Oil Hits Two-Week Low Amid Continued Concerns of Further Interest Rate Hikes
SECTOR COMMENTARY:
The energy sector is pointing to a lower start, pressured by weakness in the underlying commodities and in the major equity futures which fell as traders navigate a wave of earnings announcements and the start of the Fed's two-day policy meeting. Earnings season continued to ramp up today with ExxonMobil posting a record $56 billion profit for 2022, beating earnings expectations for the fourth quarter.
WTI crude oil futures extended their slide lower for the third-straight session and hit a two-week low this morning, falling on concerns of further interest rate hikes, strength in the U.S. dollar and ample Russian crude flows. Investors expect the U.S. Federal Reserve will raise interest rates by 25 basis points Wednesday, with half-point increases coming from the Bank of England and European Central Bank the following day. Further bearish sentiment followed news that Russia's oil loadings from its Ust-Luga port is expected to rise at the beginning of February despite the western sanctions. Traders are also looking for the outcome of an OPEC panel meeting tomorrow with the group expected to recommend keeping the group's current output policy unchanged.
Natural gas futures continued to slide lower, falling amid milder weather forecasts in key consuming regions that should cut expected heating demand through the middle of February. A growing belief that more than enough gas was in storage for the rest of the winter and that Freeport LNG's export plant in Texas would not start pulling in big amounts of gas until at least March, also weighed on prices.
BY SECTOR:
US INTEGRATEDS
Exxon Mobil announced fourth-quarter 2022 earnings of $12.8 billion, or $3.09 per share assuming dilution, resulting in full-year earnings of $55.7 billion, or $13.26 per share assuming dilution. Fourth-quarter results included unfavorable identified items of $1.3 billion associated with additional European taxes on the energy sector and asset impairments, partly offset by one-time adjustments related to the Sakhalin-1 expropriation. Capital and exploration expenditures were $7.5 billion in the fourth quarter, bringing full-year 2022 investments to $22.7 billion, consistent with our guidance.
Technip Energies has been awarded a contract for the front-end engineering and design (FEED) of the world’s largest low-carbon hydrogen project for ExxonMobil in Baytown, Texas, USA.
INTERNATIONAL INTEGRATEDS
Petrobras received earnout payment of 430 million reais from Karoon Energy's subsidiary related to stake sale of Bauna Oilfield.
As highlighted in the December 2022 Quarterly Report, Karoon advised that on 30 January 2023, the Company paid Petróleo Brasileiro S.A. (Petrobras) US$84.5 million (US$78 million plus US$6.5 million accrued interest, equivalent to BRL 430.3 million). The payment was made from Karoon’s existing cash on hand.
Deliveries of petroleum products from French sites has been impacted by the national strike, TotalEnergies said.
CANADIAN INTEGRATEDS
Imperial reported estimated net income in the fourth quarter of $1,727 million and cash flow from operating activities of $2,797 million, compared to net income of $2,031 million and cash flow from operating activities of $3,089 million in the third quarter of 2022. Fourth quarter results reflected strong operating performance across all business segments and robust diesel crack spreads, which were offset by lower upstream realizations. Full-year estimated net income was $7,340 million with cash flow from operating activities of $10,482 million.
U.S. E&PS
No significant news.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Kirby announced net earnings attributable to Kirby for the fourth quarter ended December 31, 2022 of $37.3 million or $0.62 per share, compared with earnings of $11.0 million, or $0.18 per share for the 2021 fourth quarter. Excluding one-time items in both quarters, net earnings attributable to Kirby were $40.3 million or $0.67 per share, compared with earnings of $16.7 million, or $0.27 per share, in the year ago period. Consolidated revenues for the 2022 fourth quarter were $730.2 million compared with $591.3 million in the 2021 fourth quarter.
DRILLERS
Helmerich & Payne reported net income of $97 million, or $0.91 per diluted share, from operating revenues of $720 million for the quarter ended December 31, 2022, compared to net income of $46 million, or $0.42 per diluted share, from operating revenues of $631 million for the quarter ended September 30, 2022. The net income per diluted share for first quarter of fiscal 2023 and fourth quarter of fiscal year 2022 include $(0.20) and $(0.03) of after-tax losses, respectively, comprised of select items.
REFINERS
Marathon Petroleum reported net income attributable to MPC of $3.3 billion, or $7.09 per diluted share, for the fourth quarter of 2022, compared with net income attributable to MPC of $774 million, or $1.27 per diluted share, for the fourth quarter of 2021. Adjusted net income was $3.1 billion, or $6.65 per diluted share, for the fourth quarter of 2022. This compares to adjusted net income of $794 million, or $1.30 per diluted share, for the fourth quarter of 2021. Adjustments are shown in the accompanying release tables.
Phillips 66 announced fourth-quarter 2022 earnings of $1.9 billion, compared with earnings of $5.4 billion in the third quarter of 2022. Excluding special items of $15 million, the company had adjusted earnings of $1.9 billion in the fourth quarter, compared with third-quarter adjusted earnings of $3.1 billion.
MLPS & PIPELINES
Enbridge announced that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series D on March 1, 2023. As a result, subject to certain conditions, the holders of the Series D Shares have the right to convert all or part of their Series D Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series E of Enbridge on March 1, 2023. Holders who do not exercise their right to convert their Series D Shares into Series E Shares will retain their Series D Shares.
MPLX LP reported fourth-quarter 2022 net income attributable to MPLX of $816 million, compared with $830 million for the fourth quarter of 2021. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) attributable to MPLX was $1,454 million, compared with $1,445 million for the fourth quarter of 2021. Logistics and Storage (L&S) segment adjusted EBITDA for the fourth quarter of 2022 was $979 million, compared with $934 million for the fourth quarter of 2021. Gathering and Processing (G&P) segment adjusted EBITDA for the fourth quarter of 2022 was $475 million, compared with $511 million for the fourth quarter of 2021.
BTIG upgraded New Fortress Energy to Buy from Neutral.
MARKET COMMENTARY
U.S. stock index futures edged lower as key economic data and a slew of earnings reports jangled investor nerves. European shares were down on fears of another round of interest rate hikes by major central banks later this week. Japan's Nikkei ended lower as corporate results showed mixed trends, while Chinese stocks closed in the red as investors booked profits after a strong rally that was fueled by record monthly foreign inflows. Oil prices dropped as ample Russian crude flows outweighed demand recovery expectations from China. Gold prices fell to their lowest levels in more than one week as the dollar firmed.
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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