Oil Trading Higher for Second Consecutive Session on OPEC+ Decision to Maintain Production Policy
SECTOR COMMENTARY:
The energy sector is poised for a mixed to lower start, looking past mild strength in the crude complex and pressured by weakness in the major equity indices. U.S. stock index futures slipped as investors cautiously waited for the Federal Reserve's decision on interest rates later in the day and after ADP reported private payrolls grew 106,000 in January.
WTI and Brent crude oil futures are trading higher for the second consecutive session, as the market digested the decision by OPEC+ to make no recommendation to change the group’s existing production policy in its latest meeting, according to three delegates. The OPEC+ Joint Ministerial Monitoring Committee, which tracks the alliance’s compliance with its output quota, convened digitally on Wednesday. The second OPEC+ technical group, the Joint Technical Committee that studies market fundamentals, canceled a virtual meeting originally scheduled for Jan. 31, according to a delegate. Following the release of the API report, data showed U.S. crude stocks rose 6.3 million barrels, putting a cap on futures.
Natural gas futures are down in early trading as warmer forecasts for the second week of February were offset by news Freeport LNG took additional steps towards a restart.
BY SECTOR:
US INTEGRATEDS
The White House on Tuesday expressed outrage at Exxon Mobil record net profit in 2022 of $56 billion, a historical high not just for the company but for the entire Western oil industry.
INTERNATIONAL INTEGRATEDS
BP announced that on 31 January 2023 it has purchased, in accordance with the authority granted by shareholders at the 2022 Annual General Meeting of the Company, a total of 3,107,923 of its ordinary shares of $0.25 each on the London Stock Exchange and Cboe (UK) as part of the buyback programme announced on 1 November 2022.
Eni is discussed with Norwegian private equity firm HitecVision a sale of a stake in its retail and renewables unit Plenitude, according to sources with knowledge of the talks.
The feasibility study of the 1 GW H2BE hydrogen project, which assessed the technical and economic suitability of a potential location at Engie's site at Rodenhuize in Ghent (Belgium), has been completed. ENGIE and Equinor have decided to sign a joint development agreement (JDA), progress H2BE to the next development phase and further mature towards concept selection in 2023.
Horisont Energi announced Fertiberia as a new partner to join the Barents Blue project. The previous partners Equinor and Vår Energi leaves the project as the cooperation agreement expired on 31 January.
According to SEC Filing, Petrobras received 347 million reais from Shell related to earnout of Atapu Block in 2022.
According to SEC Filing, Petrobras Co has received 132 million reais as a victim-beneficiary of a collaboration agreement.
Shell has been accused of misleading investors over its renewable energy spending plans in a complaint filed with the U.S. securities regulator by activist group Global Witness.
Audax Renovables signed market access agreement with Shell Energy in Spain.
TotalEnergies has started up commercial operation of a 51-megawatt (MW) solar power plant located in Tsu, Mie Prefecture, Japan.
CANADIAN INTEGRATEDS
Suncor Energy said a small leak that was detected in refining process equipment has been contained at its 103,000 barrel-per-day Commerce City refinery in Colorado.
Veritas Research downgraded Imperial Oil to Sell.
U.S. E&PS
Diamondback Energy announced that it has completed its previously announced acquisition of all leasehold interests and related assets of Lario Permian, LLC, a wholly owned subsidiary of Lario Oil & Gas Company, and certain associated sellers.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
TechnipFMC announced that Robert G. Gwin, former President of Anadarko Petroleum Corporation, has been appointed to its Board of Directors, effective February 1, 2023. The Company also announced that Peter Mellbye will retire from the Board and will not stand for re-election at the Company’s next annual general meeting.
TechnipFMC has been awarded a large integrated Engineering, Procurement, Construction, and Installation (iEPCI) contract by Aker BP for its Utsira High development.
DRILLERS
Noble announced changes to its share capital. During the period since December 30, 2022, 122 new A ordinary shares each with a nominal value of USD 0.00001 have been issued and 270,098 A ordinary shares have been cancelled.
Transocean announced that the ultra-deepwater drillship, Dhirubhai Deepwater KG2, has been awarded a 910-day contract by a national oil company for work offshore Brazil. The estimated backlog of $392 million excludes a mobilization fee of 90 times the contract dayrate.
REFINERS
PBF Energy's 156,400 barrel-per-day capacity refinery in Martinez, California responded to a fire around noon, according to a social media post by the company.
Vertex Energy announced that it has sold its Heartland used motor oil collection and recycling business to a wholly owned subsidiary of GFL Environmental, Inc. ("GFL"), for total cash consideration of $90 million. The transaction was completed pursuant to the entry into a sale and purchase agreement which closed at the time of signing, on February 1, 2023.
Valero Energy and Darling Ingredients announced that the companies have made the final investment decision on a Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant, which is owned and operated by Diamond Green Diesel Holdings LLC, a 50/50 joint venture between Valero and Darling. Upon completion of the project, which is expected in 2025, the DGD Port Arthur plant will have the capability to upgrade approximately 50 percent of its current 470 million gallon annual production capacity to SAF. The project’s estimated cost is $315 million, with half of that attributable to Valero. With the completion of this project, DGD is expected to be one of the largest SAF manufacturers in the world.
The Board of Directors of Valero Energy has approved an increase in the company’s regular quarterly cash dividend on common stock from $0.98 per share to $1.02 per share. The dividend is payable on March 16, 2023 to holders of record at the close of business on February 14, 2023. The increase in the dividend raises the annualized cash dividend rate on Valero’s common stock to $4.08 per share.
MLPS & PIPELINES
Enterprise reported net income attributable to common unitholders of $5.5 billion, or $2.50 per unit on a fully diluted basis for 2022, compared to $4.6 billion, or $2.10 per unit on a fully diluted basis for 2021. Net income for 2022 and 2021 was reduced by non-cash, asset impairment charges of approximately $53 million, or $0.02 per fully diluted unit, and $233 million, or $0.11 per fully diluted unit, respectively.
NuStar Energy announced its highest fourth quarter net income and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the company’s history, along with strong full-year 2022 results fueled by record-breaking volumes in its Permian Crude System and strong performance in its Fuels Marketing Segment. NuStar reported net income of $92 million for the fourth quarter of 2022, or $0.18 per unit, compared to net income of $58 million, or $0.19 per unit, for the fourth quarter of 2021. Results for the fourth quarter of 2022 include a $16 million gain from insurance proceeds to rebuild tanks at its Selby terminal. Earnings per unit (EPU) for the fourth quarter of 2022 also included a $0.31 per unit premium related to the repurchase of a portion of the Series D preferred units. Excluding the effects of these items, adjusted net income was $75 million for the fourth quarter of 2022, or $0.34 per unit, compared to adjusted net income of $52 million, or $0.14 per unit, for the fourth quarter of 2021.
TC Energy announced updated cost estimates for the Coastal GasLink Project (the Project). TC Energy said it now estimates costs for completion of its troubled Coastal GasLink project to be C$14.5 billion ($10.89 billion) from C$11.2 billion pegged earlier.
MARKET COMMENTARY
Wall Street futures traded lower as investors awaited the outcome of the Federal Reserve's first policy meeting this year. European shares edged higher as industrial stocks gained and market showed signs of economic resilience. In Asian equities, Japan's Nikkei ended flat, while Chinese stocks rose on the first day of February, as the country's manufacturing activity showed an improvement. Oil prices rose ahead of the OPEC+ meeting and the U.S. government data on crude and fuel stockpiles to be released later in the day. Gold prices were a little changed, while the dollar slipped. ISM manufacturing PMI for U.S. and job openings data are due later in the day. Meta Platforms is expected to report its fourth-quarter results after market closes.
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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