Oil Prices Dip Amid Renewed China Lockdowns
Energy stocks are set to open in the red, pulled down by weaker broader index futures and lower commodity prices. A disappointing weekly jobless claims number of 229,000, which marked the highest level since January, weighed on sentiment and contributed to views of a rapidly weakening job market. News flow in the sector is light.
Oil prices are pulling back modestly this morning amid some renewed lockdowns in China and position consolidation after yesterday’s rise into the $120s for both contracts. "Oil prices have remained flat, with the lockdown of the Minhang district in Shanghai spurring China COVID-zero part two fears, crimping demand in Asia today," said Jeffrey Halley, OANDA's senior market analyst for Asia Pacific.
Natural gas futures are lower by around 4% as traders take profits and on reports of yesterday’s fire at the Freeport LNG terminal expected to disrupt liquefaction. Weekly inventory data due out later today expects a build of 98 bcf.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Eni and Norway's HitecVision completed the sale of a 5% stake in Norwegian oil firm Vaar Energi for a total consideration of $530 million, the Italian energy group said.
Eni plans to list its Plenitude retail and renewables business on the Milan stock exchange in the coming weeks, despite a slowdown in initial public offerings (IPO) on global markets.
Equinor Energy AS, operator of production licence 532, has concluded the drilling of wildcat well 7220/8-3.
Shortly after the Snøfonn North discovery near the Johan Castberg field in the Barents Sea, Equinor has made another oil and gas discovery in Skavl Stø, exploration well 7220/8-3. The well was drilled five kilometres south-southeast of discovery well 7220/8-1 on the Johan Castberg field, 210 kilometres northwest of Hammerfest.
Credit Suisse initiated coverage on Equinor ASA with a Neutral rating.
Saudi Aramco announced the distribution of proceeds, to eligible shareholders, from the sale of fractional shares in connection with the Company's issuance of one bonus share for every ten shares held by shareholders, as approved by the extraordinary general assembly (first meeting) held on Thursday 11 Shawwal 1443H corresponding to 12 May 2022.
Workers on Shell Plc's Prelude floating liquefied natural gas (FLNG) facility off Western Australia are set to begin 12 days of industrial action on Friday over a pay fight, a union alliance said.
Credit Suisse initiated coverage on TotalEnergies SE with an Outperform rating.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Callon Petroleum announced that, subject to market and other conditions, it intends to offer $600 million aggregate principal amount of senior unsecured notes due 2030 in a private offering that is exempt from registration under the Securities Act of 1933, as amended.
Devon Energy announced it has entered into a definitive purchase agreement to acquire the leasehold interest and related assets of RimRock Oil and Gas, LP, a Warburg Pincus portfolio company, in the Williston Basin for total cash consideration of $865 million. The transaction is subject to customary terms and conditions and is expected to close in the third quarter of 2022, with an effective date of April 1, 2022. Due to the accretive nature of this transaction to free cash flow, Devon’s board intends to approve a 13 percent increase to the fixed quarterly dividend following the closing of the transaction. The company also expects this transaction to be accretive to the variable dividend payout in 2022 and beyond.
PDC Energy announced that the Colorado Oil and Gas Conservation Commission approved the Company’s Kenosha Oil & Gas Development Plan permit application. The Kenosha OGDP, which encompasses 69 wells on three pads in rural Weld County, Colorado, marks an important next step as PDC further increases its permitted inventory by another rig year and solidifies drilling and completion activity well into 2024. The Company will soon have over 550 permits and drilled and uncompleted wells.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Core Laboratories N.V. announced that it has established an at-the-market equity offering program under which it may, from time to time, sell its common shares having an aggregate sales price of up to $60,000,000, and has entered into an equity distribution agreement with Wells Fargo Securities, LLC and BofA Securities, Inc., as sales agents.
Fluor announced that it was awarded a construction contract for the Interstate 35 (I-35) Capital Express South project in Austin, Texas, by the Texas Department of Transportation (TxDOT). Fluor will book the nearly $548 million contract value in the second quarter of 2022.
Granite announced that it has been awarded the approximately $15 million contract for restoration work on Calabazas Creek near Cupertino, California. Awarded by the Santa Clara Valley Water District, this project will enhance flood control along the creek. The award is anticipated to be included in Granite’s second quarter CAP.
Terrestrial Energy announced that it has signed an agreement with KBR to investigate the application of zero-emission thermal energy for hydrogen and ammonia production.
As per SEC filing, on June 7, 2022, Smart Sand held its annual meeting of stockholders. The stockholders elected José E. Feliciano and Charles E. Young to serve as Class III members of the Company’s board of directors for a three-year term.
DRILLERS
No significant news.
REFINERS
PBF Energy announced that its indirect subsidiary, PBF Holding Company LLC, delivered a notice of full redemption of all of the $1.25 billion in aggregate principal amount outstanding of its 9.25% Senior Secured Notes due 2025 issued by PBF Holding and PBF Finance Corporation. The Notes will be redeemed on July 11, 2022 at a redemption price of 104.625%, plus accrued and unpaid interest to the date of redemption. Wilmington Trust, National Association is the trustee for the Notes and is serving as the paying agent for the full redemption.
MLPS & PIPELINES
Cheniere Energy announced that its subsidiary, Cheniere Marketing, LLC, has entered into a liquefied natural gas sale and purchase agreement with Equinor ASA. Under the SPA, Equinor has agreed to purchase approximately 1.75 million tonnes per annum of LNG from Cheniere Marketing on a free-on-board basis for a term of approximately 15 years. The deliveries under the SPA will start in the second half of 2026 and reach the full 1.75 mtpa in the second half of 2027. Half of the volume, or approximately 0.9 mtpa, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-train Corpus Christi Stage III Project.
After long being deeply discounted for years because of a lack of pipelines, Canadian heavy crude is finally trading like a "North American" grade, moving in tandem with U.S. sour crudes sold on the Gulf Coast after Enbridge expanded its Line 3 pipeline late last year.
Honeywell and EnLink Midstream, LLC announced they will work together to deliver carbon capture solutions to industrial-scale carbon dioxide (CO2) emitters within the U.S. Gulf Coast area.
BKV and EnLink Midstream, LLC announced that they have reached a Phase I Final Investment Decision (FID) and entered into a definitive agreement to develop a carbon capture and sequestration (CCS) project in the Barnett Shale region of North Texas.
MARKET COMMENTARY
U.S. stock index futures fell after weaker than expected weekly jobless claims. European shares were down ahead of the European Central Bank's policy meeting. In Asian equity markets, Japan’s Nikkei ended up as easing of COVID-19 curbs alleviated concerns around regional economic growth, while Chinese shares closed lower weighed down by a decline in growth stocks. The dollar dipped, while gold prices were subdued on firmer Treasury yields.
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