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Oil

Oil Prices Hit Two-week Low Following Rise in Crude Stockpiles, Iran Nuclear Deal Talks

Energy stocks are set to open lower, with higher broader index futures being offset by weaker oil and natural gas prices, as the former drops to two-week lows.

SECTOR COMMENTARY:

Energy stocks are set to open lower, with higher broader index futures being offset by weaker oil and natural gas prices, as the former drops to two-week lows.  Near-term weakness in crude, month-end portfolio marking to market, and profit taking on strong year-to-date gains across the energy sector is prompting some position consolidating.  Meanwhile, earnings continue to flow in across the various segments of the energy sector.

Oil prices slumped to their lowest in two weeks on Thursday after Iran said talks with world powers on its nuclear program would resume by the end of November and U.S. crude inventories rose by much more than expected. Iran's top nuclear negotiator Ali Bagheri Kani on Wednesday said the country's talks with six world powers to try to revive a 2015 nuclear deal will resume by the end of November. A deal could pave the way to lifting harsh sanctions imposed by former U.S. President Donald Trump on Iran's oil exports in late 2018.  "Even if the talks resume and turn out to be successful, it is still likely to be quite some time before any agreement is reached and Iranian oil exports return to the market," Commerzbank said.

Natural gas futures are lower by ~1% ahead of weekly inventory data.  Analysts expect a build of 79 bcf.

BY SECTOR:

US INTEGRATEDS

The Board of Directors of Chevron declared a quarterly dividend of one dollar and thirty-four cents ($1.34) per share, payable December 10, 2021, to all holders of common stock as shown on the transfer records of the Corporation at the close of business November 18, 2021.

According to Reuters, negotiators for Exxon Mobil and United Steelworkers (USW) Local 13-243 met on Wednesday, the second day in a row, to discuss proposals to end a six-month lockout of hundreds of workers at the company's Beaumont, Texas, refinery, said a union official. The two sides discussed a contract proposal that the union, which represents 585 workers locked out of the 369,000 barrel-per-day (bpd) refinery and lubricant oil plant, put forward in a meeting on Tuesday, said Bryan Gross, USW International representative.

INTERNATIONAL INTEGRATEDS                                     

Brazil's securities regulator CVM said it is going to investigate the alleged privatization of state-run oil company Petroleo Brasileiro after comments by government officials including President Jair Bolsonaro, Reuters reported. The president on Wednesday repeated that he is considering selling off Petrobras, as it is known, saying its insistence on passing on higher energy prices to consumers was giving him a "headache." Bolsonaro said he viewed the possible sale with "initial sympathy," while adding it was only being run for the benefit of its shareholders.

Petrobras said it has entered the binding phase for the sale of its stakes in the Urugua and Tambau fields in the Santos basin, Reuters reported. The two fields belong to the BS-500 concession and are located in the north of the Santos Basin, between 140 km and 160 km off the coast of Rio de Janeiro state. Production in 2020 from the fields was approximately 5,000 barrels per day of oil and 918,000 cubic meters per day of gas, Petrobras said in a securities filing.

Repsol posted an adjusted net income, which specifically measures business performance, of €1.582 billion between January and September 2021, the period when implementation of its 2021-2025 Strategic Plan began. Net income was €1.939 billion between January and September 2021, higher than in the same period in 2019 (€1.466 billion), prior to the COVID-19 crisis. Adjusted net income was flat compared to 2019 (€1.637 billion), demonstrating the effectiveness of Repsol's new strategy.

Repsol said it would raise its dividend and buy back shares after strong oil and gas prices helped its third-quarter profit rebound above pre-pandemic levels, Reutersreported. The company said quarterly net profit of 623 million euros ($722.87 million), its highest quarterly result since the end of 2018, would allow it to boost its shareholder payments by 5% to 0.63 euros per share. It said it would also amortise shares equivalent to 4.9 percent of its capital.

Third quarter 2021 income attributable to Royal Dutch Shell plc shareholders was a loss of $0.4 billion, which included non-cash charges of $5.2 billion due to the fair value accounting of commodity derivatives and post-tax impairment charges of $0.3 billion, partly offset by net gains on sale of assets of $0.3 billion. Adjusted Earnings for the quarter were $4.1 billion. Cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders for the third quarter 2021 was negative $0.5 billion. Hurricane Ida impacted our operations, with an aggregate adverse impact of around $0.4 billion on Adjusted Earnings. Dividends declared to Royal Dutch Shell plc shareholders for the quarter amount to $0.24 per share. During the quarter, $1.0 billion of share buybacks were completed out of a total target of $2 billion in the second half of 2021. Additional shareholder distributions of $7 billion related to the Permian sale to start in 2022, post deal completion.

TotalEnergies' earnings rose sharply in third quarter, the French energy group said on Thursday, as it reaped the rewards of surging power prices and predicted gas prices would remain high in Europe and Asia though next spring, Reuters reported. The company's third-quarter adjusted net profit soared to $4.8 billion, from just $848 million last year, from core earnings than more than doubled to $11.2 billion. It predicted low supplies and sustained high demand would keep gas prices high in Europe and Asia into the second quarter of next year, barring an exceptionally mild winter. The group, which is aggressively expanding into electricity and renewable energy, estimated its production of gas and crude oil would reach their highest levels since the second quarter of 2020. TotalEnergies also predicted its average sales price for liquefied natural gas (LNG) would further rise to over $12 per million British thermal units (MMBtu) in the last quarter, from $9.10 in previous three months.

The Board of Directors of TotalEnergies met on October 27, 2021, and declared the distribution of the third 2021 interim dividend at €0.66/share, stable compared to the first and second 2021 interim dividends.

CANADIAN INTEGRATEDS

Suncor Energy reported third quarter 2021 results. Suncor’s operating earnings increased to $1.043 billion ($0.71 per common share) in the third quarter of 2021, from an operating loss of $338 million ($0.22 per common share) in the prior year quarter.Suncor’s net earnings were $877 million ($0.59 per common share) in the third quarter of 2021, compared to a net loss of $12 million ($0.01 per common share) in the prior year quarter. Funds from operations were $2.641 billion ($1.79 per common share) in the third quarter of 2021, compared to $1.166 billion ($0.76 per common share) in the third quarter of 2020.

Given the strength of the company and confidence in the execution of Suncor Energy’s strategic plans, the Board of Directors has approved the acceleration of increased returns to shareholders by the reinstatement of the dividend to 2019 levels. The reinstatement to $0.42 per common share from $0.21 per share is a 100% increase in the quarterly dividend, commencing with the dividend payable on December 24, 2021 to shareholders of record at the close of business on December 3, 2021. The dividend increase is enabled through disciplined capital spending and allocation, as well as progress in generating an incremental $2 billion of free funds flow by 2025. In addition, the Board has also authorized a further 2% increase in the normal course issuer bid (NCIB) to purchase by February 7, 2022 up to approximately 7% (107 million shares) of Suncor’s public float as at January 31, 2021.                       

U.S. E&PS

Antero Resources announced its third quarter 2021 financial and operational results.Net loss was $549 million, or $1.75 per diluted share, compared to a net loss of $536 million, or $1.99 per diluted share, in the prior year period.  The net loss was driven by a $834 million unrealized commodity derivative fair value loss primarily as a result of the rise in the natural gas futures strip prices during the quarter.  Adjusted Net Income was $61 million, or $0.19 per diluted share, compared to Adjusted Net Income of $13 million, or $0.05 per diluted share, in the prior year period. Antero increased guidance for its realized natural gas price to a premium to NYMEX of $0.20 to $0.30 per Mcf from a previous range of $0.15 to $0.25 per Mcf, reflecting a 25% increase at the midpoint. Cash production expense guidance was increased by 2% to a range of $2.27 to $2.32 per Mcfe reflecting higher fuel and ad valorem costs due to the increase in commodity prices. 

Chesapeake Energy and Nabors Industries announced they will enter into a contractual agreement, establishing Nabors as the new preferred drilling contractor for Chesapeake across its unconventional oil and natural gas assets in the United States.

CNX Resources released financial and operational results for the third quarter 2021. The company reported revenue of $585.92 million and Q3 GAAP EPS of -$4.05. On October 25, 2021, the Company’s Board of Directors approved a $1 billion increase to its existing stock repurchase program. This increases the amount currently available under the existing stock repurchase program to approximately $1.12 billion, which is not subject to an expiration date.

Crescent Point Energy announced its operating and financial results for the quarter ended September 30, 2021. Adjusted funds flow totaled $393.9 million or $0.67 per share diluted during third quarter, supported by a strong operating netback of $44.15 per boe. The Company reported net income of $77.5 million for the three month period ended September 30, 2021. During the quarter, the Company's Board of Directors approved and declared a fourth quarter dividend increase to $0.03 per share, payable on January 4, 2022 to shareholders of record on December 15, 2021. This equates to an annualized dividend of $0.12 per share, an increase of $0.11 per share from the prior level.

EQT announced financial and operational results for the third quarter 2021. Net loss attributable to EQT Corporation for the three months ended September 30, 2021 was $1,980 million, $5.55 per diluted share, compared to net loss attributable to EQT Corporation for the same period in 2020 of $601 million, $2.35 per diluted share. Sales of natural gas, NGLs and oil were $1,784 million for the three months ended September 30, 2021, an increase of $1,185 million compared to the same period in 2020 due to higher sales volume of 129 Bcfe. Average realized price for the three months ended September 30, 2021 compared to the same period in 2020 remained consistent at $2.33 due to higher New York Mercantile Exchange (NYMEX) prices and higher liquids prices, offset by lower cash settled derivatives and unfavorable differential.

Capital One Securities downgraded Matador Resources to Equal Weight from Overweight.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

ChampionX announced third quarter of 2021 results. Revenue was $818.8 million, net income attributable to ChampionX was $56.8 million, and adjusted EBITDA was $123.6 million. Income before income taxes margin was 10.3%, and adjusted EBITDA margin was 15.1%. Cash provided by operating activities was $88.7 million, and free cash flow was $67.3 million.

Compass Minerals announced several changes to its senior management team to enable support of the company’s long-term strategic growth. Bringing more than 25 years of diversified financial experience, including leadership positions in the lithium industry, Lorin Crenshaw is expected to join the company on Dec. 1, 2021, as chief financial officer. Effective upon Crenshaw joining the company, Compass Minerals’ current chief financial officer, James D. “Jamie” Standen, will transition roles to serve as chief commercial officer. As a result of these appointments, Compass Minerals’ current chief commercial officer, Brad Griffith, has departed the company effective immediately to pursue other opportunities.

Core Laboratories N.V. reported third quarter 2021 revenue of $118,000,000. Core's operating income was $6,600,000, with earnings per diluted share of $0.02, all in accordance with U.S. generally accepted accounting principles. Operating income, ex-items, a non-GAAP financial measure, was $13,000,000, yielding operating margins of 11% and EPS, ex-items, of $0.18.

Eagle Materials reported financial results for the second quarter of fiscal 2022 ended September 30, 2021. The company recorded revenue of $510 million, up 14% and net earnings per share of $2.46, up 6%. Adjusted net earnings per share from continuing operations (Adjusted EPS) was $2.73, up 26%.

Granite Construction announced results for the third quarter ended September 30, 2021. Net income increased to $35.0 million, or $0.73 per diluted share, compared to a net loss of ($91.2) million, or ($2.00) per diluted share, for the same period last year. Adjusted net income totaled $43.2 million, or $0.93 per diluted share, compared to adjusted net income of $53.8 million, or $1.16 per diluted share, for the same period last year. Revenue of $1.1 billion, essentially flat compared to the same period last year.

KBR announced its third quarter 2021 financial results and raised its FY 2021 financial guidance. Revenue was $1.8 billion, a 34% increase in the quarter, 20% organic. During the quarter, KBR repurchased $25 million of common shares and issued a quarterly dividend of $0.11 per share, an increase of 10% from 2020 levels.  In October 2021, KBR closed on the acquisition of Frazer-Nash Consultancy for approximately $400 million.

Kirby announced a net loss attributable to Kirby for the third quarter ended September 30, 2021 of $(264.7) million, or $(4.41) per share, compared with earnings of $27.5 million or $0.46 per share for the 2020 third quarter. Excluding one-time items related to coastal marine in the 2021 third quarter, adjusted net earnings attributable to Kirby were $10.3 million or $0.17 per share. Consolidated revenues for the 2021 third quarter were $598.9 million compared with $496.6 million reported for the 2020 third quarter.

TechnipFMC and Saipem announced the two companies have entered into a global commercial agreement that will allow them to identify projects worldwide that could be jointly executed for the benefit of clients. The commercial agreement will pursue specific Subsea Umbilicals, Risers and Flowlines (SURF) projects where the combination of the companies’ complementary world-class assets, technologies, products and competencies improves project economics and de-risks the overall project development for the benefit of all stakeholders.

Weatherford International announced that its wholly-owned subsidiary, Weatherford International Ltd. has closed its private offering of $1,600 million aggregate principal amount of 8.625% senior notes due 2030.

DRILLERS

Patterson-UTI Energy reported financial results for the three and nine months ended September 30, 2021.  The Company reported a net loss of $83.0 million, or $0.44 per share, for the third quarter of 2021, compared to a net loss of $112 million, or $0.60 per share, for the third quarter of 2020.  Revenues for the third quarter of 2021 were $358 million, compared to $207 million for the third quarter of 2020.

REFINERS

Credit Suisse downgraded CVR Energy to Underperform from Neutral.

PBF Energy reported third quarter 2021 income from operations of $100.9 million as compared to loss from operations of $342.7 million for the third quarter of 2020. Excluding special items, third quarter 2021 income from operations was $101.0 million as compared to a loss from operations of $374.2 million for the third quarter of 2020. PBF Energy's financial results reflect the consolidation of PBF Logistics LP, a master limited partnership of which PBF Energy indirectly owns the general partner and approximately 48% of the limited partner interests as of quarter-end. The company reported third quarter 2021 net income of $78.7 million and net income attributable to PBF Energy Inc. of $59.1 million or $0.49 per share. This compares to net loss of $397.8 million, and net loss attributable to PBF Energy Inc. of $417.2 million or $(3.49) per share for the third quarter 2020. Adjusted fully-converted net income for the third quarter 2021, excluding special items, was $14.0 million, or $0.12 per share on a fully-exchanged, fully-diluted basis compared to adjusted fully-converted net loss of $346.6 million or $(2.87) per share, for the third quarter 2020.

The Board of Directors of Valero Energy declared a regular quarterly cash dividend on common stock of $0.98 per share. The dividend is payable on December 9, 2021 to holders of record at the close of business on November 18, 2021.

MLPS & PIPELINES

Antero Midstream announced its third quarter 2021 financial and operational results.For the three months ended September 30, 2021, revenues were $225 million, comprised of $189 million from the Gathering and Processing segment and $54 million from the Water Handling segment, net of $18 million of amortization of customer relationships. Net income was $89 million, or $0.19 per share.  Net income adjusted for amortization of customer relationships and impairment expense, net of tax effects of reconciling items, or Adjusted Net Income, was $103 million. Adjusted Net Income per share was $0.22 per share, a 12% decrease compared to the prior year quarter. 

PBF Logistics LP announced third quarter 2021 net income attributable to the limited partners of $36.7 million, or $0.58 per common unit. During the quarter, the Partnership generated cash from operations of $53.4 million, EBITDA attributable to PBFX of $56.8 million, Adjusted EBITDA of $57.9 million and distributable cash flow of $46.8 million. Included in reported results for the third quarter are $1.1 million, or $0.02 per common unit, of non-cash unit-based compensation expense and continued environmental remediation costs associated with the East Coast Terminals. The board of directors of PBF Logistics GP LLC, the Partnership's general partner, declared a regular quarterly cash distribution of $0.30 per common unit. The distribution is payable on November 30, 2021, to unitholders of record at the close of business on November 12, 2021.

Credit Suisse downgraded Phillips 66 Partners LP to Neutral from Outperform.

Plains All American announced the appointment of Dan Noack to the recently created role of Vice President, Emerging Energy and Process Optimization and the formation of a cross-functional Emerging Energy team, focused on positioning Plains to benefit from emerging energy opportunities.

MARKET COMMENTARY

Wall Street futures gained on upbeat earnings from companies. European shares were up ahead of of a policy update from the European Central Bank. Japanese shares ended lower on dim corporate outlook from some technology companies. The dollar was little changed against a basket of currencies as gold prices rose. Amazon and Apple are expected to report earnings after market closes.


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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