Oil Prices Rebound on Easing Inflation, Dwindling Recession Worries
Energy stocks will open in the green, supported by higher oil and natural gas prices, along with firmly higher broader index futures (S&P 500 Index futures +0.7% as of 8:50 AM ET). News flow today contains updated contrasting outlooks from OPEC and IEA, with the former cutting its demand forecast and the latter raising its consumption expectations. Credit Suisse also assumed coverage of North American integrateds while some MLPs were also resumed.
Oil prices are continuing their recent rebound, as easing inflation, stable domestic production and expectations of an only mild recession at worst lift futures. Meanwhile, OPEC on Thursday cut its 2022 forecast for growth in world oil demand for a third time since April, citing the economic impact of Russia's invasion of Ukraine, high inflation and efforts to contain the coronavirus pandemic. The view from OPEC contrasts with that of the IEA, which earlier on Thursday raised its demand outlook.
U.S. natural gas futures rose about 2% to a two-week high on Thursday with daily output on track to decline for a third day in a row and forecasts for more demand over the next two weeks than previously expected.
BY SECTOR:
US INTEGRATEDS
Credit Suisse assumed coverage on Chevron with an Outperform rating.
Bloomberg reported that Nigerian President Muhammadu Buhari reversed his earlier authorization of Seplat Energy Plc’s $1.28-billion purchase of Exxon Mobil assets and backed the energy regulator’s decision to reject the deal, according to a spokesman.
Credit Suisse assumed coverage on ExxonMobil with an Outperform rating.
INTERNATIONAL INTEGRATEDS
Reuters reported that UAE state investor Mubadala Investment Co and Raizen SA are in the final round to acquire Brazilian ethanol joint venture BP Bunge Bioenergia, the world's third-largest sugarcane processor, one source with knowledge of the matter said. Shareholders BP PLC and Bunge decided to negotiate with both bidders in a second phase because the difference between their proposals was very small, according to the source. There are parallel negotiations with both.
Saipem won three contracts in Angola worth $900 million awarded by New Gas Consortium, which involves Eni, BP, Sonangol P&P, Chevron, TotalEnergies, the oil services company said. Under the contracts Saipem will take care of the Engineering, Procurement and Construction (EPC) activities for the Quiluma & Maboqueiro fields development project off the northwest coast of Angola.
From 11 August 2022, the shares in Equinor will be traded ex dividend USD 0.40 (ordinary dividend of USD 0.20 and extraordinary dividend of USD 0.20).
Equinor's Johan Castberg floating production, storage and offloading (FPSO) vessel suffered only minor damage during a fire on Wednesday, and the project's timeline will not be affected, a company spokesperson said.
Brazil's President Jair Bolsonaro did not mention privatizing state-controlled oil company Petrobras in his re-election plan released on Wednesday that promises to continue pursuing policies that reduce the size of the state.
Petrobras informed that it has received an official letter from the Comissão de Valores Mobiliários (CVM) informing of a request to interrupt the required period of the notice for the Extraordinary General Meeting (EGM), scheduled for 08/19/2022, in accordance with art.124, §5, II, of Law 6.404/76. The request was made by the National Association of Petroleum Workers Minority Shareholders of Petrobras (ANAPETRO). CVM requested a statement from the Company, which was made in a timely manner.
Shell has launched a sale process for its 30% stake in the Cambo oil prospect in the British North Sea, potentially paving the way for the field's controversial development, industry sources said.
Loadings of Nigeria's Forcados crude oil grade are expected to restart on Sept. 15 after a two-month outage, a loading programme showed. Shell stopped terminal operations on July 17 to repair a leak. Shell has not disclosed when repairs will be completed.
CANADIAN INTEGRATEDS
Credit Suisse assumed coverage on Cenovus Energy with an Outperform rating.
Credit Suisse assumed coverage on Imperial Oil with a Neutral rating.
Credit Suisse assumed coverage on Suncor Energy with an Outperform rating.
U.S. E&PS
Antero Resources announced that the Company's previously announced cash tender offer for any and all of the Company's outstanding 8.375% Senior Notes due 2026 expired at 5:00 p.m., New York City time, on August 10, 2022. According to information provided by IPREO LLC, the Tender Agent and Information Agent for the Any and All Offer, $181,656,000 aggregate principal amount of the Any and All Notes were validly tendered and not validly withdrawn prior to or at the expiration of the Any and All Offer. This amount excludes $2,803,000 aggregate principal amount of the Any and All Notes tendered pursuant to the guaranteed delivery procedures described in the Offer to Purchase, dated August 4, 2022, and the related notice of guaranteed delivery provided in connection with the Any and All Offer, which remain subject to the Holders' performance of the delivery requirements under such procedures.
Earthstone Energy announced the closing of the acquisition of the New Mexico assets of Titus Oil & Gas Production, LLC and Titus Oil & Gas Production II, LLC and their affiliates located in the northern Delaware Basin. The Company also announced the closing of an amendment to the Company's senior secured credit facility, which, amongst other things, increased the borrowing base from $1.4 billion to $1.7 billion, increased commitments from $800 million to $1.2 billion and introduced a term loan tranche to the Credit Facility as a portion of the $1.2 billion of current commitments.
CANADIAN E&PS
Credit Suisse assumed coverage on Canadian Natural Resources with a Neutral rating.
OILFIELD SERVICES
Enerflex reported its second quarter 2022 financial and operational results. The Company's revenue increased by 15% to $372 million, compared to first quarter 2022 revenue of $323 million. The increase in revenue was the result of a larger opening backlog, a higher contract compression utilization rate, and increased work volume within all segments. Enerflex recognized net earnings of $13 million, or $0.15 per share, during the second quarter of 2022, compared to a slight net loss in the first quarter of 2022. The increase in earnings was primarily driven by a stronger gross margin resulting from improved business activity, and lower share-based compensation expenses. The Company continues to progress all matters that need to be addressed to close the proposed acquisition of Exterran.
Pason Systems generated $73.6 million in revenue in the second quarter of 2022, representing a 69% increase from the $43.6 million generated in the second quarter of 2021 as drilling activity in Pason's operating regions continued to improve. With this increase in revenue, Pason generated $31.0 million in Adjusted EBITDA, or 42.1% of revenue in the second quarter of 2022, compared to $12.8 million in the second quarter of 2021, or 29.3% of revenue. While the Company incurred incremental expenses to support increased activity levels, and further faced inflationary effects on certain operating costs, second quarter results continue to demonstrate the Company's strong operating leverage through improved industry conditions. As a result, the Company generated net income attributable to Pason of $18.5 million ($0.23 per share) in the second quarter of 2022 compared to net income attributable to Pason of $5.3 million ($0.06 per share) in the corresponding period of 2021. Pason announced that the Board of Directors have declared a quarterly dividend of eight cents(C$0.08) per share on the company's common shares. The dividend will be paid on September 29, 2022, to shareholders of record at the close of business on September 15, 2022.
DRILLERS
No significant news.
REFINERS
Reuters reported that Marathon Petroleum plans to begin restarting the gasoline-producing fluidic catalytic cracker (FCC) at its 593,000-barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, at the end of this week, sources familiar with plant operations said.
MLPS & PIPELINES
DHT Holdings announced Adjusted EBITDA for the second quarter of 2022 was $32.5 million. Net profit for the quarter was $10.0 million which equates to $0.06 per basic share.
Golar LNG Limited reported Net income of $230.0 million and Adjusted EBITDA of $101.0 million for Q2 2022.
Kinder Morgan's El Paso Natural Gas Company, L.L.C. declared force majeure at Dimmitt compressor station, unit #5 currently unavailable.
CIBC upgraded TC Energy to Outperformer from Neutral.
BMO resumed coverage on TC Energy with an Outperform rating.
National Bank of Canada resumed coverage on TC Energy with a Sector Perform rating.
MARKET COMMENTARY
U.S. stock index futures were up, a day after Wall Street surged, as U.S. inflation slowed more than expected in July and raised hopes the Fed will become less aggressive on interest rate hikes. European shares dipped, weighed by losses in mining stocks. China’s stocks ended higher on signs of U.S. inflation easing. The dollar fell against a basket of currencies. Oil prices rose after the International Energy Agency raised its oil demand growth forecast for the year. Gold prices were lower.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities Nasdaq Advisory Services
MarketInsite
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio