Oil Lower Ahead of Fed Decision
SECTOR COMMENTARY:
The energy sector is set for a mixed-to-lower start as losses in the crude complex outweigh modest gains in the major market futures. U.S stocks are trading higher in the pre-market, following yesterday’s sell-off as investors brace themselves for the outcome of the Fed’s meeting later today. Earnings are heavy across the sector with producers, services and refiners reporting 1Q results.
WTI and Brent crude oil futures are extending yesterday’s sharp losses and are now trading at levels last seen in March. Oil futures are lower as growth concerns increased ahead of the Federal Reserve’s policy decision and amid a wave of short selling and profit-taking by money managers. Investors have now pivoted from a short-covering rally which saw managers increase their positions by 245 million barrels over the previous four weeks. Hedge funds and money managers sold the equivalent of 87 million barrels in the six most important petroleum futures and options contracts over the seven days ending on April 25. Additionally, Morgan Stanley cut its Q3-23 Brent price outlook to $77.50 from $90, citing resilient Russian supply and the belief that much of the demand boost from China's reopening has taken place.
Natural gas futures are lower on record levels of output and forecasts for lower heating demand in the near-term.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Repsol is close to buying a majority stake in power retailer CHC Energia, the Expansion newspaper reported, citing unidentified market sources.
CANADIAN INTEGRATEDS
Imperial Oil announced at its annual meeting of shareholders held on May 2, 2023, that each of the seven nominees proposed as directors of the company and listed in its management proxy circular dated March 16, 2023 were elected as directors.
U.S. E&PS
Berry announced first quarter 2023 results, including a net loss of $6 million or $0.08 per diluted share, Adjusted Net Income of $5 million or $0.07 per diluted share, and Adjusted EBITDA of $59 million. The Company’s Board of Directors declared dividends totaling $0.12 per share on the Company’s outstanding common stock. This quarterly fixed dividend of $0.12 per share is payable on May 25, 2023 to shareholders of record at the close of business on May 15, 2023.
Chesapeake Energy reported 2023 first quarter financial and operating results. Net income totaled $1,389 million, or $9.60 per diluted share; adjusted net income totaling $270 million, or $1.87 per diluted share. The company announced total quarterly dividend of $1.18 per common share to be paid in June 2023 and returned more than $250 million to shareholders YTD in the form of dividends and share repurchases.
Comstock's revenues in the first quarter of 2023 totaled $390.4 million (including realized hedging gains of $10.4 million). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter of 2023 was $254.9 million, and net income available to common stockholders for the first quarter was $134.5 million or $0.49 per share. Reported net income in the quarter included a pre-tax $56.0 million unrealized gain on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the first quarter of 2023 was $92.0 million, or $0.33 per diluted share.
EQT announced that it has commenced a consent solicitation to amend the indenture governing its outstanding 5.700% Senior Notes due 2028 to extend the Outside Date for the special mandatory redemption provision from June 30, 2023 to December 29, 2023.
Murphy Oil announced its financial and operating results for the first quarter ended March 31, 2023, including net income attributable to Murphy of $192 million, or $1.22 net income per diluted share. Excluding discontinued operations and other items affecting comparability between periods, adjusted net income attributable to Murphy was $195 million, or $1.24 adjusted net income per diluted share.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Newpark Resources announced results for its first quarter ended March 31, 2023. Total revenues for the first quarter of 2023 were $200.0 million compared to $225.2 million for the fourth quarter of 2022 and $176.4 million for the first quarter of 2022. Net income for the first quarter of 2023 was $5.6 million, or $0.06 per diluted share. Net income was $9.0 million, or $0.10 per diluted share, for the fourth quarter of 2022, and $2.5 million, or $0.03 per diluted share, for the first quarter of 2022. Adjusted Net Income for the first quarter of 2023 was $0.09 per diluted share and Adjusted EBITDA was $21.0 million, as compared to Adjusted Net Income of $0.07 per diluted share and Adjusted EBITDA of $21.5 million in the fourth quarter of 2022, and Adjusted Net Loss of $0.00 per share and Adjusted EBITDA of $11.7 million in the first quarter of 2022.
Select Energy Services announced its financial and operating results for the quarter ended March 31, 2023. Revenue for the first quarter of 2023 was $416.6 million as compared to $381.7 million in the fourth quarter of 2022 and $294.8 million in the first quarter of 2022. Net income for the first quarter of 2023 was $13.7 million as compared to $7.6 million in the fourth quarter of 2022 and $8.0 million in the first quarter of 2022. Net income for the first quarter of 2023 was impacted by $11.1 million of non-ordinary, non-cash trademark abandonment expense. This expense is associated with the Company's ongoing corporate rebranding initiative and the decision to retire certain legacy acquired trademarks and operating brands within Select's future operations. Adjusted EBITDA was $67.2 million in the first quarter of 2023 as compared to $52.2 million in the fourth quarter of 2022 and $32.2 million in the first quarter of 2022.
TechnipFMC has been awarded a large contract by ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, to supply the subsea production system for the Uaru project.
Raymond James initiated Weatherford International with a Strong Buy.
DRILLERS
No significant news.
REFINERS
Delek US Holdings announced that its Board of Directors has approved a $0.01 per share increase in the regular dividend bringing the quarterly dividend to $0.23 per share that will be paid on May 22, 2023, to shareholders of record on May 15, 2023.
Phillips 66 announced first-quarter 2023 earnings of $2.0 billion, or $4.20 per share, compared with earnings of $1.9 billion in the fourth quarter of 2022. Excluding special items of $4 million, the company had adjusted earnings of $2.0 billion, or $4.21 per share, in the first quarter, compared with fourth-quarter adjusted earnings of $1.9 billion.
MLPS & PIPELINES
Enbridge announced that its Board of Directors has declared a quarterly dividend of $0.8875 per common share, payable on June 1, 2023 to shareholders of record on May 15, 2023. The amount of the dividend is consistent with the March 1, 2023 dividend.
Enbridge announced that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series 1 (Series 1 Shares) on June 1, 2023. As a result, subject to certain conditions, the holders of the Series 1 Shares have the right to convert all or part of their Series 1 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 2 of Enbridge (Series 2 Shares) on June 1, 2023. Holders who do not exercise their right to convert their Series 1 Shares into Series 2 Shares will retain their Series 1 Shares.
EnLink Midstream reported financial results for the first quarter of 2023. Reported net income of $94.2 million and net cash provided by operating activities of $272.1 million for the first quarter of 2023. Generated adjusted EBITDA, net to EnLink, of $323.7 million for the first quarter of 2023. The lingering impact from severe winter weather throughout Texas and Oklahoma, along with unscheduled downtime after an earthquake in the Permian, late in the fourth quarter of 2022 adversely impacted first quarter of 2023 adjusted EBITDA by approximately $6 million. Repurchased approximately $50 million of common units in the first quarter of 2023. EnLink is on pace to complete the 2023 unit repurchase authorization of $200 million.
Energy Transfer reported financial results for the quarter ended March 31, 2023. Energy Transfer reported net income attributable to partners for the three months ended March 31, 2023 of $1.11 billion. For the three months ended March 31, 2023, net income per common unit (basic and diluted) was $0.32 per unit. Adjusted EBITDA for the three months ended March 31, 2023 was $3.43 billion compared to $3.34 billion for the three months ended March 31, 2022. Given Energy Transfer’s acquisition of Lotus Midstream Operations, LLC, as well as continued increasing demand, the Partnership now expects Adjusted EBITDA for the full year 2023 to be between $13.05 billion and $13.45 billion (previously $12.9 billion to $13.3 billion). The Partnership expects its 2023 growth capital expenditures to be approximately $2.0 billion.
Energy Transfer said it has completed its $1.45 billion acquisition of Lotus Midstream Operations and boosted its earnings expectations higher for the rest of the year.
MARKET COMMENTARY
U.S. stock index futures rose as investors look out for more economic data ahead of the Federal Reserve policy meeting outcome later in the day. European shares were also trading in the green. Gold prices were subdued, while dollar fell weighed down by uncertainty surrounding the U.S. debt ceiling and other economic headwinds. Oil prices continued its plunge on concerns about the U.S. economy. ADP's private payrolls data is scheduled for release later in the day. Qualcomm will release its quarterly earnings report after market closes.
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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