Oil Prices Drop on Expexted Interest Rate Hikes
The energy sector is poised for a mixed to lower start, pressured by weakness in the crude complex as the major equity indices swing in and out of positive territory. U.S. stock index futures were mostly flat ahead of a widely expected super-sized rate hike from the Federal Reserve, with investors looking for signs the central bank could temper its aggressive stance on future interest rate increases.
WTI and Brent crude oil futures are down in early trading ahead of an expected rate hike by the Federal Reserve, but found a floor as market participants eyed falling U.S. crude stockpiles and upcoming European sanctions on Russian barrels. U.S. crude oil stocks fell about 6.5 million barrels for the week ended Oct. 28. At the same time, gasoline inventories fell 2.6 million barrels, more than expected. China's zero-COVID policy has been a key factor in keeping a lid on oil prices as repeated lockdowns have slowed growth and pared oil demand in the world's second-largest economy.
Natural gas futures are trading higher on a drop in output at the start of the month and expectations gas demand will rise once the Freeport liquefied natural gas (LNG) export plant in Texas exits an outage.
BY SECTOR:
US INTEGRATEDS
Repair work is taking place at Exxon Mobil's 140,000 barrel per day (bpd) Fos-Sur-Mer oil refinery in France following a fire last week, a source told Reuters.
INTERNATIONAL INTEGRATEDS
Equinor has signed an agreement to buy BeGreen, a leading solar project developer in North-West Europe. The acquisition strengthens Equinor's capabilities and portfolio within solar PV.
Shell has won two of 10 packages in the Land Transport Authority’s (LTA) tender for electric vehicle (EV) charging points to be installed in Housing Development Board (HDB) carparks. Shell has secured the right to install up to 4847 alternate current (AC) charging points at 415 carparks in the North and North-East regions of Singapore.
The Sakhalin-2 liquefied natural gas (LNG) project in Russia has enough technical expertise to operate even without departed shareholder Shell, Mitsui & Co CEO Kenichi Hori said.
The strike protest has been lifted at TotalEnergies' Gonfreville refinery in Normandy, BFM television reported.
Strike action continues at TotalEnergies' 117,000 bpd Feyzin oil refinery in France, a source familiar with the matter told Reuters.
Reuters reported that TotalEnergies was raising production levels on multiple units at its 238,000 barrel-per-day Port Arthur, Texas, refinery on Tuesday after an overnight upset, said sources familiar with plant operations.
CANADIAN INTEGRATEDS
Cenovus Energy generated more than $4.0 billion in cash from operating activities, approximately $3.0 billion in adjusted funds flow and nearly $2.1 billion in free funds flow in the third quarter of 2022, driven by continued strong operations. Total upstream production was approximately 778,000 barrels of oil equivalent per day (BOE/d)1 and downstream throughput averaged 533,500 barrels per day (bbls/d). As part of Cenovus’s commitment to increasing shareholder returns, in addition to its base dividend, the Board of Directors declared a variable dividend payable on December 2, 2022 and approved filing an application with the TSX to renew its normal course issuer bid (NCIB) for another year. Cenovus’s total revenues were $17.5 billion, down from $19.2 billion in the second quarter, mainly due to lower benchmark commodity prices, which drove reduced prices for the company’s products across the upstream and downstream businesses.
Suncor Energy's acquisition of a larger stake in the Fort Hills oil sands project is a sign that Canada's second-largest oil company is looking for alternatives to extending the life of its biggest mine, which has run into political obstacles, industry observers said.
U.S. E&PS
Berry announced third quarter 2022 results, including net income of $192 million or $2.34 per diluted share, Adjusted Net Income of $46 million or $0.55 per diluted share, Adjusted EBITDA of $97 million and cash flows from operating activities of $96 million. The Board of Directors declared dividends on common stock totaling $0.47 per share.
Chesapeake Energy reported 2022 third quarter financial results. Net cash provided by operating activities was $1,313 million. Net income totaled $883 million, or $6.12 per diluted share; adjusted net income totaled $730 million, or $5.06 per diluted share.
Comstock Resources' revenues in the third quarter of 2022 totaled $692.4 million (after realized hedging losses of $304.5 million). Net cash provided by operating activities (excluding changes in working capital) generated in the third quarter was $532.9 million, and net income available to common stockholders for the third quarter of 2022 was $351.2 million or $1.28 per share. Reported net income in the quarter included a pre-tax $33.2 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 third quarter of 2022 was $325.6 million, or $1.18 per diluted share.
Comstock Resources announced that its Board of Directors approved the reinstatement of a quarterly cash dividend on its common stock for the fourth quarter at an annual dividend rate of $0.50 per share. A dividend of $0.125 per common share will be paid on December 15, 2022 to stockholders of record at the close of business on December 1, 2022.
Devon Energy posted a rise in third-quarter profit, buoyed by multi-year high crude prices. Devon's adjusted income came in at $1.43 billion, or $2.18 a share, in the three months ended Sept. 30, up from $733 million, or $1.08 per diluted share, a year ago.
Magnolia Oil & Gas reported third quarter 2022 net income attributable to Class A Common Stock of $245.5 million, or $1.29 per diluted share. Third quarter 2022 total net income increased 79% to $287.0 million and diluted weighted average total shares outstanding decreased by 8% to 217.8 million compared to third quarter 2021.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Halliburton introduced the NeoCem E+ and EnviraCem cement barrier systems as an expansion of their portfolio of high-performance, reduced Portland cement systems.
Martin Marietta Materials reported results for the third quarter ended September 30, 2022. Total revenues were $1,811.7 million. Adjusted earnings per diluted share from continuing operations was $4.69.
Newpark Resources announced results for its third quarter ended September 30, 2022. Total revenues for the third quarter of 2022 were $219.9 million compared to $194.1 million for the second quarter of 2022 and $151.8 million for the third quarter of 2021. Net loss for the third quarter of 2022 was $24.6 million, or ($0.26) per share, which includes $29.9 million of pre-tax charges ($29.8 million after-tax, $0.32 per share). Adjusted net income for the third quarter of 2022 was $5.2 million, or $0.06 per diluted share. Net loss for the second quarter of 2022 was $7.8 million, or ($0.08) per share, which included $9.1 million of pre-tax charges ($8.8 million after-tax, $0.09 per share). Net loss for the third quarter of 2021 was $10.5 million, or ($0.11) per share, which included $4.3 million of pre-tax charges ($4.3 million after-tax, $0.05 per share).
NOW announced results for the third quarter ended September 30, 2022. Revenue was $577 million for the third quarter of 2022. Net income attributable to NOW was $40 million and non-GAAP net income attributable to NOW excluding other costs was $34 million for the third quarter of 2022. Diluted earnings per share attributable to NOW stockholders was $0.35 and non-GAAP diluted earnings per share attributable to NOW stockholders excluding other costs was $0.30 for the third quarter of 2022.
SECURE ENERGY Services reported the Corporation's operational and financial results for the three months ended September 30, 2022. The Company generated record Adjusted EBITDA of $154 million and $0.50 per basic share in Q3 2022, reflecting realized synergies, strong operational performance and industry fundamentals, up 47% from both Q3 2021 and on a per basic share basis. It recorded net income of $60 million or $0.19 per share in Q3 2022 compared to a net loss of $22 million or $0.07 per share in Q3 2021. Effective November 2, 2022, Allen Gransch has been appointed President and Corey Higham will take on the expanded role of Chief Operating Officer. It also added Joseph Lenz of Angelo, Gordon & Co. to the Board.
Select Energy Services reported that revenue for the third quarter of 2022 was $375.1 million as compared to $335.9 million in the second quarter of 2022 and $204.6 million in the third quarter of 2021. Net income for the third quarter of 2022 was $24.7 million as compared to $14.6 million in the second quarter of 2022 and a net loss of $14.2 million in the third quarter of 2021. On November 1, 2022, Select completed the acquisition of Breakwater Energy Partners, LLC through a stock-for-stock transaction. In connection with closing, Select issued a total of approximately 9.2 million shares of Select Class A common stock and repaid or assumed approximately $12.6 million of outstanding indebtedness and other obligations, subject to customary post-closing adjustments.
Toromont Industries reported its financial results for the third quarter ended September 30, 2022. Revenues increased $142.4 million or 14% in the third quarter. Net earnings increased $29.4 million or 31% in the quarter versus a year ago to $123.1 million or $1.50 EPS (basic). The Board of Directors approved a quarterly dividend of $0.39 cents per share, payable on January 5, 2023 to shareholders on record on December 8, 2022.
Vulcan Materials announced results for the quarter ended September 30, 2022. Compared with prior year, Total revenues increased 38 percent, driven by double-digit growth in the Company's legacy operations as well as the addition of acquired operations. Gross profit increased $99 million, or 25 percent, to $493 million. Earnings attributable to Vulcan from continuing operations were $178 million, or $1.33 per diluted share.
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 $0.21 per share that will be paid on December 2, 2022 to shareholders of record on November 18, 2022.
MLPS & PIPELINES
Ardmore Shipping reported a net profit of $61.0 million for the three months ended September 30, 2022, or $1.57 earnings per basic share and $1.52 earnings per diluted share, compared to a net loss of $12.8 million, or $0.37 loss per basic and diluted share, for the three months ended September 30, 2021. Adjusted for certain costs, it reported Adjusted earnings of $61.6 million, or $1.59 Adjusted earnings per basic share and $1.54 Adjusted earnings per diluted share, for the three months ended September 30, 2022, compared to an Adjusted loss of $12.8 million, or $0.37 Adjusted loss per basic and diluted share, for the three months ended September 30, 2021.
Ardmore Shipping announced that its Board of Directors has approved the initiation of a quarterly cash dividend as a component of the Company's longstanding Capital Allocation Policy. Commencing with the Company's performance for the quarter ending December 31, 2022, Ardmore intends to pay a quarterly cash dividend equivalent to one-third of Adjusted Earnings for the applicable quarter. The declaration and payment of dividends is subject to the discretion of Board of Directors.
Crestwood Equity Partners LP reported its financial and operating results for the three months ended September 30, 2022. Third quarter 2022 net loss was $43.0 million, compared to a net loss of $39.6 million in third quarter 2021. Third quarter 2022 distributable cash flow to common unitholders was $131.0 million, compared to $85.8 million in the third quarter of 2021, an increase of 53% year-over-year, resulting in a coverage ratio of 1.9x. The Company announced third quarter 2022 cash distribution of $0.655 per common unit, or $2.62 per common unit on an annualized basis, an approximate 5% increase year-over-year, payable on November 14, 2022, to unitholders of record as of November 7, 2022.
Energy Transfer reported net income attributable to partners for the three months ended September 30, 2022 of $1.01 billion, a $371 million increase from the same period last year. For the three months ended September 30, 2022, net income per limited partner unit (basic and diluted) was $0.29 per unit.
EnLink Midstream, LLC reported net income of $116.6 million, net cash provided by operating activities of $343.3 million, and adjusted EBITDA, net to EnLink, of $343.4 million for the third quarter of 2022.
MARKET COMMENTARY
U.S. stock index futures seesawed in choppy trading, while world equity markets rose, ahead of a widely expected interest rate hike from the Federal Reserve, with investors looking for signs the central bank could tone down its aggressive stance on future rate hikes. The dollar weakened, while gold prices were up. Oil prices were lower, while falling U.S. crude stockpiles and upcoming European sanctions on Russian barrels capped losses.
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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