Oil Slightly Lower Amid Falling U.S. Inventories
SECTOR COMMENTARY:
The energy sector is set for a mixed-to-higher start amid a rally in equity futures, which has outweighed a fall in crude oil contracts. U.S equities are higher in the pre-market as investors react to positive Q1 earnings from Microsoft, while they await to digest more corporate data which will provide clues on the Fed’s interest rate path. As earnings season continues to heat up, Hess Corp reported first quarter earnings, beating Wall St estimates and disclosed a new discovery offshore Guyana by a consortium led by Exxon Mobil.
WTI and Brent crude oil are slightly lower as falling U.S inventories failed to eclipse weak economic data and concerns over a hard landing. According to API figures, U.S crude stockpiles fell by about 6.1 million barrels last week, outpacing a 1.9-million-barrel decease in gasoline inventories. Additionally, WTI Midland is set to be added to the S&P Global Platts and is the first crude from outside the region to be added to the traditionally European-based basket. The amount of Midland crude arriving in Europe has climbed in the past year, following the sanctions on Russia which has only strengthened the importance of WTI across the Atlantic.
Natural gas futures are lower on the last day before the expiration of the front-month contract on forecasts for milder weather in the next two weeks.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
No significant news.
CANADIAN INTEGRATEDS
Cenovus Energy delivered upstream production in the first quarter of 779,000 barrels of oil equivalent per day (BOE/d) and downstream throughput of 457,900 barrels per day (bbls/d). The company generated $1.4 billion in adjusted funds flow and cash used in operating activities was $286 million. First-quarter results reflect lower commodity prices, reduced production in the upstream business and lower operating throughput in the downstream compared with the fourth quarter. Consistent with Cenovus’s commitment to shareholders, the Board of Directors approved a 33% increase in the company’s base dividend, to $0.56 per share annually starting in the second quarter of 2023.
U.S. E&PS
Hess reported net income of $346 million, or $1.13 per share, in the first quarter of 2023, compared with net income of $417 million, or $1.34 per share, in the first quarter of 2022. On an adjusted basis, the Corporation reported net income of $404 million, or $1.30 per share in the first quarter of 2022. The decrease in after-tax results compared with the prior-year quarter reflects lower realized selling prices partially offset by the net impact of higher production volumes in the first quarter of 2023.
Kosmos Energy announced that its Board of Directors has appointed three new Directors, effective April 25, 2023: Ms. Maria Moræus Hanssen, Sir John Grant, and Mr. J. Mike Stice. The Company also announced today that Sir Richard Dearlove has informed the Company he will not seek re-election to the Board at the end of his current term. Sir Richard has served on the Board with distinction since 2012.
Matador Resources reported financial and operating results for the first quarter of 2023. The company announced an Adjusted net income of $180.0 million, or adjusted earnings of $1.50 per diluted common share and an Adjusted EBITDA of $365.2 million.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
CES Energy Solutions announced that it has successfully entered into an amended and restated credit agreement dated April 25, 2023 with respect to its syndicated and operating credit facilities. Led by the Bank of Nova Scotia as Agent and a syndicate including The Toronto-Dominion Bank, ATB Financial, Bank of Montreal, Wells Fargo Bank, HSBC Bank Canada, Canadian Imperial Bank of Commerce, Business Development Bank of Canada, and Canadian Western Bank, the total size of the increased Credit Facility is approximately C$ equivalent $700.0 million consisting of a Canadian Term Loan Facility of $250.0 million and an aggregated revolving facility of approximately C$ equivalent $450.0 million. The Credit Facility matures on April 25, 2026 and is secured by substantially all of the Company's assets and includes customary terms, conditions and covenants.
MRC Global commented on a lawsuit filed by Mario Investments LLC, an affiliate of Cornell Capital LLC, the sole holder of MRC Global’s 6.50% Series A Convertible Perpetual Preferred Stock. The lawsuit, brought against the company in the Delaware Court of Chancery, attempts to prevent MRC Global from moving forward with its previously announced refinancing of its senior secured Term Loan B. The company disputes Cornell Capital’s claim in the lawsuit that Cornell Capital has a right to consent to the refinancing.
NexTier Oilfield Solutions reported first quarter 2023 financial and operational results. The company announced total revenue of $935.7 million, a 7% sequential increase, Adjusted net income of $156.4 million, or $0.66 per diluted share, compared to $145.8 million, or $0.59 per diluted share in the prior quarter, and Adjusted EBITDA of $227.6 million, compared to $212.7 million in the prior quarter. For the second quarter of 2023, we expect moderate sequential revenue growth, with adjusted EBITDA expected to improve once again. We expect our frac equipment to remain sold out, with strong demand for our services continuing in oil basins. Given very high industry frac equipment utilization and the widening service quality bifurcation we are seeing amongst our peer group, we do not anticipate that we will have a need to change our pricing strategy.
RPC announced that on April 25, 2023 its Board of Directors declared a $0.04 per share regular quarterly cash dividend payable June 9, 2023 to common stockholders of record at the close of business on May 10, 2023.
RPC announced its unaudited results for the first quarter ended March 31, 2023. RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production, and development of oil and gas properties throughout the United States and in selected international markets. For the quarter ended March 31, 2023, RPC generated revenues of $476.7 million, a slight decrease compared to $482.0 million in the fourth quarter of 2022. Revenues were impacted by weather disruptions and a change in the job mix in pressure pumping, RPC's largest service line. Operating profit for the first quarter of 2023 was $90.7 million compared to $112.3 million in the fourth quarter of 2022. Net income for the first quarter of 2023 was $71.5 million, or $0.33 diluted earnings per share, compared to net income of $87.0 million, or $0.40 diluted earnings per share, in the fourth quarter of 2022.
Select Energy Services announced that its Board of Directors declared a quarterly cash dividend of $0.05 per share of Class A common stock, to be paid on May 17, 2023, to holders of record as of the close of business on May 5, 2023. A comparable distribution of $0.05 per unit has also been approved to the unitholders of SES Holdings, LLC, which will be subject to the same payment and record dates. All future dividend payments are subject to quarterly review and approval by Select's Board of Directors.
On April 24, 2023, TechnipFMC entered into a new $500,000,000 five-year senior secured performance letters of credit facility (the "Performance LC Credit Agreement"). The commitments under the Performance LC Credit Agreement may be increased to $1,000,000,000, subject to the satisfaction of certain customary conditions precedent related to the increase in commitments.
Weatherford International announced its results for the first quarter of 2023. Revenues for the first quarter of 2023 were $1,186 million, an increase of 26% year-over-year and a decrease of 2% sequentially. Operating income was $185 million in the first quarter of 2023, compared to $18 million in the first quarter of 2022 and $169 million in the fourth quarter of 2022. The Company’s first quarter of 2023 net income was $72 million, compared to a net loss of $80 million in the first quarter of 2022 and net income of $72 million in the fourth quarter of 2022. Adjusted EBITDA was $269 million, an increase of 78% year-over-year and 1% sequentially. Diluted income per share was $0.97, compared to a diluted loss per share of $1.14 in the first quarter of 2022 and diluted income per share of $0.99 in the fourth quarter of 2022.
DRILLERS
Precision Drilling announced its first quarter of 2023 results. Revenue of $559 million was 59% higher than in 2022 and the result of increased North American drilling and service activity and day rates, partially offset by lower international activity. Drilling rig utilization days increased 17% in the U.S. and 9% in Canada, and well service activity increased 53% as compared with the first quarter of 2022.Adjusted EBITDA was $203 million, $166 million higher than 2022, mainly due to increased activity and day rates and lower share-based compensation. Share-based compensation recovery was $12 million, approximately $60 million lower than in 2022 as a result of our lower share price. Please refer to “Other Items” later in this news release for additional information on share-based compensation charges.
REFINERS
No significant news.
MLPS & PIPELINES
Crestwood Equity Partners announced that Steven Dougherty, Executive Vice President and Chief Accounting Officer, will be leaving the Company to pursue other opportunities. Mr. Dougherty will continue to serve in his current role through the end of the second quarter 2023 to ensure an orderly transition of his responsibilities.
Equitrans Midstream declared quarterly cash dividends of $0.15 per common share and $0.4873 per share of Series A Perpetual Convertible Preferred Stock for the first quarter 2023. The dividends will be paid on May 15, 2023, to all applicable ETRN shareholders of record at the close of business on May 5, 2023.
Golar LNG Partners LP, an indirect subsidiary of New Fortress Energy, has declared a cash distribution of $0.546875 per unit of 8.75% Series A Cumulative Redeemable Preferred Units for the period from February 15, 2023 through May 14, 2023. This will be payable on May 15, 2023 to all Series A preferred unitholders of record as of May 8, 2023.
MARKET COMMENTARY
Wall Street futures rallied after upbeat results from Microsoft and Alphabet dwarfed worries about the impact of rising interest rates on the U.S. economy. European shares fell as banking sector jitters eclipsed upbeat earnings. Japanese shares fell, pressured by overnight declines on Wall Street. The U.S. dollar slipped, while gold prices stuck to a narrow range as traders strapped in for U.S. economic data for further guidance on the Federal Reserve's monetary policy stance. Oil was mixed as falling U.S. inventories lifted the U.S. WTI price while the Brent benchmark steadied as the market took stock of weak U.S. data that raised fears of recession in the world's biggest economy. Durable goods data for March is scheduled for release at 8:30 a.m. ET. Meta Platforms Inc is set to report results after market close.
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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