Oil Lower Amid Weak Chinese Trade Data
SECTOR COMMENTARY:
The energy sector is set for a lower start, tracking losses in crude contracts and the broader market futures. U.S equities are down in the pre-market amid downbeat earnings forecasts from Skyworks and PayPal and as investors await for key inflation data tomorrow. Earnings continued across the energy sector, with several operators reporting 1Q results, capex, production, and updated guidance.
WTI and Brent crude oil futures are lower on weak Chinese trade data and as market participants remain cautious ahead of the release of April CPI data. China’s crude oil imports fell in April to their lowest level since January as high inventories, refinery maintenance and a weaker domestic economic rebound weighed on demand. Elsewhere, wildfires in Alberta Canada are lending support as the events have forced energy producers to shut in at least 280K bpd, or more than 3% of the nation’s output.
Natural gas futures recovered earlier losses and are higher as wildfires in Canada shutdown gas flows and as Norwegian gas system operator Gassco announced a gas outage that will remove 8.4 million cubic metres per day at Gullfaks.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Plenitude (Eni) and Kraken (Octopus Energy Group) entered a strategic partnership that will be instrumental in Plenitude's long-term growth in international retail energy markets. Plenitude will progressively adopt the Kraken platform in the countries where the company operates its international retail energy business, which currently counts around 2 million customers in France, Greece, Slovenia, Spain and Portugal.
Ford Motor said it will test a small fleet of prototype hydrogen fuel-cell versions of its electric E-Transit model to see if they are a workable zero-emission option for customers hauling heavy goods long distances.
Saudi Aramco announced Q1 profit fell, Q1 net profit after zakat and tax 119.54 billion riyals versus 148.03 billion riyals year ago, and Q1 net income $31.9 billion.
TotalEnergies announced that it has acquired Spain-based Iber Resinas, an actor in the mechanical recycling of plastics for sustainable applications. With this transaction, TotalEnergies will increase its production of circular polymers in Europe, extend its range of recycled products, and enhance its access to feedstock through Iber Resinas's network of suppliers.
CANADIAN INTEGRATEDS
Cenovus Energy provided an update on its Conventional production operations following ongoing wildfire activity in northern Alberta. Fires in the north-central region of the province have led the Government of Alberta to declare a state of emergency and a number of communities are under evacuation orders. With a focus on the safety of its people and integrity of its assets, on May 4, as a precaution, Cenovus began safely and methodically shutting in a number of producing Conventional fields and bringing down processing plants.
Suncor Energy reported quarterly adjusted earnings of C$1.36 per share for the quarter ended in March. The mean expectation of ten analysts for the quarter was for earnings of C$1.32 per share. Revenue fell 9.2% to C$12.26 billion from a year ago; analysts expected C$10.98 billion. Suncor Energy Inc's reported EPS for the quarter was C$1.54.
U.S. E&PS
Devon Energy reported financial and operational results for the first-quarter 2023. Devon reported net earnings of $995 million, or $1.53 per diluted share, in the first quarter of 2023. Adjusting for items analysts typically exclude from estimates, the company’s core earnings were $952 million, or $1.46 per diluted share. Operating cash flow totaled $1.7 billion in the first quarter, which funded all the company’s capital requirements and resulted in $665 million of free cash flow for the quarter. In addition to this free cash flow, Devon received $69 million in divestiture contingency payments during the period. For the full-year 2023, Devon has not made any modifications to its previously announced plan to sustain production in the range of 643,000 to 663,000 Boe per day. Additionally, total capital investment for the year remains at an expected range of $3.6 billion to $3.8 billion. These capital requirements in 2023 are estimated to be self funded at pricing levels as low as a $40 WTI oil price.
Kosmos Energy announced its financial and operating results for the first quarter of 2023. For the quarter, the Company generated a net income of $83 million, or $0.17 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income of $78 million, or $0.16 per diluted share for the first quarter of 2023, revenues of $394 million, or $71.67 per boe (excluding the impact of derivative cash settlements).
Ranger Oil announced financial and operational results for the first quarter of 2023. Total sales volumes of 48.7 thousand barrels of oil equivalent per day ("Mboe/d") and crude oil sales volumes of 35.5 thousand barrels of oil per day ("Mbbl/d") for the first quarter of 2023. Net income of $113.8 million and adjusted net income of $84.6 million. Adjusted EBITDAX of $187.9 million. Adjusted EBITDAX of $187.9 million.
Talos Energy announced its operational and financial results for three months ended March 31, 2023. Revenue of $322.6 million, driven by realized prices of $71.28 per barrel for oil, $22.62 per barrel for natural gas liquids, and $2.83 per thousand cubic feet for natural gas. Net Income of $89.9 million, or $0.84 Net Income per diluted share, and Adjusted Net Loss of $1.3 million, or $0.01 Adjusted Net Loss per diluted share. Adjusted EBITDA of $203.1 million, or $35.48 Adjusted EBITDA per Boe, inclusive of $6.2 million of TLCS expenses. Authorized a $100.0 million share repurchase program in March 2023 and repurchased 1.9 million shares through the end of the first quarter.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Cactus announced financial and operating results for the first quarter of 2023. Revenue of $228.4 million and operating income of $49.7 million; Net income of $52.3 million and diluted earnings per Class A share of $0.63; Adjusted net income of $50.7 million and diluted earnings per share, as adjusted of $0.64; Adjusted EBITDA and Adjusted EBITDA margin(3) of $79.4 million and 34.8%, respectively.
Granite Construction announced the pricing of its previously announced offering of $325 million aggregate principal amount of 3.75% Convertible Senior Notes due 2028. In connection with the offering of the Convertible Notes, Granite granted the initial purchasers of the Convertible Notes the right to purchase up to an additional $48.75 million aggregate principal amount of Convertible Notes. The sale of the Convertible Notes is expected to close on May 11, 2023, subject to customary closing conditions.
MRC Global announced first quarter 2023 results. Net income attributable to common stockholders for the first quarter of 2023 was $28 million, or $0.33 per diluted share, as compared to the first quarter of 2022 net income of $10 million, or $0.12 per diluted share. Adjusted net income attributable to common stockholders for the first quarter of 2023 was $27 million, or $0.32 per diluted share, as compared to the first quarter of 2022 adjusted net income of $15 million, or $0.17 per diluted share. MRC Global’s first quarter 2023 gross profit was $179 million, or 20.2% of sales, as compared to the first quarter 2022 gross profit of $136 million, or 18.3% of sales. Gross profit for the first quarter of 2023 and 2022 includes $1 million of income and $6 million of expense, respectively, in cost of sales relating to the use of the last-in, first-out (LIFO) method of inventory cost accounting. Adjusted Gross Profit, which excludes (among other items) the impact of LIFO, was $188 million, or 21.2% of sales, for the first quarter of 2023 and was $152 million, or 20.5% of revenue, for the first quarter of 2022.
Select Water Solutions announced that the Company's stockholders approved an amendment and restatement of the Company's Fourth Amended and Restated Certificate of Incorporation to, among other things, change the name of the Company from Select Energy Services, Inc. to Select Water Solutions, Inc. to reflect its strategic focus as a water-first company.
DRILLERS
Dril-Quip reported a quarterly adjusted loss of 1 cent per share for the quarter ended in March. The mean expectation of three analysts for the quarter was for a loss of one cent per share. Revenue rose 9.3% to $90.87 million from a year ago; analysts expected $92.00 million.
REFINERS
Valero Energy announced that Joseph W. Gorder, Valero’s Chief Executive Officer and Chairman of the Board, has chosen to retire as CEO and has been elected as Executive Chairman of the Board, both effective June 30, 2023. In his new role, Mr. Gorder will lead the Board of Directors, and continue to provide advice and counsel to the CEO and Valero’s leadership on Company decisions.
Vertex Energy announced its financial results for the first quarter ended March 31, 2023. Vertex reported first quarter 2023 net income of $53.8 million, or $0.71 per basic share, versus a net loss attributable to common shareholders of $4.9 million, or $0.08 loss per basic share for the first quarter 2022. Adjusted EBITDA was $34.9 million for the first quarter 2023 compared to Adjusted EBITDA of $13.0 million in the prior-year period. Financial results for the first quarter 2023 include an after-tax, $48.9 million gain on the sale of the Company’s Heartland assets during the quarter. Schedules reconciling the Company’s GAAP and non-GAAP financial results, including Adjusted EBITDA are included later in this release.
MLPS & PIPELINES
Ardmore Shipping announced results for the three months ended March 31, 2023. Reported net income of $43.3 million for the three months ended March 31, 2023, or $1.06 earnings per basic share and $1.04 earnings per diluted share, compared to a net loss of $7.9 million, or $0.23 loss per basic and diluted share, for the three months ended March 31, 2022. Adjusted for certain costs (see Adjusted earnings / (loss) in the Non-GAAP Measures section), we reported Adjusted earnings of $43.3 million, or $1.06 Adjusted earnings per basic share and $1.04 Adjusted earnings per diluted share, for the three months ended March 31, 2023, compared to an Adjusted loss of $0.9 million, or $0.03 Adjusted loss per basic and diluted share, for the three months ended March 31, 2022.
Kinder Morgan announced the commercial in-service of its renewable feedstock storage and logistics hub project with Neste, a leading provider of renewable diesel and sustainable aviation fuel. Neste will store a variety of raw materials like used cooking oil, which it collects from more than 80,000 restaurants across the United States, at Kinder Morgan’s Harvey Terminal in Harvey, Louisiana to be used as feedstock in the production of renewable fuels and plastics. Enhancements to rail, truck and marine infrastructure have also been made at the facility to meet the modal flexibility requirements of Neste’s feedstock supply chain.
TEN announced that its Board of Directors declared the regular quarterly cash dividend of $0.546875 per share for its Series D Cumulative Perpetual Preferred Shares and the regular quarterly cash dividend of $0.578125 per share for its Series E Cumulative Perpetual Preferred Shares.
MARKET COMMENTARY
U.S. stock index futures fell on disappointing forecasts from PayPal and Skyworks. European shares were trading lower after a string of downbeat corporate updates soured sentiment. Meanwhile, upbeat earnings from the steelmakers boosted Japanese shares, sending the benchmark Nikkei gauge to the highest close in 16 months. Oil prices fell in cautious trade ahead of the key U.S. inflation data expected on Wednesday. Gold prices gained and the dollar edged up.
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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