Oil Prices Rebound After Yesterday’s Steep Losses
SECTOR COMMENTARY:
Energy stocks are set to open in the green following yesterday’s sharp sell-off, as higher oil prices and strength in the broader benchmarks lend support. Earnings continue to pick up across the sector. Shell announced the commencement of a share buyback program and intends to raise its dividend.
Oil prices are higher, rebounding from yesterday’s steep losses. OPEC+ JMMC will not make any changes to current production policy following a meeting this morning.
Natural gas futures are up half a percent as traders await weekly inventory data. Analysts expect a draw of 194 bcf.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Shell Plc announced fourth quarter 2023 unaudited results. Q4 2023 adjusted earnings of $7.3 billion, reflecting robust operational performance and strong LNG trading. 4% increase in dividend per share for the fourth quarter and a $3.5 billion share buyback programme, expected to be completed by Q1 2024 results announcement. CFFO of $12.6 billion for Q4 2023 includes a working capital inflow of $3.3 billion due to lower prices. CFFO reflects tax payments of $3.6 billion and the timing impact of payments for emissions certificate and biofuel programmes mainly in Germany. Net debt of $43.5 billion at the end of 2023 is $1.3 billion below 2022.
Shell Plc also announced the commencement of a $3.5 billion share buyback programme covering an aggregate contract term of approximately three months. The purpose of the programme is to reduce the issued share capital of the Company. All shares repurchased as part of the programme will be cancelled. It is intended that, subject to market conditions, the programme will be completed prior to the Company’s Q1 2024 results announcement, scheduled for May 2, 2024.
Aramco and Algeria's Sonatrach have raised February official selling prices for liquefied petroleum gas by 1.6-2.0% versus January due to rising oil prices and increased demand.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Gran Tierra Energy announced that it intends, subject to market and other conditions, to offer an additional amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 in a private placement to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended, to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act, and pursuant to certain prospectus exemptions in Canada.
Gerdes Research upgraded shares of Range Resources to Buy from Hold.
SM Energy announced certain estimated 2023 results, including production, pricing, capital expenditures, return of capital and certain financial metrics. Highlights include: Fourth quarter production was 14.1 MMBoe, or 153.5 MBoe/d, at 43% oil, which exceeded the high end of guidance. Fourth quarter estimated capital expenditures of $223 million plus increased capital expenditure accruals and other of $45 million totaled $268 million,(1) below the low end of the guidance range. The Company ended 2023 with 115.7 million shares outstanding and approximately $215 million remaining under its authorized stock repurchase program.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Core Laboratories reported fourth quarter 2023 revenue of $128,200,000. Core's operating income was $14,600,000, with diluted earnings per share of $0.14, all in accordance with U.S. generally accepted accounting principles. Operating income, ex-items, a non-GAAP financial measure, was $15,000,000, yielding operating margins of 12%, and EPS, ex-items, of $0.19. The Company's fourth quarter 2023 effective tax rate was negatively impacted by adjustments primarily associated with non-cash adjustments of deferred taxes in connection with the domestication of the parent company to the U.S. For the full year 2023, revenue was up 4% compared to 2022, with incremental margins, ex-items, over 80%, driven by continued execution of the Company's strategic operational efficiency priorities. The Company's full year EPS, ex-items, was $0.80, representing year on year growth of 40%.
Kirby Corporation announced net earnings attributable to Kirby for the fourth quarter ended December 31, 2023, of $61.9 million or $1.04 per share, compared with earnings of $37.3 million, or $0.62 per share for the 2022 fourth quarter. Excluding one-time charges in the 2022 fourth quarter, net earnings attributable to Kirby were $40.3 million or $0.67 per share. Consolidated revenues for the 2023 fourth quarter were $799.2 million compared with $730.2 million in the 2022 fourth quarter.
Tetra Tech announced results for the first quarter ended December 31, 2023. Revenue increased 37% to $1.23 billion with double-digit organic growth. EBITDA increased 32% to $131 million; on pace to reach $575 million in FY24, doubling in the past 3 years. Record first quarter EPS of $1.40. Largest first quarter backlog ever, up 24% year-over-year. Industry leading DSO of 55 days. On January 29, 2024, Tetra Tech’s Board of Directors approved the Company’s 39th consecutive quarterly dividend at an amount of $0.26 per share, a 13% increase year-over-year, payable on February 27, 2024, to stockholders of record as of February 14, 2024. Tetra Tech has $348 million remaining under its $400 million share repurchase program. Tetra Tech expects EPS for the second quarter of fiscal 2024 to range from $1.25 to $1.35 and net revenue to range from $990 million to $1.04 billion. For fiscal 2024, Tetra Tech is raising EPS guidance to range from $5.90 to $6.20 and is raising net revenue guidance to range from $4.15 billion to $4.30 billion.
Thermon Group Holdings announced consolidated financial results for the third quarter of the fiscal year ending March 31, 2024. Key highlights for Q3 2024 as compared to the three months ended December 31, 2022 include: Produced record revenue of $136.4 million, an increase of 12%, driven by sales growth in US-LAM, Europe and Asia Pacific. Realized fully diluted GAAP earnings per share of $0.46 and record non-GAAP adjusted EPS of $0.59, an increase of 86% and 13% respectively, due to continued growth led by the US-LAM region. Generated net income of $15.8 million, an increase of 88%, and Adjusted EBITDA of $30.7 million, an increase of 3%, driven by volume growth and effective cost management.
DRILLERS
No significant news.
REFINERS
Marathon Petroleum announced that Eileen P. Drake and Kimberly N. Ellison-Taylor have been elected to the company's board of directors, effective March 1, 2024.
MLPS & PIPELINES
Enterprise Products Partners L.P. announced its financial results for the three months and year ended December 31, 2023. Enterprise reported net income attributable to common unitholders of $5.5 billion, or $2.52 per common unit on a fully diluted basis, for 2023 compared to $5.5 billion, or $2.50 per common unit on a fully diluted basis, for 2022. Adjusted CFFO was $8.1 billion for both 2023 and 2022. Adjusted FCF was $4.8 billion for 2023 compared to $3.0 billion for 2022. For 2023, Enterprise’s payout ratio of declared distributions to common unitholders and partnership unit buybacks was 56 percent of Adjusted CFFO and 94 percent of Adjusted FCF for 2023.
MARKET COMMENTARY
U.S. stock index futures climbed after Wall Street took a hit in the prior session as the Federal Reserve smashed expectations of early interest-rate cuts, with economic data and big-tech earnings on investors' tracking list for the day. The focus will be on the quarterly results of Apple, Meta, and Amazon scheduled after the closing bell. European shares were mixed following a raft of dismal earnings updates. Japan's Nikkei ended lower, while Chinese stocks were little changed after a private-sector survey showed the country's factory activity expanded modestly in January. The dollar gained after Fed pushed back against the idea of an interest rate cut in March, while gold prices fell.
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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