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Oil Prices Slide, Erasing Gains From OPEC Agreement

MONDAY, DECEMBER 10, 2018

SECTOR COMMENTARY

The energy sector is poised for a mixed to lower start, pressured by declines in the underlying commodities while U.S. stock index futures moved moderately higher, bouncing off six-week lows from earlier, as the market tries to stage a comeback from its worst week since March on worries over global growth and the China-U.S. trade war.

Oil prices on both sides of the Atlantic fell in pre-market trading, in line with further declines in global stocks and erasing gains made last week when OPEC and other key exporters agreed to cut their crude output from January. Prices rose 3 percent on Friday after OPEC and some non-OPEC producers including heavyweight Russia said they would cut oil supply by 1.2 million barrels per day. "They had one thing in common - none of them wanted to see inventories rise further. They could disagree on prices and upon the size of the cuts, but to really see inventories moving higher? No one wanted that," SEB commodities strategist Bjarne Schieldrop said.

Natural gas futures pulled back this morning, as strong demand this past weekend is expected to fade as forecasts for warmer weather are expected for this week in key consuming regions.

US INTEGRATEDS

(Saturday) Reuters - Qatar Petroleum said it has entered an agreement with anExxonMobil affiliate to acquire a 10 percent participating interest in three offshore exploration blocks in the Angoche and Zambezi basins in Mozambique.

INTERNATIONAL INTEGRATEDS

Press Release - On 30 October 2018, the Directors of BP announced that the interim dividend for the third quarter 2018 would be US$0.1025 per ordinary share (US$0.615 per ADS). This interim dividend is to be paid on 21 December 2018 to shareholders on the share register on 9 November 2018. The dividend is payable in cash in sterling to holders of ordinary shares and in US dollars to holders of ADSs. A scrip dividend alternative has been made available for this dividend allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Sterling dividends payable in cash will be converted from US dollars at an average of the market exchange rate over the four dealing days from 4 to 7 December 2018 (£1 = US$1.27725). Accordingly, the amount of sterling dividend payable in cash on 21 December 2018 will be 8.0251 pence per share.

(Sunday) Reuters - Egypt's petroleum minister signed an agreement with BP and UAE-based Mubadala Investment Co giving them stakes in the Nour gas field off the northern coast of Sinai. BP will buy 25 percent and Abu Dhabi state fund Mubadala 20 percent of Italian energy company Eni's stake.

Reuters - Eni announced new oil discovery in block 15/06, offshore Angola. The discovery is estimated to contain between 170 and 200 million barrels of light oil in place.

Reuters - Petroleo Brasileiro has entered into the non-binding phase of the sale of an onshore oil cluster located in the state of Espírito Santo.

Reuters - At least 60,000 liters of oil spilled into Rio de Janeiro's Guanabara Bay over the weekend after a robbery attempt on a pipeline owned by a subsidiary of Petroleo Brasileiro.

Reuters - Royal Dutch Shell said it would expand the Shearwater gas hub in the British North Sea, its seventh project to get the green light in the ageing basin this year.

Reuters - Royal Dutch Shell to further invest in north sea gas hub at shearwater.

U.S. E&PS

Press Release - Antero Resources announced that Paul J. Korus has been appointed to its board of directors, as a Class II director, effective as of December 7, 2018.

Press Release - Bonanza Creek Energy announced that the Company entered into a new $750 million reserve-based credit facility with an initial $350 million borrowing base due December 2023.

Press Release - ConocoPhillips announced its 2019 capital expenditure budget and operating plan. The operating plan reflects the company’s ongoing commitment to free cash flow generation, differentiated payout to shareholders and superior financial returns through business cycles. The 2019 operating plan is expected to continue driving underlying improvement in return on capital employed. Key highlights are: Planned 2019 capital expenditures of $6.1 billion result in free cash flow at prices above $40 per barrel WTI; Increased target payout to shareholders to greater than 30 percent of cash from operations from 20-30 percent.

Press Release - Hess announced a 2019 E&P capital and exploratory budget of $2.9 billion. Of this, approximately 75 percent will be allocated to high return growth assets in the Bakken and Guyana.

CANADIAN E&PS

National Bank of Canada upgraded ARC Resources to ‘Outperform’ from ‘Sector Perform’.

OILFIELD SERVICES

Bernstein upgraded TechnipFMC to ‘Market Perform’ from ‘Underperform’.

REFINERS

Jefferies dropped coverage on Andeavor.

JPMorgan downgraded Delek US Holdings to ‘Neutral’ from ‘Overweight’.

(Late Friday) Reuters - Valero Energy 335,000 barrel-per-day-capacity Port Arthur, Texas, refinery returned to full production on Friday after full steam supply was restored.

MLPS & PIPELINES

Bank of America Merrill Lynch cuts Shell Midstream Partners to ‘Underperform’ from Buy.

Bank of American Merrill Lynch cuts BP Midstream Partners to ‘Underperform’ from ‘Neutral’.

Bank of America Merrill Lynch cuts Phillips 66 Partners to ‘Neutral’ from ‘Buy’.

Jefferies dropped coverage on Energy Transfer Partners.

Press Release - Pembina Pipeline is pleased to announce a capital program of $1.6 billion and an Adjusted EBITDA guidance range of $2.8 to $3.0 billion for 2019.

Press Release - Summit Midstream Partners announced that Matthew Harrison, the Executive Vice President and Chief Financial Officer of Summit Midstream Partners, LLC ("Summit Investments") and Summit Midstream GP, LLC (collectively with Summit Investments, the "Company"), will be departing the Company to pursue other interests. Summit Midstream GP, LLC, which is owned by Summit Investments, manages and operates SMLP. Mr. Harrison's employment with the Company will terminate effective January 4, 2019. Summit Investments announced that it is promoting Marc Stratton to Executive Vice President and Chief Financial Officer of the Company, effective immediately. Mr. Stratton joined Summit Investments as a founding member in 2009, and has held various senior management roles at the Company including, since 2015, Senior Vice President of Finance, Treasurer and Head of Investor Relations.

MARKET COMMENTARY

U.S. stock futures fell, tracking a global sell-off in Asian and European markets, amid signs of slowing growth worldwide and tensions between U.S. and China refusing to subside. The dollar consolidated after posting its biggest drop in 3 months last week. Gold prices remained little changed. Oil prices fell, erasing gains made last week after OPEC and other key producers decided to cut crude output from January.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP

· Bloomberg TV Commodities Edge – Q2’18 Earnings Themes

· Bloomberg TV DayBreak Americas - (Discussion with Kevin Holt, CIO of Invesco, begins at 0:56:58 – 1:05:22)

· TD Ameritrade Network– Trade Tariff Effects on Market & Interest Rates

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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