Oil Prices Steady Amidst Fed Rate Hike
SECTOR COMMENTARY:
Energy stocks are set to open lower, tracking weaker broader index futures, which are trading lower by more than 1%, and lower oil prices. Equities and risk assets remain on edge after the Federal Reserve raised rates by another 50 basis points yesterday, and also indicated more rate hikes are to come into 2023. The ECB also raised its benchmark rate by 50 basis points this morning, as global central banks continue their flight to tame inflation.
Oil prices steadied on Thursday after early declines as the dollar firmed while the possibility of further increases to interest rates by central banks also heightened demand concerns. Federal Reserve Chair Jerome Powell on Wednesday said that the U.S. central bank will raise interest rates further next year, even as the economy slips towards a possible recession. "The oil price is under pressure today as the Fed's hawkish guidance for its monetary policy sparked renewed concerns about economic growth, lifting the U.S. dollar and sending commodity prices down," said CMC Markets analyst Tina Teng.
Natural gas futures are higher by a nickel, trading around $6.47, ahead of weekly inventory data. Analysts expect a draw of 52 bcf.
BY SECTOR:
US INTEGRATEDS
Chevron, through its Chevron New Energies business, and Baseload Capital have announced a joint venture to develop geothermal projects in the United States. The two companies will collaborate on driving geothermal opportunities - including identifying the best prospects for development, operations and progressing the next generation of geothermal technologies from pilot to commercial scale. Through this agreement, Chevron and Baseload Capital will work together to create awareness around geothermal energy which will be a critical supply option for renewable energy.
Saipem has won two new contracts in Guyana and Egypt for an overall value of around $1.2 billion, it said in a statement. The first contract has been awarded by ExxonMobilGuyana for the UARU oil field development project, located in the Stabroek block offshore Guyana at a water depth of around 2,000 meters. The second deal, in Egypt, was signed with Petrobel for the transportation, installation and pre-commissioning of 170 km of umbilical cables for the Zohr Field, with the offshore campaign is expected to start in the third quarter of 2023.
ExxonMobil announced successful startup of one of the largest advanced recycling facilities in North America. The facility at the company’s integrated manufacturing complex in Baytown, Texas, uses proprietary technology to break down hard-to-recycle plastics and transform them into raw materials for new products. It is capable of processing more than 80 million pounds of plastic waste per year, supporting a circular economy for post-use plastics and helping divert plastic waste currently sent to landfills.
INTERNATIONAL INTEGRATEDS
bp ventures has made a $20 million AUD investment in 5B Holdings Pty Ltd, an Australian renewable company with technology that enables rapid deployment of solar power at scale. The investment closes 5B's $55 million AUD Series B funding round, which was co-led by existing investors The AES Corporation and Artesian.
According to Reuters, the Azeri Energy Ministry said bp produced 18.7 mln tonnes of oil in Jan-Nov.
Based on a collaboration project with OKEA, Njord A will be electrified to cut greenhouse gas emissions from production. Equinor has, on behalf of the Njord licence partners, submitted a revised plan for development and operation (PDO) to the Ministry of Petroleum and Industry.
Equinor said it had begun pumping oil from the second phase of its giant Johan Sverdrup development, sharply boosting output from Europe's biggest producing field.
Equinor and partner bp launched the first of three Industry Supplier Expos with an inaugural event in the Capitol Region at Hudson Valley Community College (HVCC), in Troy New York. More than 80 manufacturers attended the expo which is designed to help local and regional manufacturers participate in New York’s new offshore wind industry and connect them directly with Equinor and its key suppliers. The event was also attended by Assemblyman John McDonald from the 108th District and Assemblywoman Patricia Fahy from the 109th District.
Petrobras informed that has become part of the list of global companies that stand out in climate change mitigation actions, as announced by the international organization CDP, formerly known as the Carbon Disclosure Project. The company received an A- rating in recognition of its good practices on this topic and as demonstrated last year.
Brazil's lower house of Congress voted late on Tuesday to make it easier for politicians to take roles at state-run firms, hammering shares of the state-run oil company, devastated by a political graft scandal over the past decade. Shares in state-run oil company Petrobras closed 10% lower on Wednesday. State lender Banco do Brasil SA lost 2.5%.
Reuters reported that India is considering building several refineries instead of a single mega plant planned with Saudi Aramco and Abu Dhabi National Oil Company (ADNOC), due to challenges in acquiring land, three sources familiar with the matter said.
According to Bourse Filing, Saudi Aramco has 24.9 mln shares traded for SAR 769.1 mln in negotiated deals.
Brazilian power company Eletrobras said it has signed a cooperation agreement with Shell as they exchange information for a potential co-investment in offshore wind power in Brazil.
Octopus Energy, Britain's fourth-largest energy supplier, has signed a power purchase agreement (PPA) with Shell Energy for up to 2.4 terawatt hours (TWh) per year from the Dogger Bank offshore wind farm project, it said.
TotalEnergies said it joined forces with Saudi Arabian Oil Company (Aramco) to build a new petrochemical complex in Saudi Arabia. The project involves an investment of around $11 billion, of which $4 billion will be funded through equity by Aramco (62.5%) and TotalEnergies (37.5%), the statement said. Construction is scheduled to begin during the first quarter of 2023 with commercial operation targeted to start in 2027.
TotalEnergies said that on Monday, December 12, 2022, the French media, Mediapart, and Sky News, in association with Greenpeace UK and Source Material, published an investigation regarding its BaCaSi project in the Republic of the Congo. The BaCaSi project is an ambitious partnership between TotalEnergies, Forêt Ressources Management, a French company with its Congolese subsidiary Forest Neutral Congo (FNC) and the Republic of the Congo.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
TD Securities downgraded EOG Resources to Hold from Buy.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Pason Systems announced that it has increased its non-controlling investment in Intelligent Wellhead Systems through the acquisition of outstanding common shares of IWS for an aggregate purchase price of $7.9 million and an agreement to invest up to $25 million in preferred shares of IWS. The preferred share investment consists of an initial subscription of $10 million, with up to a further $15 million in future tranches of preferred shares subject to the continued growth and success of IWS. These funds will support IWS' ongoing growth initiatives and accelerate the development and deployment of IWS' technologies.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
As per SEC filing, Energy Transfer LP completed the previously reported underwritten public offering of $1.0 billion aggregate principal amount of the Partnership's 5.550% Senior Notes due 2028 and $1.5 billion aggregate principal amount of the Partnership's 5.750% Senior Notes due 2033. The Notes were issued under the Indenture, dated as of December 14, 2022, between the Partnership and U.S. Bank Trust Company, National Association, as trustee, as supplemented by the First Supplemental Indenture, dated as of December 14, 2022.
Enterprise Products Partners L.P. announced that its operating subsidiary has received the International Sustainability and Carbon Certification (“ISCC”) PLUS certification for facilities within the company’s natural gas liquids fractionation and petrochemical complex in Chambers County, Texas.
Euronav NV acknowledged the receipt from CMB NV of a letter to its Supervisory Board asking it to terminate the Combination Agreement with Frontline, following the publication of a 13D filing in relation to the recent increase of its holdings in Euronav. The fact that this development could take place, has always been planned for in the proposed combination. The exchange offer, which is expected to be launched in the first quarter of 2023, aims at combining the two companies so that they can act as one group where Frontline will be the parent and Euronav a majority-controlled subsidiary. This exchange offer is independent from any merger.
New Fortress Energy announced the pricing of the previously announced secondary public offering of 6,900,000 shares of its common stock by Energy Transition Holdings LLC, an entity managed by Great Mountain Partners LLC, at a price to the public of $46.00 per share. The 6,900,000 shares of common stock being sold in this offering represent approximately 3.3% of the Company’s outstanding common stock as of the close of business on December 13, 2022 and represent 21.3% of the shares held by the Selling Stockholder in the Company as of that date. The Company will not receive any proceeds from the sale of the shares by the Selling Stockholder. The offering is expected to close on December 19, 2022, subject to customary closing conditions.
Plains All American through its wholly owned subsidiary Plains Midstream Canada, announced that it has entered into definitive agreements to sell its 21% non-operated/undivided ownership interest in the Keyera Fort Saskatchewan (KFS) facility to Keyera Corporation for approximately $365MM CAD ($270 million USD). The transaction, which is subject to Canadian Competition Bureau review and closing conditions, is anticipated to close in the first quarter 2023.
TC Energy is resuming operations in a section of its Keystone pipeline a week after a leak of more than 14,000 barrels of oil in rural Kansas triggered the whole pipe's shutdown. The company said in a statement on Wednesday that it had given notice to regulators and customers about the restart of pipeline sections unaffected by the incident. The segment of the pipeline where the incident occurred remains sealed off.
Williams announced that it has reached an agreement to acquire MountainWest Pipelines Holding Company (MountainWest) from Southwest Gas Holdings, in a transaction including $1.07 billion of cash and $0.43 billion of assumed debt, for an enterprise value of $1.5 billion. MountainWest comprises roughly 2,000-miles of interstate natural gas pipeline systems primarily located across Utah, Wyoming and Colorado, totaling approximately 8 Bcf/d of transmission capacity. MountainWest also holds 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir, providing valuable service to western markets. The acquisition price represents an approximate 8x estimated 2023 EBITDA multiple.
MARKET COMMENTARY
U.S. stock index futures dropped, a day after the Federal Reserve raised interest rates as expected, but confounded market expectations of a less hawkish stance by saying rates would remain higher for longer. Asian markets ended in negative territory on Fed rate hike worries. The U.S. dollar strengthened across the board on hawkish Fed, while gold prices slid.
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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