Friday, January 18, 2019
Sector Commentary
The energy sector is poised for a higher start, supported by strength in the crude complex and U.S. stock index futures which were boosted on hopes that the trade war between the U.S. and China would be resolved.
In company news, Schlumberger the world's largest oilfield services provider, rose over 2% in pre-market trading after reporting quarterly revenue that topped estimates and forecast single-digit growth in international markets this year.
Oil prices on both sides of the Atlantic climbed 1% in morning trading after an OPEC report showed its production fell sharply last month, easing some concerns about prolonged oversupply. "The combination of production cuts by OPEC+ (especially the Saudis) and tightening sanctions on Iranian oil exports have brought the market close to balance," U.S. investment bank Jefferies said. Oil markets were also buoyed by signs that the United States and China might soon resolve their trade dispute in talks scheduled for January 30.
Natural gas futures fell 5%, pressured by forecasts for warmer weather than previously expected.
US INTEGRATEDS
UBS upgraded Chevron to 'Buy' from 'Neutral'.
INTERNATIONAL INTEGRATEDS
Press Release - Eni through Vår Energi, jointly owned by Eni (69.6%) and by HitecVision (30.4%), has been awarded a total of 13 licenses in the Awards in Predefined Areas 2018 (APA) by the Ministry of Petroleum and Energy of Norway (MPE).
JPMorgan upgraded Eni to 'Neutral' from 'Underweight'.
Reuters - Shell will develop the third phase of its giant Norwegian gas field Ormen Lange with a subsea compression system. The company will either choose Schlumberger's Onesubsea or TFMC to do the work, adding that it would take a decision later in 2019.
CANADIAN INTEGRATEDS
BMO downgraded Husky Energy to 'Market Perform' from 'Outperform'.
U.S. E&PS
(Late Thursday) Press Release - Gulfport Energy provided an update for the quarter and year ended December 31, 2018. During the fourth quarter of 2018, Gulfport repurchased 10.2 million shares and completed in full the previously announced and expanded authorized program to acquire up to $200 million of the Company's outstanding common stock during 2018. Since initiating the share repurchase program in February 2018, Gulfport repurchased 20.7 million shares and reduced its shares outstanding by over 10%. Gulfport's net daily production for the fourth quarter of 2018 averaged approximately 1,392.8 MMcfe per day. For the fourth quarter of 2018, Gulfport's net daily production mix was comprised of approximately 91% natural gas, 6% natural gas liquids and 3% oil.
(Late Thursday) Press Release - Ultra Petroleum announced that the U.S. Court of Appeals for the Fifth Circuit delivered a favorable opinion in the appeal proceedings by Ultra Petroleum about the make-whole claims that had been asserted against the Company. This is a victory for Ultra Petroleum, reversing a bankruptcy court decision that had required the Company to pay approximately $400 million to various creditors following the Company's emergence from Chapter 11 proceedings.
CANADIAN E&PS
GMP revised MEG Energy to 'Hold' from 'Tender'.
RBC upgraded MEG Energy to 'Outperform' from 'Sector Perform'.
OILFIELD SERVICES
Raymond James upgraded Calfrac Well Services to 'Strong Buy' from 'Outperform'.
Press Release - Oceaneering International announced it has recently secured three subsea umbilical contracts valued in excess of $80 million in total. The contracts with major international operators are to supply developments in the Mediterranean Sea, the North Sea and the South China Sea. Two contracts are for electro-hydraulic, steel tube production control umbilicals, measuring approximately 66 miles (106 kilometers) in total, and related umbilical distribution hardware. The third contract is for three thermoplastic production control umbilicals with a total measure of approximately 26 miles (42 kilometers) and related umbilical distribution hardware.
Press Release - Schlumberger reported results for full-year 2018 and the fourth quarter of 2018. The fourth-quarter consolidated revenue was $8.2 billion, decreased 4% sequentially, as North America revenue was $2.8 billion declined 12% while international revenue was $5.3 billion increased 1%. The full-year 2018 revenue was $32.8 billion, increased 8% year-on-year and grew for the second successive year. The full-year GAAP EPS, including charges & credits, was $1.53.
DRILLERS
(Late Thursday) Press Release - Ensco announced that it intends to convene and adjourn the Company's General Meeting scheduled for January 23, 2019, which was scheduled to approve resolutions relating to the transaction with Rowan Companies entered into on October 7, 2018. On January 14, 2019, Ensco provided an enhanced proposal to Rowan whereby Rowan shareholders would receive 2.600 shares of Ensco for each share of Rowan, which represents an approximately 17.4% increase compared to the 2.215 exchange ratio contemplated under the definitive transaction agreement entered into on October 7, 2018. Rowan's Board of Directors is in the process of reviewing the enhanced proposal before providing its response to Ensco. Following Rowan's response, Ensco will announce the date and time at which the General Meeting will be reconvened.
REFINERS
(Late Thursday) Press Release - CVR Refining announced that CVR Energy has elected to exercise the right (the "Call Right") assigned to it by CVR Refining GP, the general partner of the Partnership and an indirect wholly owned subsidiary of CVR Energy, pursuant to Section 15.1(a) of the Partnership's First Amended and Restated Agreement of Limited Partnership, as amended, to purchase all of the issued and outstanding common units representing limited partner interests in the Partnership not already owned by the General Partner or its affiliates. CVR Energy will purchase the Common Units on January 29, 2019, for a cash purchase price of $10.50 per Common Unit, or approximately $241 million in the aggregate. CVR Energy also entered into a purchase agreement with American Entertainment Properties and Icahn Enterprises Holdings, pursuant to which, on the Purchase Date, all of the Common Units held by AEP and IEP will be purchased by CVR Energy for a cash purchase price per unit equal to the Call Price, or approximately $60 million in the aggregate.
Citigroup downgraded Delek US to 'Neutral' from 'Buy'.
(Late Thursday) Reuters - PBF Energy was finishing overhauls of the crude distillation units (CDUs) at the 190,000-barrel-per-day (bpd) Chalmette, Louisiana, refinery. The two 96,000-bpd CDUs were shut on Jan. 4 for overhauls scheduled to last up to a month.
MLPS & PIPELINES
(Late Thursday) Press Release - Crestwood Equity Partners announced that the board of directors of its general partner has declared the partnership's quarterly cash distribution of $0.60 per limited partner unit ($2.40 annually) for the quarter ended December 31, 2018. In addition, Crestwood announced a quarterly cash distribution of $0.2111 per Class A preferred equity unit ($0.8444 annually). Distributions will be made on February 14, 2019, to unitholders of record as of February 7, 2019.
SunTrust initiated coverage of Magellan Midstream at 'Hold'.
SunTrust initiated coverage of ONEOK at 'Buy'.
MARKET COMMENTARY
Wall street futures traded higher, in line with world stocks, on renewed hopes for trade negotiations between the U.S. and China. Boost in risk appetite dragged gold prices down, while palladium rose amid supply concerns and robust demand. The dollar was little-changed against a basket of its rivals. Oil prices climbed after a report showed sharp reduction in output from OPEC members last month. Industrial production data is due for release later during the day.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- Bloomberg TV Commodities Edge - Q2'18 Earnings Themes
- Bloomberg TV DayBreak Americas - (Discussion with Kevin Holt, CIO of Invesco, begins at 0:56:58 - 1:05:22)
- TD Ameritrade Network - Trade Tariff Effects on Market & Interest Rates
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 . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
