Oil Prices Surge on Supply Woes
The energy sector is poised for a higher start, supported by continued strength in the underlying commodities despite weakness in the broader markets. U.S. stock futures dipped as investors expect the Federal Reserve to remain hawkish following comments from several policymakers suggesting faster interest rate hikes to combat inflation.
WTI and Brent crude oil are up in early trading as focus remains on tight supply which has offset concerns about a potential recession and a weaker global economy. Tight global supply due to western sanctions on Russia can become more constrained as G7 countries agreed to explore options to impose price caps on Russian oil exports. Additionally, concerns about the ability of Saudi Arabia and the United Arab Emirates to activate their spare capacity to make up for lost Russian supply has lent support to oil futures. French President Emmanuel Macron said he was told the producers will struggle to increase output further as the United Arab Emirates oil production is near maximum capacity. Ahead of a series of two-day meetings, OPEC and OPEC+ is expected to confirm no big policy change this month.
Natural gas futures rose on a drop in daily output this week and forecasts for hotter weather and more demand in the next two weeks.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
According to Reuters, Eni said in a note published via state-owned energy exchange GME, its request of gas supply to Italy from Russia has been partially confirmed for June 29.
Fluxys and Equinor launched a solution for large-scale decarbonisation in North-Western Europe. The two companies have agreed to develop a major infrastructure project for transporting captured CO2 from emitters to safe storage sites in the North Sea, connecting Belgium to Norway. The project is in the feasibility stage, with an investment decision expected by 2025.
Repsol, amidst tension in international gasoline and diesel prices — the main variable in determining fuel prices — will continue supporting its customers and will maintain the discounts at its more than 3,300 service stations in Spain.
Maersk Drilling has secured a contract from Shell UK Ltd for the provision of the harsh-environment jack-up rig Maersk Resilient for the drilling of the Pensacola well in the UK sector of the North Sea.
Shell Plc said liquefied natural gas (LNG) shipments from its Prelude floating facility off northwest Australia would be disrupted for at least two weeks due to work bans by unions fighting for better pay.
Mitsui O.S.K. Lines, Ltd. and TotalEnergies Marine Fuels have completed the first refuelling of a ship with biofuels in Singapore, the shipping company said.
GC Group has partnered with TotalEnergies for the installation of solar photovoltaic (PV) rooftop system. The installation of solar panels with TotalEnergies is part of GC Group's action plan to achieve "Together to Net Zero" campaign for sustainable growth. The target is to reduce GHG by 20% by 2030 and achieve net zero emissions by 2050.
Bernstein upgraded TotalEnergies SE to Outperform from Market-Perform.
CANADIAN INTEGRATEDS
Imperial announced that together with ExxonMobil Canada, it has entered into an agreement with Whitecap Resources for the sale of XTO Energy Canada, which is jointly owned by Imperial and ExxonMobil Canada, for a total cash consideration of $1.9 billion ($940 million Imperial’s share). The sale is expected to close before the end of the third quarter 2022, subject to regulatory approvals.
U.S. E&PS
As per SEC filing, EQT entered into a Third Amended and Restated Credit Agreement with the lenders party thereto and PNC Bank, National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, amending and restating that certain Second Amended and Restated Credit Agreement, dated as of July 31, 2017, among the Company, the lenders party thereto and PNC Bank, National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, as amended from time to time. Under the Credit Agreement, the Company may obtain unsecured loans in an aggregate principal amount not to exceed $2,500,000,000 outstanding at any time. The Credit Agreement matures on June 28, 2027, but the Company may request two one-year extensions of the Stated Maturity Date, subject to satisfaction of certain conditions. Commitments under the Credit Agreement may be increased by up to $500,000,000, subject to the agreement of the Company and new or existing Lenders.
Laredo Petroleum announced that John Driver and Shihab Kuran have been appointed as independent members of its Board of Directors, effective June 24, 2022.
S&P SmallCap 600 constituent Southwestern Energy will replace CDK Global in the S&P MidCap 400, and Frontdoor will replace Southwestern Energy in the S&P SmallCap 600 effective prior to the opening of trading on Wednesday, July 6. Brookfield Business Partners LP is acquiring CDK Global in a tender offer expected to be completed on July 5.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Baker Hughes and Petrosafe, a subsidiary of the Egyptian General Petroleum Corporation (EGPC), announced a contract that will mark the first deployment of Baker Hughes' flare.IQ technology in refinery operations in Egypt to help reduce emissions from oil and gas flaring operations. This initial phase of a broader flare recovery partnership will be implemented at the APC Refinery in Alexandria. The Egyptian Ministry of Petroleum and Mineral Resources (MoPMR) aims to reduce emissions and improve the efficiency of oil and gas operations as part of its ambitious aim to reduce greenhouse gas emissions from this sector.
Tellurian and Baker Hughes have announced that Baker Hughes has been awarded a contract by Driftwood Pipeline LLC, a subsidiary of Tellurian, to provide electric-powered Integrated Compressor Line (ICL) technology and turbomachinery equipment for Lines 200 and 300, a natural gas transmission project, proposed to be located in Beauregard and Calcasieu Parishes, in southwest Louisiana.
Compass Minerals announced the signing of a non-binding Memorandum of Understanding (MOU) to supply LG Energy Solution, a leading global manufacturer of lithium-ion batteries for electric vehicles and energy storage systems, with a battery-grade lithium product from its lithium brine development project at its Ogden, Utah, solar evaporation facility.
Shawcor Ltd. announced it has finalized the sale and leaseback agreement for its Rexdale facility. Net proceeds for the transaction of approximately $49 million exceeded previously communicated expected proceeds and, concurrent with the sale of the facility, the Company has entered into a three-year leaseback agreement. This new arrangement facilitates operational continuity while the Company relocates to a modernized location in the Greater Toronto Area. Proceeds from the property sale will be used to reduce existing indebtedness.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Brooge Energy Ltd is a Cayman Islands-based infrastructure provider which is currently engaged in clean petroleum products and biofuels and crude oil storage and related services. The Company is now intending to focus on renewable energy infrastructure. The Company conducts its business and operations through its subsidiary Brooge Petroleum and Gas Investment Company FZE (“BPGIC”). BPGIC is strategically located outside the Strait of Hormuz at the Port of Fujairah in the Emirate of Fujairah in the UAE. The Company announced that it has established Brooge Renewable Energy Ltd (“BRE”), a wholly owned subsidiary of Brooge Energy to focus on green energy related infrastructures activities that are intended to accommodate the necessary energy transfer from fossil fuels into energy produced from renewable resources as the private sector and regulators are increasingly focusing on combatting the harmful effects of climate change.
Nordic American Tankers said that on May 13, 2022, it took delivery of the first of two recent suezmax tanker newbuildings from Samsung shipyard in South Korea. The vessel, which can carry one million barrels of oil, was named Nordic Harrier. The second newbuilding, to be named Nordic Hunter, will be delivered in a few days and will also commence a contract for six years to ASYAD Shipping Company of the Sultanate of Oman. The contract begins promptly upon delivery from the yard, immediately producing earnings and cash-flow and further strengthening the NAT position in the crucial Middle East region.
Williams announced that it has reached a final investment decision on its clean energy project, the Louisiana Energy Gateway (LEG), which will gather 1.8 Bcf/d of natural gas produced in the Haynesville basin for delivery to premium markets, including Transco, industrial markets and growing LNG export demand along the Gulf Coast. Williams intends to create opportunities to pursue additional market access projects as well as develop carbon capture and storage infrastructure that will further decarbonize the natural gas value chain. The project is expected to go into service in late 2024.
MARKET COMMENTARY
Wall Street futures declined on fears of global recession, while investors awaited the final estimate of first-quarter gross domestic product data. European shares fell, with investors looking ahead to a meeting of major central bank heads for clues on policy outlook. In Asian equities, Japan's Nikkei was dragged down by heavyweight technology stocks, while Chinese stocks ended lower on fresh geopolitical tensions. Gold prices rose, while the dollar edged lower. Oil prices surged on supply woes.
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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