Oil
Oil

Oil Prices Rebound to 2014 High on Tight Supply, Russia-Ukraine Tensions

The energy sector is poised for a higher start, supported by strength in the underlying commodities and in the broader equity futures which rose this morning following a turbulent start amid strong earnings while investors wait for the outcome of the Federal Reserve's meeting.

The energy sector is poised for a higher start, supported by strength in the underlying commodities and in the broader equity futures which rose this morning following a turbulent start to the week amid strong earnings while investors looked to the outcome of today’s Federal Reserve's policy meeting. Fed funds futures traders are pricing in a 25 basis point hike in March, in addition to three more rate increases by the end of the year.

WTI and Brent crude oil futures are up in early trading, up at levels not seen since October 2014, supported by tight supply and geopolitical tensions in Europe and the Middle East that raise concerns about further disruption. Ahead of the official EIA report later today, traders are also digesting last night’s API report which showed crude stock fell slightly more than expected last week. Western leaders have stepped up military preparations and made plans to shield Europe from a possible supply shock as U.S President Joe Biden said he would consider personal sanctions on Vladimir Putin if Russia invades Ukraine.

Natural gas futures rallied this morning and are up over 7.5%, supported by forecasts for more cold and heating demand through the end of January and beginning of February. Traders said demand for U.S. LNG will remain strong so long as global gas prices keep trading well above U.S. futures as utilities around the world scramble for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia.

BY SECTOR:

US INTEGRATEDS

Ondas Holdings announced that American Robotics received a new purchase order from Chevron for its fully autonomous, FAA-approved, Scout Systems.

The U.S. Department of Energy said it had approved an exchange of 13.4 million barrels of crude oil from the Strategic Petroleum Reserve to seven companies as part of President Joe Biden's effort to help control oil prices. The companies are: ShellTrading US, 4.2 million barrels; Trafigura Trading LLC, a unit of Farringford NV, 3 million barrels; Phillips 66, 2.3 million barrels; Macquarie Commodities Trading, 2 million barrels; Chevron USA, 885,000 barrels; Exxon Mobil, 515,000 barrels; and BP Products North America, 500,000 barrels.

According to ReutersExxon Mobil next month plans to start production at its second oil platform in Guyana.

INTERNATIONAL INTEGRATEDS                                            

A new milestone has been reached in the partnership between Eni and Aeroporti di Roma, as part of their strategic agreement aimed at promoting decarbonization initiatives in the aviation sector and accelerating the green transition of airports. A shipment of 5,000 litres of pure HVO hydrogenated biofuel arrived at Fiumicino airport from Eni's Venice biorefinery in Porto Marghera.

BofA Global Research downgraded Equinor to Neutral from Buy.

The Petroleum Safety Authority Norway has given AS/Norske Shell consent to use the Transocean Barents mobile drilling facility for production drilling at Ormen Lange.

The Petroleum Safety Authority Norway has given Norske Shell consent for exploration drilling in block 6305/5 in the Norwegian sea.

Thailand's state oil and gas explorer looks set to take over Myanmar's biggest gas field, as TotalEnergies and Chevron exit in the wake of last year's coup in the Southeast Asian state, analysts say.

CANADIAN INTEGRATEDS

No significant news.                       

U.S. E&PS

Hess reported net income of $265 million, or $0.85 per share, in the fourth quarter of 2021, compared with a net loss of $97 million, or $0.32 per share, in the fourth quarter of 2020. On an adjusted basis, the Corporation reported a net loss in the prior-year quarter of $176 million, or $0.58 per share. The improvement in adjusted after-tax results compared with the prior-year period was primarily due to higher realized selling prices in the fourth quarter of 2021.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

RPC announced its unaudited results for the fourth quarter ended December 31, 2021.  For the quarter ended December 31, 2021, RPC generated revenues of $268.3 million, an increase of 80.5 percent compared to $148.6 million in the fourth quarter of 2020 due to higher customer activity levels resulting in higher utilization of our existing equipment and pricing improvements. Net income for the fourth quarter of 2021 was $12.3 million, or $0.06 diluted earnings per share, compared to a net loss of $10.2 million, or $0.05 loss per share in the fourth quarter of the prior year. The adjusted net loss in the fourth quarter of 2020 was $6.8 million, or $0.03 adjusted loss per share.

Select Energy Services and Nuverra Environmental Solutions announced that following the Securities and Exchange Commission declaring effective the Registration Statement on Form S-4 on January 19, 2022, the two largest Nuverra stockholders have delivered their written consents to approve and adopt the merger agreement among Nuverra, Select and wholly owned subsidiaries of Select. These stockholders, Ascribe II Investments, LLC, Ascribe III Investments, LLC and Gates Capital Management, own approximately 84% of Nuverra's outstanding common stock. While the consents of Ascribe and Gates are sufficient to approve the transaction, Nuverra is requesting all its common stockholders approve the merger and other proposals outlined in the Registration Statement by executing and returning the written consent furnished with the filing. Select and Nuverra expect the transaction to close in the first quarter of 2022, subject to the satisfaction of customary closing conditions.

Smart Sand announced that it has commenced operations and is delivering sand to its newly-constructed, unit-train-capable transloading terminal in Waynesburg, Pennsylvania. The terminal has more than four miles of track, is located on Norfolk Southern’s Class 1 rail line, services the southwestern portion of the Marcellus Basin and is expected to have transloading capacity in excess of one million tons of frac sand per year.   The terminal will also serve as the Company’s new Northeastern hub for its SmartSystem last-mile storage and transloading solutions.

DRILLERS

No significant news.

REFINERS

No significant news.

MLPS & PIPELINES

Cheniere Energy announced that its Board of Directors has declared a quarterly cash dividend of $0.33 per common share payable on February 28, 2022 to shareholders of record as of the close of business on February 7, 2022.

Lehigh Cement, a division of Lehigh Hanson Materials Limited and Enbridgeannounced  a memorandum of understanding to collaborate on a carbon solution for Lehigh's cement manufacturing facility in Edmonton, Alberta.

Energy Transfer LP announced a quarterly cash distribution of $0.175 per Energy Transfer common unit ($0.70 on an annualized basis) for the fourth quarter ended December 31, 2021, which will be paid on February 18, 2022 to unitholders of record as of the close of business on February 8, 2022. The distribution is an approximately 15% increase over the previous quarter and represents the first step in Energy Transfer’s plan to return additional value to unitholders while maintaining its target leverage ratio of 4.0x-4.5x debt-to-EBITDA. Future increases to the distribution level will be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per quarter, or $1.22 on an annual basis, while balancing the partnership’s leverage target, growth opportunities and unit buy-backs.

Magellan Midstream Partners, L.P. announced that Michael Mears will retire on April 30. Mears has served as president, chief executive officer and chairman of the board for Magellan since 2011. Aaron Milford, 48, will succeed Mears as president and chief executive officer and will become a board member effective May 1. Currently, Milford serves as the partnership's chief operating officer. At the same time, Barry Pearl, who now serves as lead director, will become chairman of the board, separating the roles of chairman and chief executive officer consistent with governance best practices.

TC Energy is pivoting to find new ways to utilize its North American crude pipeline network after shelving plans to build the cross-border Keystone XL pipeline, including new ways to utilize its MarketLink system from Cushing, Oklahoma, to the US Gulf coast.

MARKET COMMENTARY

U.S. stock index futures rose, with a surge in Microsoft lifting Nasdaq 100 futures, while investors awaited the Federal Reserve's monetary policy decision later in the day. European shares extended gains and were on track for their best session since early December. Japan’s Nikkei ended in the red, dragged down by technology heavyweights. The dollar index was higher, while gold prices dropped. Oil was up, supported by tight supply and geopolitical tensions in Europe and the Middle East. Tesla and Intel are among the top companies scheduled to report earnings after the closing bell.


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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