Oil Prices Continue Decline on Sluggish Economic Figures From China
SECTOR COMMENTARY:
The energy sector is poised for a lower start, pressured by weakness in the underlying commodities and in the major equity futures which slid lower this morning on disappointing Chinese economic data and a statement from Fitch which warned it may have to downgrade dozens of banks.
WTI and Brent crude oil futures extended their slide lower for the second-straight session, falling on sluggish Chinese economic figures coupled with fears that Beijing's unexpected cut in key policy rates was not substantial enough. Fresh economic data out of China this morning showed the country industrial output and retail sales data slowed further last month. The news is the latest in a broad array of data that highlights the faltering economy and prompted China's central bank to marginally cut key interest rates, a move many analysts say was too small to make a meaningful difference.
After two-consecutive days of gains, natural gas futures turned lower this morning, pressured by moderating weather forecast in key consuming regions
BY SECTOR:
US INTEGRATEDS
Chevron and Chevron, a subsidiary of Chevron, announced the early participation date and the consent revocation deadline have been extended to 5:00 p.m., New York City time, on August 18, 2023 and the expiration date has been extended to one minute after 11:59 p.m., New York City time on September 1, 2023, with respect to their previously announced (i) offer to exchange any and all validly tendered and accepted 5.750% Senior Notes due 2026 issued by PDC Energy, Inc. for 5.750% Senior Notes due 2026 to be issued by CUSA and fully and unconditionally guaranteed by Chevron and cash, and (ii) the related solicitation of consents to certain proposed amendments to the indenture pursuant to which the Old Notes were issued.
Exxon Mobil for the first time registered arbitration awards against Venezuela with a U.S. federal court in Delaware that soon plans an auction of shares in Venezuela-owned oil refiner Citgo Petr
INTERNATIONAL INTEGRATEDS
BP has invested in a start-up company developing technology seeking to use vapour from heavy industry to sharply reduce the production costs of zero-carbon hydrogen.
Petrobras said it will raise gasoline and diesel prices at its refineries starting Wednesday after what it called an "abrupt" increase in global prices.
CANADIAN INTEGRATEDS
Suncor Energy reported a lower second-quarter profit, as oil and gas prices retreated from last year's peak amid concerns over a slowdown in global economic growth. The company reported net income of C$1.88 billion ($1.40 billion), or C$1.44 per share, in the quarter ended June 30, compared with C$4 billion, or C$2.84 per share, a year earlier.
U.S. E&PS
Enerplus announced acceptance by the Toronto Stock Exchange of its notice to commence a normal course issuer bid.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Flotek Industries announced that it has entered into a revolving loan and security agreement in connection with an Asset Based Loan with Amerisource Funding, Inc. The ABL provides for a 24-month term with up to $10 million of initial credit availability for eligible accounts receivable and eligible inventory. After closing and subject to certain conditions, including an acceptable appraisal and the pledge of real estate collateral by the Company, the credit availability is expected to be increased by the lesser of 50% of the appraised value of the real estate and $5 million. Borrowings under the ABL bear interest at the Wall Street Journal Prime Rate plus 2.5% per annum. The ABL also contains customary administrative and facility fees.
Shawcor announced that it has entered into a definitive agreement to sell a substantial part of its pipe coating division to Tenaris S.A., including its wholly owned operations in Canada, the US, Mexico, Norway, the UAE and Indonesia, several mobile concrete coating plants, its joint-venture interest in Azerbaijan, its world-class research and development capabilities in Toronto and Norway, and a broad portfolio of intellectual property.
BMO upgraded Shawcor to Outperform from Market Perform.
DRILLERS
Seadrill Limited reported strong second quarter 2023 results, which reflect a full quarter’s contribution from contracted rigs acquired as part of the Aquadrill transaction, completed on April 3, 2023. Delivered $159 million of Adjusted EBITDA on $414 million of revenue, resulting in an Adjusted EBITDA Margin of 38.4%, and net income of $94 million, or $1.16 per diluted share. Initiated shareholder return program with share repurchase authorization of up to $250 million. After the quarter, successfully issued $575 million of 8.375% senior secured second lien notes due 2030 and executed a new $225 million revolving credit facility with an accordion feature of up to $100 million
REFINERS
BofA downgraded Marathon Petroleum, PBF Energy, Phillips 66 and Valero Energy to Neutral from Buy
PBF Energy announced that its indirect subsidiary, PBF Holding Company LLC, priced $500 million in aggregate principal amount of 7.875% senior notes due 2030 at an issue price of 99.324% in a private offering. The offering is expected to close on August 21, 2023, subject to customary closing conditions. The Notes will be co-issued by PBF Finance Corporation, a wholly owned subsidiary of PBF Holding. PBF Holding intends to use the net proceeds from the offering, together with cash on hand, to fund the redemption of its 7.25% Senior Notes due 2025.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
Wall Street futures slipped amid elevated government bond yields on expectations that U.S. interest rates are likely to stay higher for longer, while investors also awaited retail sales data which is likely to show resilient consumer spending. European shares fell, led by UK and Swedish stocks after the inflation data released from both countries stoked rate-hike fears. On the Asian front, Japan's Nikkei closed higher, with chip-related shares leading the gains. China stocks closed down despite the country’s central bank cutting key policy rates to support growth. The dollar edged lower while gold traded near six-week lows. Oil prices fell on demand concerns after data showed China's industrial output and retail sales growth slowed.
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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