Energy stocks are set to open higher, being lifted by modestly higher broader index futures, a 1% gain in oil prices, and better than expected earnings results from oilfield services bellwether Schlumberger.
Schlumberger earned 43 cents per share, excluding charges and other items, beating estimates of 40 cents, according Refinitiv IBES data. The company said revenue from its international business rose 8% to $5.63 billion in the third quarter, while revenue from North America fell 11% to $2.85 billion. It recorded a goodwill impairment charge of $12.7 billion in the third quarter, largely related to its purchase of Smith International Inc and Cameron International Corp. The company reported a net loss of $11.38 billion, compared with a profit of $644 million a year earlier, hit by the charge.
WTI crude oil gained nearly 1%, while Brent was higher by roughly half a percent. Prices rose as concern over an economic slowdown in China, the world's biggest oil consumer, was countered by bullish signals from both the Chinese and U.S. refining sectors. In the third quarter, China's economic growth slowed to 6% year on year, its weakest for 27-1/2 years and below expectations, dogged by soft factory production amid sluggish domestic demand and continuing trade tensions with the United States. Elsewhere, the joint technical committee monitoring a global oil production pact between OPEC and partners found that compliance is being exceeded, with cuts for September representing 236% of agreed quotas, sources said.
Natural gas futures were flat in early morning trade.
Press Release - BP and China’s Zhejiang Petroleum and Chemical Corporation (ZPCC) have signed a memorandum of understanding (MOU) to explore the creation of a new equally-owned joint venture to build and operate a 1 million tonne per annum (tpa) acetic acid plant in eastern China. The proposed facility – in Zhoushan, Zhejiang Province – would deploy BP’s CATIVA XL technology to produce acetic acid, a versatile intermediate chemical used in a variety of products such as paints, adhesives and solvents. It is also used in the production of purified terephthalic acid (PTA) of which BP is a leading global manufacturer.
Reuters - There is no future for companies that work only in oil and gas in the medium- to long-term, the head of Italian major Eni said. "Diversification into renewable energy and the circular economy is crucial," Claudio Descalzi told financial daily Il Sole 24 Ore in an interview. Asked about interest in Eni from France's Total, Descalzi said he did not know if the French major or other companies were interested in the company. "For sure, nobody will be able to touch us without the green light from the Italian government," he said. Eni is more than 30% owned by the Italian state.
(Late Thursday) Reuters - Petroleo Brasileiro SA Petrobras produced 2.878 million barrels of oil equivalent per day (boepd) in the third quarter, up 14.6% from the same period a year earlier. In a securities filing, Petrobras said August monthly production reached a new record of 3 million boepd. The company is on target to reach its annual production target of 2.7 million boepd.
Press Release - Ofgem has appointed Total Gas and Power, A wholly owned subsidiary of Total, to take on supplying Rutherford Energy Supply Limited's (trading as Uttily Energy) 280 business customers. This follows an appointment process run by Ofgem to get the best deal possible for customers. For existing customers, energy supplies will continue as normal as they switch over to Total Gas and Power on Saturday 19 October. Total Gas and Power will honour any money owed to customers with open accounts with Rutherford, up to a total of £100,000.
Reuters - Total announced that its first large liquefied natural gas (LNG) bunker vessel has been launched, following the signature of a long-term charter contract between Total and Mitsui O.S.K Lines (MOL) in February 2018. After delivery in 2020, the bunker vessel will operate in Northern Europe, where it will supply LNG to commercial vessels, including 300,000 tons per year for CMA CGM’s nine ultra-large newbuild containerships in Europe-Asia trade, for a period of at least 10 years.
Reuters - Total will open a Digital Factory in Paris in early 2020 that will bring together up to 300 developers, data scientists and other experts to accelerate the group’s digital transformation. The Digital Factory will be tasked with developing the digital solutions Total needs to improve its operations, in terms of both availability and cost; offer new services to customers, notably in the area of managing and controlling energy consumption; extend its reach to new distributed energies; and reduce its environmental impact. Total's ambition is to generate as much as $1.5 billion in value per year for the company by 2025 through additional revenue and reductions in operating or investment expenses
RBC Capital Markets downgraded Athabasca Oil to ‘Underperform’ from ‘Sector Perform.’
(Late Thursday) Press Release - Parex Resources provided an operational update. Parex’ Q3 2019 average production is estimated at 53,020 boe/d compared to the Company's Q2 2019 average quarterly production of 52,252 boe/d. The company expects Q4 2019 production average to exceed 53,500 boe/d. Regarding share Buy-Backs: On December 21, 2018 Parex began a normal course issuer bid with the intent to repurchase for cancellation approximately 15.0 million shares (10% of public float). As at October 11, 2019 the Company has repurchased 15.0 million shares at an average cost of C$20.21 per share for a total of C$304 million. Basic shares outstanding as at September 30, 2019 were 143.3 million (estimated October 2019 142.8 million) compared to 155.0 million as at December 31, 2018. Diluted share outstanding as at September 30, 2019 were 148.3 million compared to 162.0 million as at December 31, 2018. The total NCIB cost was funded from free cash flow. As at September 30, 2019 the cash balance was USD$350 million and estimated working capital is USD$270 million (December 31, 2018 USD$219 million). Subject to the approval of the Toronto Stock Exchange, Parex expects to renew its NCIB in December 2019 with the intent to repurchase another 10% of the public float.
Press Release - Schlumberger reported results for the third quarter of 2019. The company reported Worldwide revenue of $8.5 billion increased 3% sequentially; International revenue of $5.6 billion increased 3% sequentially; North America revenue of $2.8 billion increased 2% sequentially; GAAP loss per share, including charges of $8.65 per share, was $8.22; EPS, excluding charges, was $0.43 representing a 23% sequential increase; and Cash flow from operations was $1.7 billion and free cash flow was $1.1 billion. During the quarter, Schlumberger repurchased 2.2 million shares of its common stock at an average price of $36.64 per share, for a total purchase price of $79 million. And on October 17, 2019, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.50 per share of outstanding common stock, payable on January 10, 2020 to stockholders of record on December 4, 2019.
Press Release - TechnipFMC has been awarded a significant integrated Engineering, Procurement, Construction and Installation (EPCI) contract by Woodside for the development of the Pyxis and Xena fields, located offshore North West Australia. TechnipFMC will design, manufacture, deliver and install subsea equipment including subsea production system, flexible flowlines and umbilicals. This contract is the first call-off under the recently executed five-year EPCI Frame Agreement between TechnipFMC and Woodside. The Frame Agreement allows collaborative development of projects for Woodside through early engagement and utilization of TechnipFMC integrated execution solutions.
(Late Thursday) Press Release - Noble Corporation announced that its report of drilling rig status and contract information has been updated as of October 17, 2019. New contracts/ Extensions/ Modifications/ Letters of Intent include: Noble Sam Croft – Two of three option wells have been exercised, extending the contract to March 2020; and, Noble Hans Deul – Final option well has been exercised extending the contract to April 2020.
(Late Thursday) Press Release - Transocean issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs. Since its last report Transocean added approximately $75 million in contract backlog, bringing total backlog to $10.8 billion. This quarter’s report includes the following new contracts: Paul B. Loyd, Jr. – Awarded an estimated 255 day contract in the UK North Sea; Deepwater Nautilus – Awarded a 45 day contract in Brunei; and Discoverer India – Customer exercised a one-well option in Egypt.
MLPS & PIPELINES
(Late Thursday) Press Release - BP Midstream Partners announced that the Board of Directors of BP Midstream Partners GP LLC, the general partner of the Partnership, declared a quarterly cash distribution of $0.3355 per unit for the third quarter of 2019. The distribution reflects an increase of 3.6% over the second quarter 2019 distribution per unit.
(Late Thursday) Press Release - Crestwood Equity Partners announced that the board of directors of its general partner has declared the partnership’s quarterly cash distribution of $0.60 per limited partner unit ($2.40 annually) for the quarter ended September 30, 2019. In addition, Crestwood announced a quarterly cash distribution of $0.2111 per Class A preferred equity unit ($0.8444 annually). Both common and preferred distributions will be made on November 14, 2019, to unitholders of record as of November 7, 2019.
(Late Thursday) Reuters - Seaway Crude Pipeline Company LLC, a 50/50 joint venture between Enterprise Products Partners, the operator, and Enbridge, said it would cut some spot rates to ship light crude oil on the 400,000 barrel-per-day (bpd) pipeline from Cushing, Oklahoma, to the Texas Gulf Coast.
(Late Thursday) Press Release - The Board of Directors of Holly Energy Partnershas declared a cash distribution of $0.6725 per unit for the third quarter of 2019. The quarterly distribution amount remains the same as the $0.6725 per unit paid in the second quarter of 2019. The distribution will be paid on November 12, 2019 to unitholders of record on October 28, 2019.
U.S. stock index futures were near flat, as upbeat earnings reports offset sharpest contraction in the Chinese economy in nearly three decades that exacerbated worries about slowing global growth. Japan's Nikkei rose after high-tech companies jumped on upbeat earnings from Taiwan's TSMC while the broader market ended lower. European shares were little changed ahead of a parliamentary vote on the new Brexit deal. The index which tracks the dollar against six major currencies was slightly down. Oil prices gained and gold eased.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 9/17/19 - Oil's New Risk Premium Discussion on CNBC TV
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- 7/1/19 - OPEC meeting discussion with CNBC TV
- 7/1/19 - Oil Market Geopolitics with Bloomberg TV
- 5/23/19 - Oil's New Bear Market Discussion with Bloomberg TV
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