MONDAY, JULY 27, 2020
Energy stocks are set for a higher start, backed by gains in the crude complex and U.S. stock index futures which have rebounded following last week’s steep sell-off as investors brace for a busy week of corporate earnings, while lawmakers continue stimulus negotiations. In company news, Seaport Global initiated coverage in a host of small-to mid-cap E&P’s.
Oil prices edged higher this morning, helped by a weak dollar and expected U.S. stimulus measures but gains were capped by rising global coronavirus cases and tensions between the United States and China. The U.S. dollar index reached its lowest since September 2018, hurt by deteriorating U.S.-China relations and domestic economic concerns as coronavirus infections showed no sign of slowing. Meanwhile, tropical storm Hanna became a strong Cat 1 storm before making landfall in South Texas over the weekend. Gulf of Mexico production was not affected but the storm is expected to have some impact on tanker traffic. Brent September contract and RBOB August contract are set to expire this Friday.
Natural gas futures are off about ~1%, despite above seasonal temperatures across much of the Northeast which should boost cooling demand. The August contract expires Wednesday.
Reuters - Exxon Beaumont, Texas complex reported operations require flaring.
Reuters - Eni confirmed and expanded gas and condensate potential in Ken Bau discovery in block 114, Song Hong Basin, Offshore Vietnam.
Reuters - Var Energi, backed by Eni and HitecVision, is seeking around $1 billion for its Jotun production ship, a source with direct knowledge of the matter told Reuters. Var would then lease the floating production, storage and offloading (FPSO) vessel, which has been upgraded recently, to extend production at its Balder field, the source added. Eni owns around 70% of Var, currently producing around 300,000 barrels of oil equivalent per day, and HitecVision the rest, although the two hold equal voting rights.
(Late Friday) Reuters - Royal Dutch Shell’s drilling activities in the U.S.-regulated northern Gulf of Mexico may be affected by Tropical Storm Hanna.
Reuters - Total agreed to sell its Lindsey refinery in Lincolnshire, northeast England, to Prax Group, the French oil producer said on Monday. The refinery has an annual production capacity of 5.4 million tons.
Seaport Global initiated coverage on Berry Petroleum,SM Energy and WPX Energywith a ‘Neutral’ rating.
Seaport Global initiated coverage on Bonanza Creek Energy, Cimarex Energy, Concho Resources, Diamondback Energy, Laredo Petroleum, Northern Oil and Gas and Penn Virginia and with a ‘Buy’ rating.
(Late Friday) Press Release - California Resources announced that it has entered into an amended and restated Restructuring Support Agreement with approximately 85% of the holders of its term loans due 2017 and 68% of the holders of its unsecured and deficiency debt claims. Reflecting this consensus, CRC has filed a plan of reorganization in its chapter 11 case that provides for the elimination of over $5 billion of debt and mezzanine equity interest, the consolidation of CRC’s ownership in the Elk Hills power plant and cryogenic gas plant, and the payment of all valid trade, employee, retiree, customer, vendor, regulatory and contingent claims in full in cash in the ordinary course of business.
Press Release - CNX Resources and CNX Midstream Partners announced that they have entered into a definitive merger agreement pursuant to which CNX will acquire all of the outstanding common units of CNX Midstream that it does not already own in exchange for CNX common stock valued at approximately $357 million, based on the most recent closing price of CNX common stock. Under the merger agreement, each outstanding common unit of CNX Midstream that CNX does not already own will be converted into 0.88 shares of CNX common stock, representing a 15% premium to the average exchange ratio during the 30 trading days ended July 24, 2020.
Press Release - EQT announced financial and operational performance results for the second quarter 2020. Net loss for the three months ended June 30, 2020 was $263 million, $1.03 per diluted share, compared to net income for the same period in 2019 of $126 million, $0.49 per diluted share.
Press Release - Range Resources announced that second quarter 2020 drilling and completion expenditures were $99 million, and second quarter production averaged 2,349 Mmcfe per day. Second quarter 2020 drilling and completion expenditures were $99 million. In addition, during the quarter, $5.0 million was used to fund acreage acquisitions and gathering systems. Year-to-date capital spending of $235 million puts Range on track to spend at or below its capital budget of $430 million as 2020 spending was weighted towards the first six months.
Press Release - Vermilion Energy is pleased to report operating and condensed financial results for the three and six months ended June 30, 2020. Fund flows from operations in Q2 2020 was $82 million ($0.52/basic share(1)), a decrease of 52% from the prior quarter. The decrease is primarily due to significantly lower commodity prices as a result of the impact of the COVID-19 pandemic combined with the OPEC+ oil price war that ensued in early March. Lower commodity price impacts were partially offset by higher production and hedging gains, including a $25 million gain from unwinding our USD-to-EUR cross currency interest rate swap.
Press Release - Funds advised by SK Capital Partners, LP, a private investment firm focused on the specialty materials, chemicals and pharmaceuticals sectors, today announced it has signed a definitive agreement to acquire the specialty polymers business from Baker Hughes.
Citigroup upgraded Schlumberger to ‘Buy’ from ‘Neutral’.
Reuters - Marathon Petroleum’s 585,000-barrel-per-day (bpd) Galveston Bay refinery in Texas City, Texas, is restarting multiple units after completing a two-month overhaul. The 60,000-bpd resid hydrocracker, the 65,000-bpd reformer called Ultraformer 4 and a sulfur recovery unit are among the units Marathon plans to have back in production by midweek.
MLPS & PIPELINES
Press Release - Delek Logistics Partners declared its quarterly cash distribution for the second quarter 2020 of $0.90 per common limited partner unit, or $3.60 per common limited partner unit on an annualized basis. This distribution represents a 1.1% increase from the distribution for the first quarter 2020 of $0.89 per common limited partner unit ($3.56 per common limited partner unit annualized) and an 5.9% increase over Delek Logistics’ distribution for the second quarter 2019 of $0.85 per common limited partner unit ($3.40 per common limited partner unit annualized). The second quarter 2020 cash distribution is payable on August 12, 2020 to unitholders of record on August 7, 2020.
(Late Friday) Press Release - Martin Midstream Partners L.P. announced that, in connection with its and its subsidiary, Martin Midstream Finance Corp.’s, previously announced (1) offer to exchange, consent solicitation, rights offering and plan solicitation made pursuant to the confidential Exchange Offer Memorandum, Consent Solicitation, Rights Offering, and Disclosure Statement Soliciting Acceptances of a Prepackaged Plan of Reorganization, dated July 9, 2020 to Eligible Holders, and (2) separate but related offer to purchase and consent solicitation made pursuant to the Offer to Purchase and Consent Solicitation Statement, dated July 9, 2020 to Other Holders, it has received tenders and consents as of 5:00 p.m., New York City time, on July 23, 2020 of the Issuers’ 7.25% senior unsecured notes due 2021.
Press Release - Summit Midstream Partners announced updates regarding its offer to exchange any and all of its 9.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units for newly issued common units representing limited partner interests in the Partnership. As of July 24, 2020, based on information provided by American Stock Transfer & Trust Company, LLC, the depositary of the Exchange Offer, 53,827 Series A Preferred Units had been tendered. As previously announced, the Exchange Offer is scheduled to expire at 5:00 p.m., New York City time, on July 28, 2020, unless further extended.
U.S. stock index futures rose, as bets on a more dovish outlook from the Federal Reserve brightened the mood ahead of a heavy earnings week. European shares slipped after Britain imposed a quarantine on travelers returning from Spain while losses were capped by German data, which showed an improvement in business morale. Asian shares were choppy, as investors remained jittery over tensions between U.S. and China, and rising number of coronavirus cases. Gold prices soared, while the dollar index fell. Oil prices edged lower. Durable goods data is on the economic radar.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 – CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 – Bloomberg Day Break – Steady escalation of US-Iran tensions
- 12/5/19 – Bloomberg Balance of Power – OPEC's Limited Efficacy
- 9/17/19 - Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 - Discussion on Bloomberg TV about Impact of Abqaiq Attack