Oil Inches Lower Amid Clash Between Israel and Palestine
SECTOR COMMENTARY:
The energy sector is poised for a mixed to higher start, reeling ahead of the open as investors weigh a small pullback in crude prices against further strength in the major equity futures and a drop in Treasury yields.
WTI and Brent crude oil futures inched lower this morning following yesterday’s over 4% rally, steadying as traders continue to monitor for potential supply, geopolitical and economic disruptions resulting from military clashes between Palestine and Israel. In a more positive sign for supply, Venezuela and the U.S. have progressed in talks that could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions. While participants will continue to closely monitor headlines coming out of the Middle East, attention is starting to shift to the next round of inventory data and the EIA Short Term Energy Outlook tomorrow. Also on the calendar is the OPEC monthly Thursday and the IEA monthly and rig count on Friday.
Natural gas futures have extended their trend higher for the sixth-consecutive session, continuing to gain momentum amid supply concerns in Europe prompted by violence in the Middle East and on colder weather forecasts.
BY SECTOR:
Chevron and unions representing workers at its two Australian liquefied natural gas (LNG) facilities will meet for talks after the oil and gas major asked the industrial arbitrator to help close a deal as workers threaten to restart strikes.
INTERNATIONAL INTEGRATEDS
According to Reuters, CEO Claudio Descalzi said at an energy conference that Eni to fully replace Russian gas by winter 2024-2025.
Oceaneering International announced that one of its wholly owned subsidiaries, Marine Production Systems do Brasil Ltda., has secured a five-year contract from Petróleo Brasileiro S.A. (“Petrobras”) for the operation of three existing drill pipe riser (“DPR”) systems to support intervention and completion operations in Brazil. Petrobras also has the option to add a fourth DPR system by notifying Oceaneering prior to mid-December 2023. The contract value could be worth up to $75 million in revenue during the five-year contract period.
Petrobras informed that in September its refining units reached 97% utilization for the second consecutive month. As a result, the Total Utilization Factor (FUT) of the refineries in 3Q23 reached 95.8%, the best result since 2014
Survivors and relatives of victims of a 2021 insurgent attack in Mozambique have filed a complaint against TotalEnergies for negligence and indirect manslaughter, saying the company had failed to ensure the safety of subcontractors. TotalEnergies rejected the allegations, saying they were "inaccurate."
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
On October 6, 2023, Civitas Resources, JPMorgan Chase Bank, N.A., as the administrative agent, and the lenders party thereto entered into a Fifth Amendment to Amended and Restated Credit Agreement, which Fifth Amendment amends the terms of that certain Amended and Restated Credit Agreement, dated as of November 1, 2021 among the Company, the guarantors party thereto, each lender from time to time party thereto, and the Administrative Agent. The Fifth Amendment amends the Credit Agreement to, among other things, permit the Company to incur, on or before January 31, 2024, an aggregate of up to $1.5 billion of indebtedness comprised of new senior unsecured notes, unsecured bridge facilities or a combination thereof, provided the proceeds therefrom are used to fund the transactions contemplated by the Purchase and Sale Agreement, dated October 3, 2023, by and between the Company and Vencer Energy, LLC.
Civitas Resources announced that, subject to market conditions, it intends to offer $1,000 million in aggregate principal amount of senior unsecured notes due 2030 in a private placement to eligible purchasers under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The Company expects to use the net proceeds from the Offering, together with cash on hand and borrowings under the Company’s credit facility, to fund a portion of the cash purchase price of the Company’s recently announced pending acquisition of certain oil and gas properties, interests, and related assets located in the Midland Basin from Vencer Energy, LLC.
Civitas Resources’ CEO Chris Doyle issued the following statement in conjunction with the Company’s recently announced debt offering: “Today’s debt offering is expected to successfully finance our accretive Vencer acquisition. There is inherent flexibility in our capital structure, and we see tremendous value in our equity at today’s levels. With expectations for $300 million or more in non-core asset sales, we anticipate maintaining a strong capital structure rapidly advancing towards our 0.75x mid-cycle leverage target.”
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Enerflex announced the appointment of Mr. Preet Dhindsa as Interim Chief Financial Officer, effective October 13, 2023. Enerflex has retained an executive search firm and will consider Mr. Dhindsa and other candidates as part of its process to identify the Company's next permanent CFO.
Schoeller-Bleckmann Oilfield Equipment AG completed the acquisition of Praxis Completion Technology announced in June. The closing of the transaction took place yesterday. The purchase price for the acquisition of all shares in the company amounts to MUSD 22, plus compensation for working capital adjustments and earnings generated from January 1, 2023 until yesterday’s closing. The latter had not yet been determined at the time of closing.
DRILLERS
No significant news.
REFINERS
According to Reuters, Par Pacific provided commitments that raise revolver commitment under ABL loan deal to $900 million.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures rose following dovish comments from Federal Reserve policymakers, though investors remained cautious amid escalating tensions in the Middle East. European shares were also trading in the green. Japan's Nikkei recorded its largest daily gain in nine months. Spot gold prices fell. The dollar weakened against a basket of currencies. Oil prices eased after rallying more than 4% in the previous session as traders watched for signs of potential supply disruptions from the conflict in Middle East.
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 Rich Pontillo.
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Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.
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