said they have signed a new, two-year expanded joint-development agreement to further enhance carbonate fuel cell technology for the purpose of capturing carbon dioxide from industrial facilities. The agreement, worth up to $60 million, will focus efforts on optimizing the core technology, overall process integration and large-scale deployment of carbon capture solutions. ExxonMobil is exploring options to conduct a pilot test of next-generation fuel cell carbon capture solution at one of its operating sites.

INTERNATIONAL INTEGRATEDS

Reuters - China and France signed contracts totalling $15 billion during a visit by President Emmanuel Macron. Among other deals, France's Total will set up a joint venture with China's Shenergy Group to distribute LNG by truck in the Yangtze River Delta.

U.S. E&PS 

Chesapeake Energy was downgraded to sell from hold at Tudor Pickering Holt.

(Late Tuesday) Press Release - Devon Energy reported third-quarter net earnings of $109 million, or $0.27 per diluted share. Core earnings were $103 million, or $0.26 per diluted share. Operating cash flow totaled $597 million, a 22 percent increase compared to the second quarter. Free cash flow generation reached $56 million in third quarter. Share-repurchase program decreased outstanding share count by 28 percent since 2018. Third-quarter oil production increased 19 percent year-over-year, exceeding guidance. In addition, the company raised full-year 2019 oil production guidance for 3rd time this year. And, capital efficiency improved with no change to 2019 capital spending plan. Through Oct. 31, 2019, Devon had repurchased 147 million shares, or approximately 28 percent of outstanding shares since 2018, at a total cost of $4.8 billion, under its $5 billion authorization. In the third quarter, the company completed $550 million of share repurchases and returned $35 million of additional capital to shareholders through its quarterly dividend.

(Late Tuesday) Press Release - Diamondback Energy announced financial and operating results for the third quarter ended September 30, 2019 and announced 2020 capital and production guidance. Diamondback's third quarter 2019 net income was $368 million, or $2.26 per diluted share. Adjusted net income was $239 million, or $1.47 per diluted share, down 13% from $1.70 in Q2 2019 and down 12% from $1.67 in Q3 2018. Diamondback’s Q3 2019 production averaged 287.1 MBOE/d (65% oil), up 133% year over year from 123.0 MBOE/d in Q3 2018, and up 2% quarter over quarter from 280.4 MBOE/d in Q2 2019. Diamondback announced that the Company's Board of Directors declared a cash dividend of 18.75 cents per common share for the third quarter of 2019 payable on November 22, 2019, to stockholders of record at the close of business on November 15, 2019. During the third quarter of 2019, Diamondback repurchased 2,954,000 shares of common stock for approximately $296 million. As of September 30, 2019, Diamondback repurchased 3,970,000 shares, or approximately 20% of the Board approved program.

(Late Tuesday) Press Release - Laredo Petroleum announced its 2019 third-quarter results, reporting net loss attributable to common stockholders of $264.6 million, or $1.14 per diluted share, which includes a non-cash full cost ceiling impairment charge of $397.9 million. Adjusted Net Income, a non-GAAP financial measure, for the third quarter of 2019 was $48.8 million, or $0.21 per diluted share. Adjusted EBITDA, a non-GAAP financial measure, for the third quarter of 2019 was $146.2 million. The Company also announced the signing of a purchase and sale agreement to acquire 7,360 net acres and 750 net royalty acres in Howard County for $130 million, subject to customary closing adjustments and conditions, with closing expected late in the fourth quarter of 2019.

Press Release - Northern Oil and Gas announced that it has extended the deadline for holders of the Company’s 8.50% Senior Secured Second Lien Notes due 2023 to validly tender Notes in the previously announced exchange and/or tender offers, or validly deliver consents, to be eligible to receive the consent fee in connection with the Company’s solicitation of consents to certain amendments to the indenture under which the Notes were issued to 5:00 p.m., New York City time, on November 14, 2019.

(Late Tuesday) Press Release - Oasis Petroleum announced financial and operating results for 3Q 2019. In 3Q 2019, the Company reported net income of $20.3 million, or $0.06 per diluted share, as compared to net income of $62.3 million, or $0.20 per diluted share, in 3Q 2018. Excluding certain non-cash items and their tax effect, Adjusted Net Loss Attributable to Oasis was $16.0 million, or $0.05 per diluted share, in 3Q 2019, as compared to Adjusted Net Income Attributable to Oasis of $26.3 million, or $0.08 per diluted share, in 3Q 2018. Adjusted EBITDA in 3Q 2019 was $256.6 million, as compared to Adjusted EBITDA of $270.4 million in 3Q 2018.

(Late Tuesday) Press Release - Parsley Energy announced financial and operating results for the quarter ended September 30, 2019. During 3Q19, the Company recorded net income attributable to its stockholders of $119.7 million, or $0.43 per share. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted net income for 3Q19 was $82.0 million, or $0.29 per share. Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense for 3Q19 was $370.7 million. Parsley Energy announced that its Board of Directors declared a quarterly dividend of $0.03 per share. The dividend is payable on December 20, 2019, to shareholders of record on December 10, 2019.

(Late Tuesday) Press Release - Whiting Petroleum announced its financial and operating results for the third quarter of 2019. In the third quarter, Whiting delivered oil production of 80,880 barrels per day, despite adverse weather conditions and ongoing gas and natural gas liquid (NGL) infrastructure and processing constraints. The Company maintained strong capital spending discipline, with capital expenditures in the third quarter below the Company’s previously announced guidance range. During the third quarter, Whiting’s capital expenditures totaled $225 million. This includes $22.6 million for non-operated drilling and completions. During the third quarter, the Company successfully completed a cash tender offer for $300 million of its 2020 convertible notes using proceeds from its credit facility. It also recently repurchased $100 million of debt in the open market at an average discount of 4.7%. In addition, Whiting maintained $1.75 billion of commitments under its credit facility following redetermination by the lenders of a $2.05 billion borrowing base.

CANADIAN E&PS

(Late Tuesday) Press Release - Athabasca Oil reported its third quarter operational and financial results. The company reported adjusted funds flow of $43.9 million ($0.08/share) and $133.3 million ($0.26/share) for the third quarter and first nine months of 2019 respectively. Free Cash Flow was $8.6 million and $39.3 million for the third quarter and first nine months of 2019.

(Late Tuesday) Press Release - Bonavista Energy reported to shareholders its financial and operating results for the three and nine months ended September 30, 2019. In the third quarter of 2019, the company generated adjusted funds flow of $34.6 million and successfully drilled its first Duvernay horizontal well. The company achieved adjusted funds flow of $34.6 million ($0.13 per share), approximately 10% ahead of plan resulting from a modest improvement in commodity pricing and a reduction in royalty and operating expenses, produced 62,437 boe per day (69% weighted to natural gas), up two percent over the previous quarter and in line with its forecast. Natural gas liquids production increased 12% over the prior period to 17,310 boe per day, re-establishing premium natural gas liquid recovery efficiencies following significant turnaround activity experienced in the second quarter. In addition, the company executed a successful E&D program, spending $43.3 million to drill six (5.5 net) and complete eight (7.8 net) wells, including drilling its first Duvernay horizontal well. Of its third quarter E&D program, 27% of spending was directed to support capital that contributed to the expansion of our operated infrastructure in our West Central core area and our Duvernay land position.

(Late Tuesday) Press Release - G2S2 Capital Inc. announced that on November 4, 2019, G2S2 entered into an agreement with Bonavista Energy relating to the nomination of directors to the board of directors of Bonavista. Under the agreement, Bonavista has agreed to nominate and recommend George Armoyan for election as a director at Bonavista’s 2020 annual general meeting. 

Press Release - Encana previously announced on October 31, 2019 its intention to establish corporate domicile in the United States. In connection with the Reorganization, on November 6, 2019, 1847432 Alberta ULC (“184Co”), which is currently a wholly-owned subsidiary of Encana and will be a predecessor of Ovintiv following the completion of the Reorganization, filed a Registration Statement on Form S-4, which includes a preliminary prospectus of Ovintiv and preliminary proxy statement of Encana, with the Securities and Exchange Commission.

(Late Tuesday) Press Release - Gran Tierra Energy announced the Company's financial and operating results for the quarter ended September 30, 2019. The company reported net loss for the Quarter of $29 million and net income for the nine months of 2019 of $12 million. Funds flow from operations was $59 million ($0.16 per share, basic) for the Quarter and $223 million ($0.59 per share, basic) for the nine months of 2019.

Scotiabank downgraded Gran Tierra Energy to ‘Sector Perform’ from ‘Sector Outperform.’

OILFIELD SERVICES

(Late Tuesday) Press Release - CGG announced its 2019 third quarter unaudited results. Net income from continuing operations was $63 million. Segment revenue was $382 million, up 36% year-on-year. The respective contributions from the Group’s businesses were 25% from Geoscience, 50% from Multi-Client (75% from the GGR segment) and 25% from Equipment. Segment EBITDAs was $225 million, up 83% year-on-year, a 59% margin. Segment operating income was $111 million, up 80%, a high 29% margin, including $(19) million impact of the new multi-client amortization policy. IFRS 15 adjustment at operating income level was $(13) million and IFRS operating income, after IFRS 15 adjustment, was $98 million. 

Press Release - National Energy Services Reunited Corp. a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) and Asia Pacific regions, today reported its financial results for the quarter ended September 30, 2019. Revenue for the third quarter of 2019 is $162 million, growing 11% year-over-year. 

Press Release - Smart Sand, Inc. a fully integrated frac sand supply and services company that is a low-cost producer of high quality Northern White frac sand and provider of proppant logistics solutions through both its in-basin transloading terminal and SmartSystemsTM wellsite proppant storage solutions, today announced results for the third quarter 2019

MLPS & PIPELINES

Press Release - Enable Midstream Partners announced financial and operating results for third quarter 2019. Net income attributable to limited partners was $132 million for third quarter 2019, a decrease of $6 million compared to $138 million for third quarter 2018. Net income attributable to common units was $123 million for third quarter 2019, a decrease of $6 million compared to $129 million for third quarter 2018. Net cash provided by operating activities was $264 million for third quarter 2019, an increase of $31 million compared to $233 million for third quarter 2018. Adjusted EBITDA was $295 million for third quarter 2019, a decrease of $6 million compared to $301 million for third quarter 2018. DCF was $202 million for third quarter 2019, a decrease of $18 million compared to $220 million for third quarter 2018.

Press Release - The Board of Directors for Enbridge has declared a quarterly dividend of $0.73800 per common share, payable on December 1, 2019 to shareholders of record on November 15, 2019. The amount of the dividend is consistent with the September 1, 2019 dividend.

(Late Tuesday) Press Release - Keyera announced its 2019 third quarter financial results. Adjusted earnings before finance costs, taxes, depreciation and amortization was a record $269 million (Q3 2018 – $160 million). Distributable cash flow was $184 million or $0.85 per share (Q3 2018 – $127 million or $0.61 per share) while net earnings were $153 million or $0.71 per share (Q3 2018 – $35 million or $0.17 per share).

Press Release - Joint venture partners WhiteWater Midstream, MPLX, alongside Agua Blanca lead investor First Infrastructure Capital, announced final investment decision to proceed with the expansion of the Delaware Basin Agua Blanca System. The expansion includes a 42” diameter trunkline that more than doubles system capacity to over 3 billion cubic feet per day of natural gas across Culberson, Loving, Pecos, Reeves, Winkler and Ward counties. The expansion is supported by multiple 10 year, take-or-pay transportation agreements.

(Late Tuesday) Press Release - Plains All American Pipeline and Plains GP Holdings reported third-quarter 2019 results. The company reported solid third-quarter results and increased Adjusted EBITDA guidance for the full year. The company ended the quarter with solid leverage metrics, more than $3 billion of committed liquidity and substantial distribution coverage. The company remain focused on allocating capital in a disciplined manner. In the near-term the company positioned to grow its fee-based business in 2020 and complete multiple previously announced, highly contracted and capital efficient projects from late 2020 through 2021, which provide strong visibility for fee-based growth. Looking forward, the company expects meaningful reductions in its growth capital program in 2021 and beyond as it prioritizes further lowering its leverage and returning capital to investors.

(Late Tuesday) Reuters - Plains All American Pipeline said it expects to begin construction on the Wink-to-Webster Permian crude pipeline by the end of the year and is targeting bringing the line to service by early 2021. Plains has already ordered a majority of equipment needed to commence construction such as 36-inch (91.5-cm) domestic line-pipe and long-lead materials, a company executive said during the quarterly earnings call.

Reuters - A big oil spill from the Keystone Pipeline in North Dakota last week has hardened opposition to the controversial Keystone XL expansion among landowners along its route, who say they hope to use the incident to help block or stall the project in court. Operator TC Energy is in the process of securing land easements for Keystone XL from scores of reluctant landowners in Nebraska, one of the final obstacles to a project linking Canada’s oil fields to U.S. refineries that has been delayed for over a decade by environmental opposition. The roughly 9,120-barrel spill from the existing Keystone line brings the number of significant releases since the system was built a decade ago to four - much higher than the company estimated in its risk assessments before it was approved - raising worries Keystone XL will be just as problematic.

(Late Tuesday) Reuters - TC Energy was issued a corrective action order by the U.S. Pipeline And Hazardous Materials Safety Administration (PHMSA) after its 590,000-barrel-per-day (bpd) Keystone system spilled more than 9,000 barrels of crude in rural North Dakota. PHMSA's order finds that continued operation of affected Keystone pipeline segment, between Edinburg and the pump stations near Niagara, North Dakota, without corrective action is or would be hazardous to life, property, or environment. The order requires, among other things, that the pipeline remain shut until TC Energy submits a restart and return-to-service plan, which must specify any appropriate pressure restriction to ensure safety of the affected segment.

MARKET COMMENTARY

Futures for Wall Street indexes were little changed, tracking global shares, as investors awaited new developments in the Sino-U.S. trade negotiations. The dollar index was in the red, while spot gold was nearly flat. Oil dipped on a larger-than-expected increase in U.S. crude inventories. Earnings reports from Qualcomm, Fitbit and Baidu are scheduled for release after the markets close.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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