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Oil Prices Rise on Expectations of Tighter Supplies Until End of Year

Oil prices rose on Thursday, extending strong gains made in previous sessions on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis.

SECTOR COMMENTARY:

Energy stocks are set to open higher, aided by stronger broader index futures and rebounding oil prices.

Oil prices rose on Thursday, extending strong gains made in previous sessions on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis. "Some soft spots have emerged in the oil demand recovery, but this is unlikely to change the outlook fundamentally," Morgan Stanley said in a note. Members of the OPEC+ agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand. 

U.S. natural gas futures slipped from a 31-month high on Thursday ahead of a storage report expected to show last week's build was bigger-than-usual. 

BY SECTOR:

US INTEGRATEDS

HSBC downgraded Chevron to Hold from Buy.

As per SEC filing, on July 16, 2021, Andrew Swiger, Senior Vice President of Exxon Mobil and principal financial officer, announced his intention to retire effective September 1, 2021. On July 16, 2021, the company elected Kathryn Mikells as Senior Vice President and Chief Financial Officer effective August 9, 2021. Ms. Mikells, age 55, has previously served as Chief Financial Officer and adirector of Diageo plc for more than the past five years. Prior to that time she held Chief Financial Officer positions at Xerox,ADT, Nalco, and United Airlines, where she also served as Vice President of Investor Relations and Treasurer. 

Jefferson Energy Companies, a subsidiary of Fortress Transportation and Infrastructure Investors LLC, announced it has entered into a new contract to expand terminal services to ExxonMobil Oil Corporation, a wholly owned subsidiary of Exxon Mobil. Jefferson Energy is constructing approximately 1.9 million barrels of new storage capacity at the Jefferson Energy terminal and five connecting pipelines between the ExxonMobil Beaumont refinery and Jefferson Energy terminal that will increase utilization of its existing marine infrastructure. The engineering and construction has begun for this second phase of the Jefferson Energy terminal master plan buildout and will increase total storage to approximately 6.2 million barrels.

INTERNATIONAL INTEGRATEDS

BP has acquired UK-based digital energy business Open Energi. The company’s digital platform uses real-time data to optimise the performance of energy assets. It can generate savings and maximise revenues for customers by connecting to power markets and providing flexibility at times of low renewable generation and during price peaks. It also accumulates data and learns how best to further optimise the energy use of different assets over time.

HSBC downgraded Eni to Hold from Buy.

Royal Dutch Shell launched the sale of its stakes in oil and gas fields it does not operate off the coast of Malaysia, according to a document seen by Reuters. 

HSBC downgraded Royal Dutch Shell to Hold from Buy.

Reuters reported that Waitrose expands partnership with Shell. Shell is to install hundreds of electrical vehicle charging points at Waitrose stores by 2025 as part of expanded partnership. The company is targeting installation of 800 Shell recharge electric vehicle charging points in up to 100 Waitrose locations across UK by 2025.

CANADIAN INTEGRATEDS

Cenovus Energy has entered into a power purchase agreement (PPA) to buy solar-power produced electricity and the associated emissions offsets from a partnership between Cold Lake First Nations (CLFN) and Elemental Energy Inc., helping Cenovus advance two of its environmental, social & governance (ESG) focus areas by addressing climate & greenhouse gas (GHG) emissions as well as further supporting Indigenous reconciliation through economic engagement.        

U.S. E&PS

CNX Resources announced the release of its annual Corporate Responsibility Report. The report details company execution in line with the traditional Global Reporting Initiative (GRI) core option, along with additional disclosure standards established by the Task Force on Climate-related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB). Included in the report is more information about CNX objectives and initiatives undertaken to meet the company's broader environmental, social, and governance (ESG) philosophy: tangible, impactful, and local.

Piper Sandler upgraded Northern Oil and Gas to Overweight from Neutral.

Whiting Petroleum announced that it has entered into separate definitive agreements to acquire oil and gas assets in the Williston Basin of North Dakota and divest of all its oil and gas assets in the Denver-Julesburg Basin of Colorado.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

PGS ASA reported second quarter and preliminary first half 2021 results. The company reported Revenues and Other Income according to IFRS of $185.9 million and an EBIT loss of $7.3 million, compared to $90.3 million and an EBIT loss of $82.2 million, respectively, in Q2 2020.

TechnipFMC reported second quarter 2021 results. Total Company revenue in the second quarter was $1,668.8 million. Loss from continuing operations attributable to TechnipFMC was $174.7 million, or $0.39 per diluted share. Adjusted loss from continuing operations was $26 million, or $0.06 per diluted share.

CGG and PGS have signed a Memorandum of Understanding (MoU) with a view to combining their seismic multi-client products and technical capabilities applied to the Carbon Capture Utilization and Storage (CCUS) industry. The ambition is to join forces and unlock the value of existing seismic data for carbon storage evaluation. Together, the companies intend to explore, conceptualize and create new derivative data products using existing seismic data to facilitate screening and evaluation of carbon storage sites.

Petrofac announced that it has become the first company to sign a Memorandum of Understanding (MOU) as a customer for Storegga's proposed UK-based, large scale Direct Air Capture facility. Petrofac has committed to purchase the permanent removal of carbon dioxide from the atmosphere at the facility, delivering a key tool to supplement existing decarbonisation initiatives in support of its Net Zero goals.

DRILLERS 

Precision Drilling announced 2021 second quarter financial results:  Revenue of $201 million was an increase of 6% compared with the second quarter of 2020. Net loss of $76 million or $5.71 per share compared with a net loss of $49 million or $3.56 per share in the second quarter of 2020. Earnings before income taxes, loss (gain) on repurchase of unsecured senior notes, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization (Adjusted EBITDA) of $29 million was 50% lower than the second quarter of 2020. Excluding the impact of $26 million of share-based compensation charges, our second quarter Adjusted EBITDA was $55 million. Generated cash and funds provided by operations of $42 million and $13 million, respectively. 

Transocean issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs. This quarter’s report includes the following updates: Deepwater Invictus – Customer exercised a one-well option in the U.S. Gulf of Mexico; Deepwater Skyros – Customer exercised a 370-day option in Angola; Discoverer Inspiration – Awarded a nine-well contract in the U.S. Gulf of Mexico; Dhirubhai Deepwater KG2 – Awarded a one-well contract, plus two one-well options in Brunei; Petrobras 10000 – Awarded a two-year contract in Brazil; Deepwater Nautilus – Customer exercised two one-well options; Deepwater Nautilus – Awarded a one-well contract; Transocean Norge – Awarded a four-well contract, plus five one-well options in Norway; Transocean Spitsbergen – Customer exercised two one-well options in Norway; Transocean Barents – Customer terminated its contract for convenience in Norway; and Transocean Barents – Awarded a two-well contract in Norway.

REFINERS

PBF Energy commented on the Bay Area Air Quality Management District (BAAQMD) Board members' decision to adopt Proposed Amended Rule (PAR) 6-5 related to particulate emissions from refinery Fluid Catalytic Cracking (FCC) units in the Bay Area. Paul Davis, President of PBF Energy's Western Region, stated, "We have been working closely throughout the rule-making process with BAAQMD staff and anticipated today's outcome. Importantly, the rule-making requires refineries to meet a specific emissions standard by 2026, without requiring the installation of a wet gas scrubber or any other specific technology."

MLPS & PIPELINES

Kinder Morgan’s board of directors approved a cash dividend of $0.27 per share for the second quarter ($1.08 annualized), payable on August 16, 2021, to stockholders of record as of the close of business on August 2, 2021. This dividend represents a 3% increase over the second quarter of 2020. KMI is reporting a second quarter net loss attributable to KMI of $757 million, compared to a net loss attributable to KMI of $637 million in the second quarter of 2020; and distributable cash flow (DCF) of $1,025 million, compared to $1,001 million in the second quarter of 2020. This quarter’s net loss was primarily due to a $1,600 million ($1,228 million after-tax), non-cash impairment related to anticipated lower volumes and rates on contract renewals on our South Texas natural gas processing and gathering assets. Adjusted Earnings, which do not include that impairment, were $516 million for the quarter.

The board of directors of ONEOK declared a quarterly dividend of 93.5 cents per share, unchanged from the previous quarter, resulting in an annualized dividend of $3.74 per share.

Shell Midstream Partners, L.P. announces that the Board of Directors of its general partner declared a cash distribution of $0.30 per limited partner common unit for the second quarter of 2021, which represents a 35% decrease from the first quarter 2021. This decrease was undertaken to ensure the Partnership’s near-term financial health, provide a long-term sustainable financial framework and allow the Partnership the ability to pursue projects that build upon its diverse portfolio and enhance unitholder value.  The Partnership’s management team will provide more information and an updated financial framework during the second quarter earnings webcast. The distribution will be paid August 13, 2021 to unitholders of record as of August 3, 2021.

MARKET COMMENTARY

U.S. stock index futures were higher, ahead of a batch of earnings reports.  European stocks extended gains for a third session, as signs of a strong corporate earnings season and expectations that the European Central Bank will stick to a dovish stance lifted demand for risky equities. Japanese markets were closed for a holiday. Gold prices slipped on the back of a rebound in stocks, while the dollar was little changed. Oil prices rose, on expectations of tighter supplies until the end of the year as economies recover from the coronavirus crisis. Existing home sales data is also expected on the U.S. economic calendar later in the day. Intel and Twitter are scheduled to report after market.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP 


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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