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Oil

Oil Futures Rise Backed by API Report Showing Large Drop in Crude Inventories

WTI and Brent crude oil futures inched higher this morning following two consecutive days of sharp declines, backed by last night’s API report which showed U.S. crude inventories fell significantly more than expected last week.

SECTOR COMMENTARY:

The energy sector is poised for a higher start, backed by mild strength in the crude complex while major equity futures are flat after mixed results from large technology and internet giants and as investors sit on the sidelines ahead of the Federal Reserve's monetary policy decision later today. Investors will be looking for hints on the central bank's plan to taper its large asset purchases program, amid risks of a COVID-19 resurgence in the United States and rising inflation. 

WTI and Brent crude oil futures inched higher this morning following two consecutive days of sharp declines, backed by last night’s API report which showed U.S. crude inventories fell significantly more than expected last week, bringing focus back to a tight supply and demand balance rather than rising coronavirus infections. Ahead of the official EIA release later today, the industry supply report showed U.S. crude stocks fell 4.7 million barrels last week vs expectations of a 2.9mm barrel decline while gasoline stocks plunged 6.2mm barrels vs expectations of a 916k barrel drop. 

Natural gas futures are flat this morning, kept in check by forecasts for less hot weather and lower air conditioning demand next week than previously expected. 

BY SECTOR:

US INTEGRATEDS

ExxonMobil said it made a discovery at Whiptail in the Stabroek Block offshore Guyana. The Whiptail-1 well encountered 246 feet (75 meters) of net pay in high quality oil bearing sandstone reservoirs. Drilling is also ongoing at the Whiptail-2 well, which has encountered 167 feet (51 meters) of net pay in high quality oil bearing sandstone reservoirs. Drilling continues at both wells to test deeper targets, and results will be evaluated for future development.

INTERNATIONAL INTEGRATEDS

No significant news.

CANADIAN INTEGRATEDS

No significant news.                       

U.S. E&PS

Callon Petroleum released its second annual sustainability report. The online report outlines Callon's commitment to environmental responsibility, health and safety, community engagement, governance, and business ethics.

Hess reported a net loss of $73 million, or $0.24 per common share, in the second quarter of 2021, compared with a net loss of $320 million, or $1.05 per common share, in the second quarter of 2020. On an adjusted basis, net income in the second quarter of 2021 was $74 million, or $0.24 per common share. The improvement in adjusted after-tax results compared with the prior-year period primarily reflects higher realized selling prices in the second quarter of 2021.

Hess announced a significant oil discovery on the Stabroek Block offshore Guyana at Whiptail. The Whiptail-1 well encountered 246 feet (75 meters) of net pay in high quality oil bearing sandstone reservoirs. Drilling is also ongoing at the Whiptail-2 well, which is located 3 miles northeast of Whiptail-1 and has encountered 167 feet (51 meters) of net pay in high quality oil bearing sandstone reservoirs. Drilling continues at both wells to test deeper targets, and results will be evaluated for future development.

Matador Resources reported financial and operating results for the second quarter of 2021. Second quarter 2021 net income (GAAP basis) was $105.9 million, or $0.89 per diluted common share. Second quarter 2021 adjusted net income (a non-GAAP financial measure) was $121.7 million, or $1.02 per diluted common share, a 44% sequential increase from adjusted net income of $84.5 million in the first quarter of 2021, and a significant year-over-year increase from an adjusted net loss of $3.1 million in the second quarter of 2020.

Ovintiv announced its second quarter 2021 financial and operating results. The Company recorded a net loss in the second quarter of $205 million, or $0.79 per diluted share of common stock. The results included the impact of net losses on risk management of $799 million, before-tax. In addition, the Company increased its quarterly dividend payment by approximately 50% to $0.14 per share, accelerated its $4.5 billion net debt target timeline to the end of 2021 and set a new net debt target of $3 billion by year-end 2023, assuming $50 per bbl WTI oil and $2.75 per Mcf NYMEX natural gas prices. 

Penn Virginia announced that its indirect, wholly owned subsidiary Penn Virginia Escrow LLC has priced an offering of $400 million aggregate principal amount of 9.250% senior unsecured notes due 2026. The Notes will initially be sold at 99.018% of par.

CANADIAN E&PS

Ovintiv announced its second quarter 2021 financial and operating results. The Company recorded a net loss in the second quarter of $205 million, or $0.79 per diluted share of common stock. The results included the impact of net losses on risk management of $799 million, before-tax. In addition, the Company increased its quarterly dividend payment by approximately 50% to $0.14 per share, accelerated its $4.5 billion net debt target timeline to the end of 2021 and set a new net debt target of $3 billion by year-end 2023, assuming $50 per bbl WTI oil and $2.75 per Mcf NYMEX natural gas prices.

OILFIELD SERVICES

CGG announced its second quarter 2021 non-audited results. Q2 2021 revenue was $172 million and EBITDAs was $56 million. Group Net loss was reported at $(51) million. In addition, CGG is expecting in 2021 a gradual recovery in Geoscience activity quarter after quarter, around 25% growth in Equipment sales year-on-year, Multi-Client cash capex of around $165 million with over 75% prefunding and lower than originally expected Multi-client after-sales, up year-on-year. CGG also anticipates full year 2021 segment revenue to be flat year-on-year and segment EBITDAs to be around $310 million impacted by a slow recovery in multi-client data purchases, mainly by IOCs.

Piper Sandler downgraded Helix Energy Solutions to Neutral from Overweight.

Kirby announced the appointment of Shawn D. Williams as a new independent member of the Kirby Board of Directors effective July 27, 2021. Mr. Williams has an extensive background in the chemicals industry with professional and board experience, and Kirby is pleased to welcome him to its Board of Directors.

NOV reported second quarter 2021 revenues of $1.42 billion, an increase of 13 percent compared to the first quarter of 2021 and a decrease of five percent compared to the second quarter of 2020. Net loss for the second quarter of 2021 was $26 million, or 1.8 percent of sales, which included pre-tax net charges of $15 million. Adjusted EBITDA increased sequentially to $104 million, or 7.3 percent of sales.

Secure Energy Services provided an update on the Tervita Corporation merger and reported the Corporation's operational and financial results for the three and six months ended June 30, 2021. On July 2, 2021, the transaction closed, resulting in the issuance of approximately 147.6 million common shares of SECURE and following which Tervita amalgamated with SECURE. The common shares of Tervita were delisted by the TSX at the close of market on July 6, 2021. With regards to financial results, the company generated revenue (excluding oil purchase and resale) of $116.7 million, an increase of 78% from the three months ended June 30, 2020. It also achieved adjusted EBITDAi of $30.0 million, an increase of 47% from the three months ended June 30, 2020. Net loss attributable to shareholders of SECURE was $14.9 million for the three months ended June 30, 2021, compared to a net loss of $20.9 million for the corresponding 2020 comparative period. The company declared dividends of $1.2 million, representing $0.0075 (0.75 cents) per common share for the quarter. Secure also confirmed the appointments of Grant Billing, Susan Riddell Rose, Jay Thornton, and Michael Colodner to the Corporation's Board of Directors following the closing of the Transaction. All incoming directors previously served on the Tervita Board of Directors. Grant Billing, former Chairman of Tervita, will act as Chairman of the Corporation.

DRILLERS

Nabors Industries reported second quarter 2021 operating revenues of $489 million, compared to operating revenues of $461 million in the first quarter of 2021. The net loss from continuing operations attributable to Nabors common shareholders for the quarter was $196 million, or $26.59 per share. The second quarter results included charges of $81 million comprised mainly of an impairment of assets in Canada, related to the pending sale of our Canada drilling rigs, and a tax reserve for contingencies in our International segment. This compares to a loss from continuing operations of $141 million, or $20.16 per share in the prior quarter. Excluding the above unusual items in the second quarter, the net loss improved by $26 million, primarily reflecting higher adjusted EBITDA, and lower depreciation and income tax expense. Second quarter adjusted EBITDA was $117 million, compared to $108 million in the first quarter.

RPC announced its unaudited results for the second quarter ended June 30, 2021. For the quarter ended June 30, 2021, RPC generated revenues of $188.8 million, an increase of 111.4 percent compared to $89.3 million in the second quarter of 2020, which was significantly impacted by the COVID-19 pandemic. Net loss for the second quarter of 2021 was $726 thousand, or $0.00 per share, compared to a net loss of $25.1 million, or $0.12 loss per share in second quarter of the prior year.  In the second quarter of 2020 the adjusted net loss was $22.3 million, or $0.10 adjusted loss per share.

REFINERS

No significant news. 

MLPS & PIPELINES

The Board of Directors of Enbridge declared a quarterly dividend of $0.835 per common share, payable on September 1, 2021 to shareholders of record on August 13, 2021. The amount of the dividend is consistent with the June 1, 2021 dividend.

Cheniere Energy Partners declared a cash distribution of $0.665 ($2.66 annualized) per common unit to unitholders of record as of August 6, 2021, and the related distribution to its general partner. These distributions are payable on August 13, 2021.

Enterprise Products Partners announced its financial results for the three months ended June 30, 2021. Enterprise reported net income attributable to common unitholders of $1.1 billion, or $0.50 per unit on a fully diluted basis, for the second quarter of 2021, compared to $1.0 billion, or $0.47 per unit on a fully diluted basis, for the second quarter of 2020. Net income for the second quarters of 2021 and 2020 was reduced by non-cash, asset impairment charges of $18 million, or $0.01 per fully diluted unit, and $12 million, or $0.01 per fully diluted unit, respectively. 

Inter Pipeline announced that its Board of Directors is recommending acceptance of the revised takeover offer filed on July 19, 2021 from an affiliate of Brookfield Infrastructure Partners L.P. in light of the termination of the Pembina Arrangement. The recommendation follows consultation with legal and financial advisors and a recommendation of the special committee of independent directors of the Board. 

BMO resumed coverage of Pembina Pipeline with a Market Perform rating.

MARKET COMMENTARY

U.S. stock index futures were muted, while investors were in a wait-and-watch mode ahead of the Federal Reserve's monetary policy decision. European stocks gained on encouraging earnings reports. Japan’s Nikkei fell, as concerns about rising coronavirus cases soured sentiment. Gold prices held steady as investors held back from making large bets and the dollar firmed. Oil rose ahead of an industry report expected to show U.S. crude inventories fell more than expected. Goods trade balance and wholesale inventories numbers are expected on the U.S. economic calendar later in the day. Facebook, Ford Motor and Qualcomm are scheduled to report earnings after market close. 

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP 


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