Oil
Oil

Oil Rebounds More Than 2% Ahead of Iran Nuclear Deal Talks

Oil rebounded more than 2%, mirroring a broader rally in commodities, ahead of talks on reviving the Iranian nuclear accord.

SECTOR COMMENTARY:

Energy stocks are mixed in the pre-market, lifted by higher oil prices and lower index futures.  Broader benchmarks dipped after both the Dow Jones Industrial Average and the S&P 500 both closed at record highs in the prior session as strong economic data boosted hopes of a smooth recovery.  Traders also took a breather amid fresh block trades related to the implosion of Archegos Capital Management, which continued to add unease to the markets.

Oil rebounded more than 2%, mirroring a broader rally in commodities, ahead of talks on reviving the Iranian nuclear accord. Crude oil had plunged in the prior session amid a resurgence in Covid infections in Europe and an imminent increase in OPEC+ supplies, which could swell further with an agreement with Iran. Multiparty negotiations take place in Vienna later on Tuesday, though the chances of a breakthrough are seen by analysts as slim.

Natural gas is up nearly 2% following a greater than 4% sell-off yesterday. Preliminary estimates for EIA storage data due Thursday has a build of +10 to +20 Bcf which is quite bearish relative to the 5 year average of +8 Bcf. 

US INTEGRATEDS

Goldman Sachs downgraded Chevron to Neutral from Buy.

According to Reuters, Exxon Mobil’s Energy shale unit filed a breach of contract lawsuit against Energy Transfer over disputed payments for the Dakota Access Pipeline.

INTERNATIONAL INTEGRATEDS    

According to Reuters, U.S. asset manager BlackRock and Canada's Brookfield Asset Management are no longer in the race to buy a stake in Saudi oil giant Aramco's pipeline business.

Bp provided an update on the expected timing of reaching its $35 billion net debt target including the delivery of disposal proceeds and performance during the first quarter of 2021. During the first quarter bp received around $4.7 billion of disposal proceeds. This includes approximately: $2.4 billion from the completion of the sale of a 20% interest in Oman's Block 61; $1.0 billion as the final payment from the sale of bp's global petrochemicals business to INEOS; $0.7 billion from the sale of a 49% interest in a controlled affiliate holding certain refined product and crude logistics assets onshore US; and $0.4 billion from the sale of an interest in Palantir - a significant return on our initial investment. Bp now expects disposal proceeds in 2021 to be at the top end of the previously announced $4‑6 billion range.

According to Reuters, Eni announced a new light oil discovery in block 15/06, offshore Angola, through "ilx" exploration strategy.

According to Reuters, FNM and Eni signed letter of intent to launch strategic collaboration to speed up transition to new energy sources in transport sector.

Hélène Moreau-Leroy, 56, appointed Chairman and Chief Executive Officer of Hutchinson, succeeding to Jacques Maigné. Hutchinson is a chemicals subsidiary of Total specialized in sealing systems, fluid transfer systems, vibration, acoustic and thermal insulation, and transmission and mobility systems.

According to Reuters, Petroleo Brasileiro agreed to buy BP’s stakes in six oil blocks in Northern Brazil, the company said in a securities filing. Petrobras did not disclose the value of the transaction and said it will now own 100% of the fields. The company had already acquired stakes owned by France's Total. Environment regulator Ibama had denied permits to drill in the region.        

U.S. E&PS

Bonanza Creek Energy announced 2021 guidance, and posted an updated investor presentation to its website. Total 2021 annual capital expenditures are expected to be between $150 and $170 million. 2Q - 4Q 2021 production guidance of 40.0 to 44.0 thousand barrels of oil equivalent per day. Full year pro forma 2021 estimated production of approximately 42.0 MBoe/d. 2Q - 4Q 2021 oil production guidance of 48% to 52% of BOE volumes. Leverage ratio at closing of approximately 0.5x (pro forma net debt / pro forma LTM EBITDAX). Expect to generate over $150 million of full year 2021 estimated levered free cash flow at current strip pricing.

Oxy Low Carbon Ventures, a subsidiary of Occidental, and bio-engineering startup Cemvita Factory announced a plan to construct and operate a one metric ton per month bio-ethylene pilot plant, applying a jointly developed technology using human-made carbon dioxide (CO2) instead of hydrocarbon-sourced feedstocks. The pilot project will scale up the process that was successful in laboratory tests, which showed the OLCV-Cemvita technology is competitive with hydrocarbon-sourced ethylene processes. Ethylene is widely used in the chemical industry, primarily as a precursor to polymers for use in items like durable, long-life products. Start-up of the pilot plant is expected in 2022.

JPMorgan downgraded Pioneer Natural Resources to Neutral from Overweight.

CANADIAN E&PS   

ARC Resources is pleased to announce that it closed its strategic Montney combination with Seven Generations Energy to create the premier Montney producer and leader in responsible energy development. ARC is now Canada's largest condensate producer, third-largest natural gas producer, and sixth-largest upstream energy company.

Canaccord Genuity downgraded Touchstone Exploration to Speculative Buy from Buy.

OILFIELD SERVICES

Fluor announced that the U.S. Department of Energy (DOE) exercised its option to extend the current decontamination and decommissioning work at the former Portsmouth Gaseous Diffusion Plant (GDP) in Piketon, Ohio. The reimbursable contract is executed by Fluor-BWXT Portsmouth LLC, a Fluor-led partnership, together with BWX Technologies, Inc., and Jacobs. The extension includes an additional 12 months with two additional 6-month options and is valued at up to $690 million including options.

ION Geophysical announced that the Company expects to report first quarter 2021 revenues of approximately $14 million. The Company’s cash balance at March 31, 2021 is expected to be approximately $34 million, including net revolver borrowings of $21 million. Total liquidity, consisting of cash on hand and remaining available borrowing base capacity under the revolving credit facility, is expected to be approximately $39 million at quarter end. Despite continued near-term market challenges, backlog increased for the third consecutive quarter to approximately $21 million, primarily due to the Company’s strategic entry into the 3D new acquisition multi-client market. ION expects to recognize the majority of this backlog during the second and third quarters as its Mid North Sea High program progresses this summer.  

MIND Technology announced that it declared a quarterly cash dividend on its 9.00% Series A Cumulative Preferred Stock for the first quarter of its fiscal year ending January 31, 2022. In accordance with the terms of the 9.00% Series A Preferred Stock of the Company, the Board of Directors has declared a Series A Preferred Stock cash dividend of $0.5625 per share for the quarterly period that began on February 1, 2021 and ends on April 30, 2021. The dividend on the Series A Preferred Stock is payable on April 30, 2021 to holders of record at the close of business on April 15, 2021.  The Series A Preferred Stock is currently listed on the Nasdaq and trades under the ticker symbol "MINDP".

Natural Gas Services Group announced the appointment of Nigel Jenvey to its Board of Directors. Mr. Jenvey will take the seat vacated by William F. “Frank” Hughes, Jr. who is retiring after over 17 years of service to the Company.

PATTERSON-UTI ENERGY reported that for the month of March 2021, the Company had an average of 70 drilling rigs operating. For the three months ended March 31, 2021, the Company had an average of 69 drilling rigs operating.

Scotiabank upgraded Toromont Industries to Sector Outperform from Sector Perform.

REFINERS

According to Reuters, Phillips 66 said on Monday it expects to post a first-quarter loss due to severe winter storms that recently hit its operations in the Central and Gulf Coast regions. The company said it expects adjusted net loss attributable for the period to be between $700 million and $550 million.

Phillips 66 is providing preliminary ranges for certain financial information reflecting the market and operating conditions experienced in the first quarter, including the effects of recent winter storms and the ongoing COVID-19 pandemic. The severe winter storms had significant impacts on the company’s operations in the Central and Gulf Coast regions. These winter storms resulted in lower utilization of assets, as well as higher utility, maintenance and repair costs primarily in the Midstream, Chemicals and Refining segments. The higher utility costs were driven by significant increases in prices for natural gas and electricity in certain markets due to the increased demand and supply outages caused by the winter storms. These negative impacts were partially offset by the sale of electricity to help meet demand in the Texas market. The company’s Refining and Marketing and Specialties segments also continue to be impacted by lower global demand for refined petroleum products due to the COVID-19 pandemic. In addition, the company will recognize an impairment in the first quarter reflecting Phillips 66 Partners’ decision to exit the Liberty Pipeline project.

According to Reuters, Valero Energy restarted a hydrotreater at its 195,000 barrel-per-day (bpd) McKee refinery in Sunray, Texas, on Monday, said sources familiar with plant operations.

MLPS & PIPELINES

Brooge Energy, a midstream oil storage and service provider strategically located outside the Strait of Hormuz, adjacent to the Port of Fujairah in the United Arab Emirates through its wholly-owned subsidiaries Brooge Petroleum and Gas Investment Company FZE and Brooge Petroleum and Gas Investment Company Phase III FZE, announced its financial results for the year ending December 31, 2020. Revenue for the year ended December 31, 2020 decreased to $41.8 million as compared to $44.1 million for the same period ended December 31, 2019 primarily due to ancillary revenue in 2020 decreasing by $5.1 million to $14.9 million as compared to $20.1 million in 2019. In order to minimize customer concentration risk, the Company made a decision to diversify its customer base by signing new contracts. In 2020 the Company obtained five new customers as compared to 2019, each of which has no or minimal requirement for ancillary services. The decrease of $5.1 million was partially offset by $1.3 million from new contracts at higher storage rates and terms of agreement. Ancillary services revenue also includes port charges of $1.6 million that are paid by the Company to the port authority and recharged to the customers. The Company’s gross profit decreased to $28.9 million in 2020 from $33.9 million in 2019 mainly due to a decrease in ancillary revenues of $5.1 million, which is offset by an increase in storage revenues of $1.3 million and an increase in direct costs attributable to cost of production of $1.1 million.

According to Reuters, Exxon Mobil’s Energy shale unit filed a breach of contract lawsuit against Energy Transfer over disputed payments for the Dakota Access Pipeline.

TD Securities started coverage on Enterprise Products Partners with a Buy rating.

Phillips 66 Partners LP is providing guidance on results of operations for the first quarter of 2021 to reflect the Partnership’s decision to exit the Liberty Pipeline project and the effects of recent winter storms on asset utilization and utility costs.

Plains All American Pipeline and Plains GP Holdings announced their quarterly distributions with respect to the first quarter of 2021. PAA announced a quarterly cash distribution of $0.18 per common unit ($0.72 per unit on an annualized basis), which is unchanged from the distribution paid in February 2021. PAGP announced a corresponding quarterly cash distribution of $0.18 per Class A share ($0.72 per Class A share on an annualized basis), which is unchanged from the distribution paid in February 2021. With respect to PAA’s Series A Preferred Units, PAA announced a quarterly cash distribution of $0.525 per Series A Preferred Unit, or $2.10 on an annualized basis. Each of these distributions will be payable on May 14, 2021 to holders of record of each security at the close of business on April 30, 2021.

MARKET COMMENTARY

U.S. stock index futures fell as investors locked in some gains after the S&P 500 and the Dow ended at record high in the previous session. European stocks rose on hopes of global economic recovery and increasing vaccination programs. Japan's Nikkei ended lower with worries over the fourth-wave of the pandemic hitting the nation. Gold prices rose, while the dollar slipped. Oil prices rose on strong economic data from China and United States. Data for job openings by JOLTS, is scheduled for release later during the day.

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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