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Oil

Oil Gains on U.S.-China Trade Hopes

Crude oil prices are stronger following equities higher due to improved sentiment on US-China trade relations. 

SECTOR COMMENTARY

Energy stocks are poised for strength at the open on dual support from higher index futures which are extending the record gains from the prior session as well as firmer oil prices. Markets are broadly set for a third straight day of gains on optimism around a trade deal with China with a report that the US is considering rolling back some tariffs. Several large cap E&Ps reported earnings today and results were in line or better as capital efficiency remained a solid theme.

Crude oil prices are stronger following equities higher due to improved sentiment on U.S.-China trade relations. Meanwhile, OPEC’s secretary commented on the enhanced compliance with output cuts while Iran threatened less compliance with the nuclear agreements. However, OPEC’s 2019 world outlook had bearish overtones including a slowdown in demand growth as well as non-OPEC supply growth exceeding global demand growth.

Natural gas prices are up more than 2% as forecasts for a colder November firm up. 

INTERNATIONAL INTEGRATEDS

Reuters - BP said oil production at Azeri ACG stood at 541,000 barrels per day in first nine months of 2019.

Reuters - Royal Dutch Shell has signed an agreement to buy French wind energy company EOLFI. Financial terms of the acquisition were not disclosed.

Reuters - Total said it will drill another exploration well in the 11B/12B block offshore South Africa in the first quarter of next year.

U.S. E&PS 

(Late Monday) Press Release - On November 1, 2019, Approach Resourcesreceived a letter from the Listing Qualifications department staff of The Nasdaq Stock Market LLC notifying the Company of Nasdaq’s determination to delist the Company’s common stock from the Nasdaq Global Select Market due to the Company’s inability to achieve compliance with the $1.00 per share minimum closing bid price required by the continued listing requirements of Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company previously had 180 calendar days, or until October 29, 2019, to regain compliance with the Minimum Bid Requirement.

(Late Monday) Press Release - Callon Petroleum reported results of operations for the three and nine months ended September 30, 2019. For the period, the company increased production by 8% year-over-year to 37.8 Mboe/d (78% oil), generated an operating margin of $35.58 per Boe, realized fully diluted earnings per share of $0.21, adjusted earnings per share of $0.19, net income of $55.8 million, and adjusted EBITDA of $117.4 million, reduced operational capital spending by 13% during the third quarter to $116.4 million, maintaining full year operational capital targets within the previously lowered guidance range, achieved lease operating expense per Boe of $5.65, an improvement of nearly 9% over the prior period, and completed and placed on production large multi-interval, multi-pad projects in both the Midland and Delaware Basins with strong initial performance from both projects.

(Late Monday) Press Release - Carrizo Oil & Gas reported third quarter of 2019 net income attributable to common shareholders of $103.0 million, or $1.11 per basic and diluted share, compared to net income attributable to common shareholders of $76.1 million, or $0.88 and $0.85 per basic and diluted share, respectively, in the third quarter of 2018. The net income attributable to common shareholders for the third quarter of 2019 and the third quarter of 2018 include certain items typically excluded from published estimates by the investment community. Adjusted net income attributable to common shareholders for the third quarter of 2019 was $63.7 million, or $0.69 per diluted share, compared to $84.1 million, or $0.94 per diluted share, in the third quarter of 2018.

(Late Monday) Press Release - Centennial Resource Development announced financial and operational results for the third quarter 2019. For the third quarter 2019, Centennial reported a net loss of $3.6 million, or $0.01 per diluted share, compared to net income of $39.3 million, or $0.15 per diluted share, in the prior year period. Average daily crude oil production increased 17 percent to 42,079 barrels of oil per day compared to the prior year period. Average total equivalent production increased 21 percent compared to the prior year period.

(Late Monday) Press Release - Cimarex Energy reported third quarter 2019 net income of $40.5 million, or $0.39 per share, compared to $148.4 million, or $1.56 per share, in the same period a year ago.  Third quarter 2019 results were negatively impacted by a non-cash charge related to the impairment of oil and gas properties.  Third quarter adjusted net income (non-GAAP) was $92.9 million, or $0.91 per share, compared to third quarter 2018 adjusted net income (non-GAAP) of $189.6 million, or $1.99 per share.  Net cash provided by operating activities was $320.1 million in the third quarter of 2019 compared to $453.5 million in the same period a year ago.  Adjusted cash flow from operations (non-GAAP) was $360.7 million in the third quarter of 2019 compared to $388.7 million in the third quarter a year ago.

Press Release - Chesapeake Energy reported financial and operational results for the 2019 third quarter. For the 2019 third quarter, Chesapeake reported a net loss of $61 million and a net loss available to common stockholders of $101 million, or $0.06 per diluted share.  Adjusting for items typically excluded by securities analysts, the 2019 third quarter adjusted net loss attributable to Chesapeake was $188 million, or $0.11 per share, while adjusted EBITDAX was $577 million. The company exchanged $693 million of Senior Notes and $40 million of preferred shares for 319 million common shares at an average discount of approximately 25%, reducing annual interest and preferred dividend payments.

(Late Monday) Press Release - HighPoint Resources reported third quarter of 2019 financial and operating results, including significant sequential increases in total production, oil volumes and EBITDAX over the second quarter of 2019, meaningfully lower cash costs and positive results from the Hereford field drilling program. For the third quarter of 2019, the Company reported net income of $11.1 million, or $0.05 per diluted share. Adjusted net income for the third quarter of 2019 was a net loss of $7.4 million, or $0.03 per diluted share. EBITDAX for the third quarter of 2019 was $94.3 million. Adjusted net income (loss) and EBITDAX are non-GAAP (Generally Accepted Accounting Principles) measures.

(Late Monday) Press Release - Occidental Petroleum announced a net loss attributable to common stockholders for the third quarter of 2019 of $912 million, or $1.08 per diluted share, and adjusted income attributable to common stockholders of $93 million, or $0.11 per diluted share. Third quarter pre-tax items affecting comparability mainly include Anadarko merger-related transaction costs and debt financing fees of $969 million, oil and gas impairment charges of $325 million and a gain on sale of $111 million related to Occidental’s sale of its interests in Plains All American Pipeline, L.P. and Plains GP Holdings, L.P. (together, Plains).

(Late Monday) Press Release - Pioneer Natural Resources reported financial and operating results for the quarter ended September 30, 2019. Pioneer reported third quarter net income attributable to common stockholders of $231 million, or $1.38 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 third quarter was $333 million, or $1.99 per diluted share. Cash flow from operating activities for the third quarter was $895 million. The Company announced that its Board of Directors declared a quarterly cash dividend of $0.44 per share, representing a current yield of approximately 1.4% (based on the Company’s closing stock price as of October 31, 2019). The decision to grow the Company's cash dividend, from $0.08 per share on an annualized basis in February 2018 to an annualized rate of $1.76 per share currently, is consistent with the Company’s objective of increasing the return of capital to shareholders and moving toward an annual dividend yield that is competitive with that of the S&P 500. In December 2018, the Board of Directors authorized a $2 billion common stock repurchase program. During the third quarter, the Company repurchased $200 million of common stock under this program. To date, the Company has repurchased a total of 5.3 million shares for $728 million at an average price of $136 per share under this authorization.

CANADIAN E&PS

(Late Monday) Press Release - Surge Energy announced its operating and financial results for the quarter ended September 30, 2019. Highlights include: Surge's Q3/19 production of 21,217 boepd increased by 18 percent over Q3/18 production of 18,029 boepd. Surge's liquids weighting increased six percent, up from 79 percent in Q3/18 to 85 percent in Q3/19. The Company's Q3/19 liquids production increased by 26 percent as compared to Q3/18, up from 14,229 bblpd to 17,939 bblpd (96 percent light and medium oil). The Company's cash flow from operating activities in Q3/19 was $40.2 million, an increase of eight percent over Q3/18, at $37.2 million. Surge's adjusted funds flowii in Q3/19 was $41.5 million, an increase of two percent over Q3/18 at $40.6 million. Operating expenses for Q3/19 were $14.69 per boe and net operating expensesii were $13.93 per boe, both below the Company's 2019 guided range of $14.95 - $15.45 per boe. Surge generated $11.2 million of adjusted funds flow in the quarter in excess of exploration and development expenditures and dividends declared (and was used to further reduce net debt). The Company paid dividends of $8.0 million in Q3/19, representing 19 percent of Q3/19 adjusted funds flow. And, in the last nine months Surge has reduced net debt by $84 million.

OILFIELD SERVICES

(Late Monday) Press Release - McDermott International reported revenues of $2.1 billion, a net loss of $1.9 billion, or $(10.37) per diluted share, and an operating loss of $1.7 billion for the third quarter of 2019.  The net loss was due primarily to non-cash accounting charges of $1.5 billion related to impairments of goodwill and intangible assets and $256 million of changes in project gross profit on specified projects identified in a covenant of its new Superpriority Credit Agreement.  

Press Release - McDermott International announced the appointment of Chris Krummel as Executive Vice President, Chief Financial Officer, effective immediately. Mr. Krummel joined McDermott in 2016 and previously served as the company's Global Vice President, Finance and Chief Accounting Officer. He replaces Stuart Spence, who has resigned from McDermott to pursue other opportunities.

(Late Monday) Press Release - National Oilwell Varco announced that it issued a notice to redeem a portion of its 2.60% senior notes due December 2022; priced a new underwritten public offering of $500 million of senior unsecured notes due December 2029; and announced the completion of an amendment that includes the extension of the maturity date of its credit agreement.

(Late Monday) Press Release - NCS Multistage Holdings announced its results for the quarter ended September 30, 2019. Revenues were $60.8 million for the quarter ended September 30, 2019, which was a decrease of 3% compared to the third quarter of 2018. This decrease was primarily attributable to a decrease in the volume of sales of our fracturing systems products and services and our well construction products in the U.S., partially offset by increased sales of our Repeat Precision, LLC (“Repeat Precision”) products. Total revenues increased by 53% as compared to the second quarter of 2019 with increases of 7% in the United States, 127% in Canada and 301% outside of North America.

Press Release - Patterson-UTI Energy reported that for the month of October 2019, the Company had an average of 127 drilling rigs operating. 

(Late Monday) Press Release - Toromont Industries reported its financial results for the third quarter ended September 30, 2019. Net earnings increased $11.0 million or 16% in the quarter versus a year ago to $79.7 million or $0.98 EPS.  On a year-to-date basis, net earnings and EPS were up 17%. Adjusted to exclude the non-recurring gain recorded in the first quarter described in note 9 to the financial statements, net earnings and EPS were up 15%. The Company maintained its very strong financial position. Leverage as represented by the net debt to total capitalization ratio was 22% at the end September 2019, compared to 18% at the end of December 2018 and 25% at the end of September 2018. The Board of Directors announced a quarterly dividend of 27 cents per common share, payable on January 3, 2020 to shareholders on record on December 9, 2019. The quarterly dividend was previously increased 17% to 27 cents per share effective with the dividend paid April 3, 2019.

REFINERS

(Late Monday) Press Release - Delek US Holdings announced financial results for its third quarter ended September 30, 2019. Delek US reported third quarter 2019 net income of $51.3 million, or $0.68 per diluted share, versus a net income of $179.8 million, or $2.03 per diluted share, for the quarter ended September 30, 2018.  On an adjusted basis, Delek US reported adjusted net income of $58.7 million, or $0.78 per diluted share for the third quarter 2019. This compares to adjusted net income of $186.4 million, or $2.15 per diluted share, in the prior-year period.

MLPS & PIPELINES

Press Release - Cheniere Energy announced that its wholly owned subsidiary, Cheniere Corpus Christi Holdings, LLC intends to offer, subject to market and other conditions, $1.0 billion principal amount of Senior Secured Notes due 2029.

(Late Monday) Press Release - Delek Logistics Partners announced its financial results for the third quarter 2019. For the three months ended September 30, 2019, Delek Logistics reported net income attributable to all partners of $30.5 million, or $0.89 per diluted common limited partner unit. This compares to net income attributable to all partners of $23.3 million, or $0.68 per diluted common limited partner unit, in the third quarter 2018. Net cash from operating activities was $34.3 million in the third quarter 2019 compared to $6.0 million in the prior year period.  Distributable cash flow was $33.7 million in the third quarter 2019, compared to $32.4 million in the prior-year period.

(Late Monday) Press Release - Gibson Energy announced its financial and operating results for the three and nine months ended September 30, 2019. The company reported: Infrastructure segment profit of $82 million in the third quarter, a $6 million increase over the third quarter of 2018, primarily due to additional tankage at Hardisty, the expansion of the HURC Facility, the expansion of the Moose Jaw Facility and the Viking Pipeline entering service; Marketing segment profit of $50 million in the third quarter, a $17 million decrease from the third quarter of 2018, due to lower margins earned in both the Refined Products and Crude Marketing businesses; Adjusted EBITDA from continuing operations of $121 million in the third quarter inclusive of an $11 million credit related to the amendment of the Company’s retirement benefits plan, or $110 million before the gain; Distributable cash flow from combined operations of $72 million in the third quarter, resulting in a payout ratio on a trailing twelve-month basis of approximately 60%, well below the Company’s 70% to 80% target range; and it Continues to maintain a strong balance sheet, with Net Debt to Pro Forma Adjusted EBITDA at September 30, 2019 of 2.6x, below the Company’s 3.0x – 3.5x target range, and remain fully-funded for all sanctioned capital.

(Late Monday) Press Release - Gibson Energy announced that its Board of Directors has approved a quarterly dividend of $0.33 per common share payable on January 17, 2020, to shareholders of record at the close of business on December 31, 2019.  This dividend is designated as an eligible dividend for Canadian income tax purposes.  For non-resident shareholders, Gibson’s dividends are subject to Canadian withholding tax.

CIBC Capital Markets upgraded Gibson Energy to ‘Outperformer’ from ‘Neutral.’

Press Release - NuStar Energy reported income from continuing operations of $53 million for the third quarter of 2019, up $9 million or 20 percent from $44 million in the third quarter of 2018. Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $169 million, up $15 million or 10 percent from $154 million for the third quarter of 2018. Distributable cash flow (DCF) available to common limited partners from continuing operations was $88 million for the third quarter of 2019, up $11 million or 14 percent compared to $77 million in the third quarter of 2018. The distribution coverage ratio to common limited partners from continuing operations was 1.36 times for the third quarter and 1.23 times for the nine months ended September 30, 2019. 

Press Release - SunCoke Energy reported results for the third quarter 2019, reflecting the continued strong performance of the Domestic Coke segment and customer challenges facing the Logistics segment. Revenues in the third quarter 2019 increased $39.8 million compared to the prior year period, primarily reflecting the pass-through of higher coal prices, partially offset by lower volumes in the Logistics segment. Adjusted EBITDA in the third quarter 2019 was $66.7 million, a $0.7 million increase from the prior year period. Improved performance in the Domestic Coke segment and lower Corporate costs were partially offset by lower volumes in the Logistics segment. 

Press Release - SunCoke Energy announced that its Board of Directors declared a cash dividend of $0.06 per share of the Company's common stock to be paid December 2, 2019 to stockholders of record at the close of business on November 19, 2019. 

Press Release - SunCoke Energy announced that the Board of Directors has authorized a new $100 million share repurchase program for SunCoke's common stock. Repurchases under the new program may commence following completion of SunCoke's existing stock repurchase program, previously approved on July 23, 2014 and amended on January 26, 2015.

(Late Monday) Reuters - About 4,300 barrels of oil have been recovered from TC Energy's Keystone pipeline leak in Walsh County, North Dakota. "Preliminary work to expose and extract the damaged section of pipe has begun and is expected to be complete by the end of the week," the company said in a statement, adding "about 200 round-the-clock personnel focused on clean-up and remediation activities."

TCP Pipelines was upgraded to buy from neutral at UBS. 

(Late Monday) Press Release - Western Midstream Partners announced third-quarter 2019 financial and operating results. Net income (loss) available to limited partners for the third quarter of 2019 totaled $121.2 million, or $0.27 per common unit (diluted), with third-quarter 2019 Adjusted EBITDA totaling $410.2 million and third-quarter 2019 Distributable cash flow totaling $304.4 million.

MARKET COMMENTARY

U.S. stock index futures were higher, tracking a similar rally in global shares, as hopes of Washington and Beijing reaching a trade truce boosted sentiment. The dollar was up against a basket of currencies, while gold prices slipped. Oil advanced, buoyed by an improved outlook for global crude demand. ISM non-manufacturing index and international trade data are on the economic calendar.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP 


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 Tamar Essner


This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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