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Oil Hits New 2019 High Amid the Prospect of More Sanctions Against Iran

Oil prices strengthened on news that a key crude terminal in Venezuela halted operations as well as on indications that the U.S. is seeking to toughen sanctions on Iran.

Tuesday, April2, 2019

SECTOR COMMENTARY

Energy stocks are poised for a higher opening on strong support from crude oil prices which hit a new 2019 high even as broader markets take a breather from yesterday’s strong rally.

Oil prices strengthened on news that a key crude terminal in Venezuela halted operations as well as on indications that the U.S. is seeking to toughen sanctions on Iran. Brent crude touched $69.50, the highest since mid-November, while WTI hit $62.02, rising above $62 for the first time since early November. Meanwhile, the U.S. is also expected to show a large crude draw later today and strong economic data from both the U.S. and China was also supportive amid the backdrop of OPEC output at the lowest level since 2015.

Natural gas futures are moderately higher as inventory data this week is expected to show a smaller than expected supply build.

U.S. INTEGRATEDS

Reuters - Exxon Mobil recently held talks on the sale of a suite of oil and gas fields in Nigeria as the company focuses on new developments in U.S. shale and Guyana. The potential disposals are expected to include stakes in onshore and offshore fields and could raise up to $3 billion.

Press Release - Exxon Mobil said that it has made a final investment decision on a multi-billion dollar expansion of its integrated manufacturing complex in Singapore to convert fuel oil and other bottom-of-the-barrel crude products into higher-value lube base stocks and distillates. Engineering, procurement and construction contracts have been awarded to Técnicas Reunidas for the new process units, and Wood Group for interconnecting pipelines and supporting infrastructure facilities. As part of the project, ExxonMobil is working on a long-term commercial agreement with Linde to upgrade residue from the site to hydrogen and synthesis gas.

Reuters - The Exxon Mobil operated Papua New Guinea LNG project has agreed a deal to supply liquified natural gas (LNG) to a unit of China Petroleum & Chemical Corp 600028.SS, Australia's Santos, a partner in the project. The four-year deal is for the supply of about 0.45 million tonnes of LNG per annum to Unipec Singapore, Santos said in a statement.

INTERNATIONAL INTEGRATEDS

(Late Monday) Reuters - At least three investors left separate groups interested in acquiring a gas network pipeline that will be sold by Petroleo Brasileiro. Those departures will likely leave a third group, led by France's Engie with Canadian pension fund Caisse de Depot et Placement du Quebec, stronger. The final bids for TAG, as the unit is known, are due on Tuesday.

Reuters - Royal Dutch Shell became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies. In its first review of its association with 19 key industry groups, the company said it had found "material misalignment" over climate policy with the American Fuel & Petrochemical Manufacturers (AFPM) and would quit the body in 2020.

Reuters - Royal Dutch Shell said it would not renew its membership of a leading U.S. oil refining and petrochemical trade group in 2020 due to misalignment over climate policy. In its first review of its association with 19 key industry groups, the Anglo-Dutch company said that it had found "material misalignment" over climate policy with the American Fuel & Petrochemical Manufacturers.

Press Release - RealWear announced that Shell has selected RealWear’s hands-free head-mounted RealWear HMT-1Z1 platform to support in the digital transformation of its operations. The devices are being deployed through Honeywell in 12 countries including US, China, Russia, India, Germany and Austria and 24 operational sites.

(Late Monday) Reuters - Royal Dutch Shell increased production in some units at its 275,000 barrel per day (bpd) Deer Park, Texas, refinery after bottlenecked tankers made their way through restrictions on the Houston Ship Channel, Gulf Coast. Lyondell Basell Industries kept production at its 263,776 bpd Houston refinery reduced on Monday because of the shipping constraints.

Reuters - Total said it had started up production on the Kaombo Sul project located off the coast of Angola, in a deal that should lift Total's general production capacities. Kaombo Sul will add 115,000 barrels of oil per day (bopd) and bring the overall production capacity to 230,000 bopd, equivalent to 15 percent of the country's production.

U.S. E&PS

Press Release - Affiliates of Quantum Energy Partners, Post Oak Energy Capital, Concho Resources, WPX Energy and other investors announced that they have entered into a binding agreement to sell substantially all of the assets of Oryx Southern Delaware Holdings LLC and Oryx Delaware Holdings LLC (collectively, “Oryx”) to funds managed by Stonepeak Infrastructure Partners for a cash purchase price of approximately $3.6 billion. For Stonepeak, Oryx represents an ideal platform for providing critical crude oil transportation services in the Permian Basin that is well-positioned to capitalize on growing production, given its differentiated service offering, expansive geographic footprint, scalable in-place infrastructure, and unique customer diversification. Oryx will retain its name and continue to be headquartered in Midland, Texas. Its leadership team, led by Brett Wiggs and Karl Pfluger, will remain in their current roles and are investing alongside Stonepeak in this transaction.

(Late Monday) Press Release - Marathon Oil and its partners announced they have executed the Definitive Agreements with the Government of the Republic of Equatorial Guinea and Alen Unit owners to process Alen Unit gas through Alba Plant LLC's liquefied petroleum gas (LPG) processing plant and EG LNG's liquefied natural gas (LNG) production facility, both located in Punta Europa, EG.

(Late Monday) Press Release - Noble Energy announced that the Company has approved the Alen natural gas development offshore Equatorial Guinea (EG). Natural gas from the Alen field will be processed through the existing Alba Plant LLC liquefied petroleum gas processing plant (Alba Plant) and EG LNG’s liquefied natural gas production facility (EG LNG) located at Punta Europa, Bioko Island. Definitive agreements in support of the project were executed between the Alen field partners, the Alba Plant and EG LNG plant owners, as well as the government of the Republic of Equatorial Guinea.

Press Release - A subsidiary of WPX Energy and its joint venture partner in the Oryx II pipeline have signed agreements to sell the project. Closing is expected in the second quarter. Upon close, WPX expects net proceeds of approximately $350 million for its 25 percent equity interest after adjusting for debt financing related to Oryx II. In addition, WPX expects to save approximately $40 million in planned equity investments for the balance of the year due to the sale.

CANADIAN E&PS

(Late Monday) Press Release - Bonavista Energy announced the increase to the Exchange Ratio of its exchangeable shares from 1.49889 to 1.51204. This increase will be effective on April 15, 2019.

(Late Monday) Reuters - Ecopetrol will split its participation in three oil fields equally with Parex, which will operate the fields. Colombia recently modified contractual terms for offshore exploration and launched a permanent bidding process in an effort to boost its long-stagnant oil sector.

OILFIELD SERVICES

(Late Monday) Press Release - KBR announced it has been awarded a Technical Verification and Open Book Estimate (OBE) engineering, procurement, and construction (EPC) contract by Pieridae Energy Limited for a two train 10 MMTPA LNG facility at Goldboro, Nova Scotia.

Press Release - McDermott International announced it has signed a Joint Venture Agreement with Zamil Offshore to target the Maintenance, Modifications and Operations (MMO) market in Saudi Arabia. McDermott and Zamil will work together on an exclusive basis to provide Saudi Aramco with comprehensive offshore brownfield EPCI solutions and asset maintenance services. The new joint venture will be uniquely positioned to offer integrated, cost effective MMO services, to address the rising market demand in Saudi Arabia.

Press Release - Qatar Petroleum announced that it has awarded a number of contracts related to Qatar’s LNG expansion project designed to enhance its capabilities by increasing LNG production capacity from 77 to 110 million tons per year by 2024. The contracts were announced by His Excellency Mr. Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs and President & CEO of Qatar Petroleum, in a speech at the 19th International Conference & Exhibition on Liquefied Natural Gas in Shanghai (LNG2019). His Excellency announced awarding the fabrication and installation of the offshore jackets to McDermott; and the contract for early site works required to prepare the site of the four new 8 mtpa LNG mega-trains in Ras Laffan Industrial City to a joint venture between Consolidated Contractors Company (CCC) and Teyseer Trading and Contracting Company.

Reuters - Petroleum Geo Services said Q1 contract seismic was 29 percent versus 36 percent year-ago; Q1 multiclient seismic was 38 percent versus 31 percent year-ago; Q1 steaming was 6 percent versus 4 percent year-ago; Q1 yard stay was 0 percent versus 0 percent year-ago; Q1 stacked/standby was 27 percent versus 29 percent year-ago; and Q1 2019 vessel statistics includes eight vessels. All cold-stacked vessels are excluded from statistics.

(Late Monday) Press Release - On March 30, 2019, Pierre de Demandolx, a director of SEACOR, notified the board of directors of the Company that he will retire from the Board at the end of his current term, which will occur immediately prior to the 2019 Annual Meeting of Stockholders on June 5, 2019, and will not stand for reelection at the Annual Meeting. Mr. Demandolx advised the Board that his decision was not the result of any disagreement with the Company or any matter relating to the Company’s operations, policies or practices. On April 1, 2019, the Board adopted a resolution, effective as of the 2019 Annual Meeting of Stockholders, to reduce the size of the Board from six directors to five directors.

DRILLERS

(Late Monday) Press Release - RPC announced that during the First Quarter of 2019 it purchased 55,942 shares under its share repurchase program.

MLPS & PIPELINES

Press Release - Energy Transfer LP has announced that it is expanding its presence in China to meet growing demand for ethane and liquid natural gas products by opening an office in Beijing, the first office for ET outside the US.

Press Release - Gibson Energy announced the sale of its Canadian Truck Transportation business for aggregate proceeds of approximately $100 million prior to closing adjustments and contingent bonus payments to Gibson. With the sale of the Canadian Truck Transportation business, Gibson has successfully completed all of the non-core divestitures announced at its January 2018 Investor Day for total proceeds of approximately $325 million. The Company also notes that DBRS has assigned Gibson an Issuer Rating of “BBB (low)” with a “Stable” trend.

(Late Monday) Press Release - Pembina Pipeline announced that it has agreed to issue $800 million of senior unsecured medium-term notes. The Offering will be conducted in two tranches consisting of $400 million in senior unsecured medium-term notes, series 12 having a fixed coupon of 3.62% per annum, paid semi-annually, and maturing on April 3, 2029, and $400 million in senior unsecured medium-term notes, series 13 having a fixed coupon of 4.54% per annum, paid semi-annually, and maturing on April 3, 2049.

MARKET COMMENTARY

U.S. stock futures were little changed, a day after the Wall Street rallied on upbeat manufacturing numbers from the U.S. and China. European shares were mostly muted due to Brexit uncertainty, while the FTSE 100 traded higher, supported by a weaker sterling. Asian shares extended yesterday’s rally. Euro fell to a three-and-a-half week low as strong economic data from the U.S. encouraged investors to buy the dollar. Oil prices rose on expectations of further OPEC-led supply cuts and easing demand concerns. Gold prices steadied near 3-week low. Durable goods data, due for release later during the day, will also be in focus.

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.


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