Oil Trading Lower Despite OPEC+ Leaving Production Policy Unchanged
SECTOR COMMENTARY:
The energy sector is poised for a mixed to lower start pressured by weakness in the crude complex amid mixed performances in the major equity futures. U.S. stock index futures pared early morning gains after a stronger-than-expected jobs report dampened hopes that the U.S. Federal Reserve could start cutting interest rates early this year. A Labor Department report showed non-farm payrolls rose by 353,000 in January, compared with 180,000. Meanwhile, the unemployment rate stayed steady at 3.7% in January from the month before. Economists had forecast a rise to 3.8%.
In earnings news, Exxon Mobil posted a better-than-expected $36 billion profit for 2023, lifted by fuels trading and higher oil and gas production. Exxon increased its quarterly dividend by 4%. Meanwhile, Chevron Corp beat analysts' earnings estimates and increased dividends on higher oil and gas production, after a year of sharply lower profits on missteps and charges.
WTI and Brent crude oil futures are trading lower for the third-consecutive session, despite the OPEC+ group's decision to leave its production policy unchanged, keeping benchmarks on track for weekly losses on China economic growth fears and efforts to establish a ceasefire in the Middle East. OPEC+ will decide in March whether or not to extend voluntary oil production cuts in place for the first quarter following a ministerial panel meeting where no changes were made to the group's output policy. Elsewhere, Mediators are awaiting a response from Hamas to a proposal drafted last week with Israeli and U.S. spy chiefs and passed on by Egypt and Qatar for the war's first extended ceasefire.
Natural gas futures are swinging in and out of negative territory as the NOAA's 6-10 day forecast shows above-normal temps east of the Rockies, especially across the middle and upper-MS Valley, and the Great Lakes region.
BY SECTOR:
US INTEGRATEDS
Chevron reported earnings of $2.3 billion ($1.22 per share - diluted) for fourth quarter 2023, compared with $6.4 billion ($3.33 per share - diluted) in fourth quarter 2022. Included in the current quarter were $1.8 billion of U.S. upstream impairment charges and $1.9 billion of decommissioning obligations from previously sold assets in the U.S. Gulf of Mexico. Foreign currency effects decreased earnings by $479 million. Adjusted earnings of $6.5 billion ($3.45 per share - diluted) in fourth quarter 2023 compared to adjusted earnings of $7.9 billion ($4.09 per share - diluted) in fourth quarter 2022. See Attachment 4 for a reconciliation of adjusted earnings. The company’s Board of Directors declared an 8 percent increase in the quarterly dividend to one dollar and sixty-three cents ($1.63) per share, payable March 11, 2024, to all holders of common stock as shown on the transfer records of the corporation at the close of business on February 16, 2024.
Exxon Mobil announced fourth-quarter 2023 earnings of $7.6 billion, or $1.91 per share assuming dilution. Fourth-quarter results included unfavorable identified items of $2.3 billion including a $2.0 billion impairment as a result of regulatory obstacles in California that have prevented production and distribution assets from coming back online. Impairments were partly offset by favorable tax and divestment-related items. Earnings excluding identified items were $10.0 billion, or $2.48 per share assuming dilution. For the full year 2023, the company reported earnings of $36.0 billion, or $8.89 per share assuming dilution. The Corporation declared a first-quarter dividend of $0.95 per share, payable on March 11, 2024, to shareholders of record of Common Stock at the close of business on February 14, 2024. Including the 4% increase in fourth-quarter dividend, the company has increased its annual dividend for a peer-leading 41 consecutive years.
Exxon Mobil said activist investors were withdrawing a climate proposal the oil giant sought to block from being voted on during the company's shareholder meeting in May.
INTERNATIONAL INTEGRATEDS
BP has not determined how quickly it can restart its 435,000 barrel-per-day Whiting, Indiana refinery hours after a transformer failure caused a plant-wide power outage, two people familiar with plant operations said.
The board of BP announced that Kate Thomson has been appointed bp chief financial officer and will join bp's board, both with immediate effect. Kate has been interim chief financial officer since September 2023.
According to Reuters, Indonesia's Energy and Mineral Resources Ministry signed a memorandum of understanding with Italy's energy company Eni to accelerate decarbonisation programmes in the Southeast Asian country. The deal covers development of bio-feedstock for fuels, energy transition initiatives and possible carbon capture projects.
TotalEnergies restarted the cogeneration unit and was working to clear the coker ahead of restarting production at its 238,000-barrel-per-day (bpd) Port Arthur, Texas refinery, people familiar with plant operations said.
CANADIAN INTEGRATEDS
Imperial reported estimated net income in the fourth quarter of $1,365 million and cash flow from operating activities of $1,311 million, compared to net income of $1,601 million and cash flow from operating activities of $2,359 million in the third quarter of 2023. Excluding the impacts of working capital1, cash flow from operating activities was $1,799 million, compared to $1,946 million in the third quarter. Fourth quarter results reflect strong operating performance, which was more than offset by weaker commodity prices. Full-year estimated net income was $4,889 million with cash flow from operating activities of $3,734 million. Excluding the impacts of working capital1, full-year cash flow from operating activities was $6,435 million.
Imperial Oil Limited declared a quarterly dividend of 60 cents per share on the outstanding common shares of the company, payable on April 1, 2024, to shareholders of record at the close of business on March 4, 2024.
U.S. E&PS
Gran Tierra Energy announced that it has priced its offering of an additional $100 million aggregate principal amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 in a private placement to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended, to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act, and pursuant to certain prospectus exemptions in Canada.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
NOV reported fourth quarter 2023 revenues of $2.34 billion, an increase of seven percent compared to the third quarter of 2023 and an increase of 13 percent compared to the fourth quarter of 2022. Net income for the fourth quarter of 2023 was $598 million, which included the release of valuation allowances on deferred tax assets of $485 million. Operating profit was $161 million, or 6.9 percent of sales, for the fourth quarter. Under Other Items the Company recorded a net pre-tax charge of $55 million. Adjusted EBITDA increased 10 percent sequentially to $294 million, or 12.5% percent of sales.
Baker Hughes announced that the Baker Hughes Board of Directors declared an increased quarterly cash dividend of $0.21 per share of Class A common stock payable on Feb. 23, 2024, to holders of record on Feb. 13, 2024. In line with our stated goal to responsibly grow the dividend over time, the dividend increase reflects a 5% growth rate, or $0.01, over the previous quarter’s dividend and an 11% increase, or $0.02, compared to the same quarter last year.
Secure Energy Services announced it has closed the previously announced transaction with Waste Connections, Inc. to sell the facilities formerly owned by Tervita Corporation that were ordered to be divested by the Competition Tribunal. The Transaction will be completed by R360 Environmental Solutions Canada Inc., an affiliate of Waste Connections, Inc.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
After strong quarterly earnings from Meta Platforms and Amazon.com which have boosted Nasdaq futures, all eyes will be on the crucial nonfarm payrolls report due later in the day. European shares climbed as traders assessed a flurry of upbeat corporate updates from the region. Chinese stocks slumped with the Shanghai benchmark index logging its worst week in five years amid signs of panic selling and forced liquidation of some trades. The dollar traded in a tight range, while gold prices were flat. Oil prices rose following the OPEC+ group's decision to keep its production policy unchanged.
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 Rich Pontillo.
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Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.
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