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Oil

Oil Trading Near Flatline Following Last Night’s API Print

SECTOR COMMENTARY: 

The energy sector is set for a slightly lower start, pressured by weakness in the major equity futures which are lower as investors wait for the release of January’s PCE data tomorrow morning. 

WTI and Brent crude oil futures are trading near the flatline following last night’s API print which showed a sizable build in crude stocks and as market participants await economic data to assess the path for interest rate cuts. U.S. crude stocks showed an 8.43 million barrel build in the week ending Feb. 23, which surpassed expectations of a 1.8 million barrel build. Federal Reserve Governor Michelle Bowman signaled on Tuesday that she was in no rush to cut U.S. interest rates, particularly given continuing inflation risks. Meanwhile, the possibility of OPEC+ extending voluntary oil output cuts is lending support. 

Natural gas futures rebounded this morning after touching their lowest levels in nearly four years following the expiry of the March contract yesterday, despite forecasts for milder weather.

BY SECTOR:

US INTEGRATEDS

According to Reuters, Hess said that a pre-emption provision does not apply to its proposed $53-billion buyout by Chevron and it remains "fully committed" to the deal. On Monday, Exxon Mobil said it may preempt Chevron's acquisition of a 30% stake in a giant Guyana oil block, the centerpiece of the deal. 

INTERNATIONAL INTEGRATEDS

According to Bloomberg, BP Plc plans to invest about $1.5 billion in Egypt during the next few years as it seeks to develop gas projects and drilling in the North African country. The spending, which will be net to BP, follows the London-based major’s announcement earlier this month it will form a gas-focused joint venture in Egypt with Abu Dhabi National Oil Co.

According to Reuters News, Glencore is looking at buying Shell's oil refinery and petrochemical units in Singapore as the oil major seeks a buyer for the sites after earlier suitors dropped out, several industry and trading sources said. Glencore is working jointly with Indonesia's PT Chandra Asri Petrochemical to evaluate the assets, two of the sources said.

Aligned with its mission to enhance motorists’ journeys, Shell Oman Marketing Company has unveiled the new and improved Shell V-Power, the latest iteration of its premium fuel line, now available in Oman. This premium/performance fuel is designed to effectively clean up to 100% of critical engine components, providing optimum engine performance* for drivers.

TotalEnergies Marketing Canada, a subsidiary of TotalEnergies, announced the signing of a commercial partnership with Boss Lubricants, a Canadian company based in Calgary (AB) and a leader in the manufacture and distribution of lubricant products since 1992. Boss Lubricants operates 11 branches from Vancouver to Toronto, supported by its own sales teams, warehousing and transport capabilities. As part of the agreement, Boss Lubricants will be responsible for the distribution of the full range of TotalEnergies lubricant products, as well as local logistics to serve our brand customers in British Columbia, Alberta, Yukon, Manitoba and Saskatchewan.

According to Reuters, global liquefied natural gas demand continues to grow in 2024 with top buyer China back in the market and consumption in Europe rising, although prices will remain volatile as new supply will take time to come online, a TotalEnergies executive said. 

CANADIAN INTEGRATEDS 

No significant news.

U.S. E&PS

California Resources reported financial and operating results for the fourth quarter and full-year 2023. The Company reported fourth quarter net cash from operating activities of $131 million and free cash flow1 of $65 million. Net income for the period was $188 million, or $2.60 per diluted share of common stock, and adjusted net income was $67 million, or $0.93 per diluted share. Adjusted EBITDAX was $179 million. CRC’s 2024 guidance estimates exclude the pending merger with Aera. The Company intends to update guidance after the transaction closes. CRC expects its total 2024 capital program to range between $300 million and $340 million assuming normal operating conditions. Of this amount, $250 million to $260 million is related to oil and natural gas development, $30 million to $40 million is related to maintenance of one of its gas processing facilities and a power plant, both of which are located in CRC's Elk Hills field, $15 million to $25 million is for carbon management projects and $5 million to $15 million is for corporate and other activities. On February 27, 2024, CRC's Board of Directors declared a quarterly cash dividend of $0.31 per share of common stock. The dividend is payable to shareholders of record on March 6, 2024 and will be paid on March 18, 2024.

Civitas Resources reported its fourth quarter and full-year 2023 financial and operating results, as well as provided its 2024 outlook. Fourth Quarter 2023 Highlights: net income of $303 million and adjusted EBITDAX of $763 million; net cash provided by operating activities of $843 million and free cash flow of $215 million; fixed-plus-variable dividend, to be paid in March 2024, of $1.45 per share. The Company maintained its previously-provided 2024 production guidance and decreased its estimated 2024 capital expenditures by $150 million. The improvement in capital efficiency is primarily driven by optimized activity levels, enhanced well productivity, and reduced cycle times. Approximately 60% of total investments are planned to be allocated to the Permian Basin, with the remainder to the DJ Basin. The Company expects to drill and complete 130 to 150 gross wells in the Permian Basin and 90 to 110 gross wells in the DJ Basin. The majority of activity in the DJ Basin will be focused in the Watkins area, which is benefiting from higher well productivity. Capital expenditures and activity levels will be more weighted to the first half of the year, and production volumes are expected to increase modestly through the year. The Company's Board of Directors approved a quarterly dividend of $1.45 per share, payable on March 28, 2024 to shareholders of record as of March 15, 2024. The amount reflects the combination of the base dividend of $0.50 per share and a variable dividend of $0.95 per share.

Civitas Resources announced the execution of a definitive agreement to repurchase approximately 876 thousand shares of its common stock at a price of $64.54 per share from NGP Tap Rock Holdings and certain of its affiliates. The transaction was approved by the Company’s Board of Directors, and the repurchase is expected to close in early March 2024. Following the transaction, NGP will no longer own any shares of Civitas. NGP’s original ownership in Civitas was established through Civitas’ mid-2023 acquisition of Tap Rock Resources.

Carbon TerraVault provided an update on its 2023 operations. California Resources Corporation conducts its carbon management business through Carbon TerraVault which pursues carbon capture and sequestration projects that are directly sited or within close proximity to significant sources of carbon dioxide (CO2) emissions in California.

Devon Energy reported financial and operational results for the fourth-quarter and full-year 2023. Devon reported net earnings of $1.2 billion, or $1.81 per diluted share, in the fourth quarter of 2023. Adjusting for items analysts typically exclude from estimates, the company’s core earnings were $902 million, or $1.41 per diluted share. Devon has reaffirmed its previously issued outlook for production and capital in 2024. The company plans to sustain oil production at around 315,000 barrels per day, with total volumes approximating 650,000 Boe per day. The capital requirements to deliver this production are expected to decline approximately 10 percent year-over-year to a range of $3.3 billion to $3.6 billion. Based on the fourth-quarter financial performance, Devon declared a fixed-plus-variable dividend of $0.44 per share, payable on March 28, 2024, to shareholders of record at the close of business on March 15, 2024. The dividend payout consists of the board’s approval to increase the fixed dividend by 10 percent to $0.22 per share and a variable distribution of $0.22 per share. The company also accelerated the return of capital to shareholders through the continued execution of its $3 billion share-repurchase program. In the fourth quarter, Devon repurchased 5.2 million shares at a total cost of $234 million. With this repurchase program, the company is on track to reduce its outstanding share count by up to 9 percent.

Ovintiv announced its fourth quarter and year-end 2023 financial and operating results. The Company recorded full year net earnings of $2,085 million, or $7.90 per diluted share of common stock. Included in net earnings were income tax expense of $425 million and net gains on risk management of $151 million, before tax. Fourth quarter net earnings totaled $856 million, or $3.11 per diluted share of common stock. Included in net earnings were income tax expense of $211 million and net gains on risk management of $344 million, before tax. Full year capital investment of $2,744 million was below the full year 2023 guidance range of approximately $2,745 million to $2,785 million. Fourth quarter capital investment of $660 million was at the low end of the guidance range of approximately $660 million to $700 million. Ovintiv expects production in the first quarter to be the high point for the year, with oil and condensate volumes expected to average 208 to 212 Mbbls/d. On February 27, 2024, Ovintiv's Board declared a quarterly dividend of $0.30 per share of common stock payable on March 28, 2024, to shareholders of record as of March 15, 2024.

Permian Resources announced its fourth quarter and full year 2023 financial and operational results and 2024 operational plans. For the fourth quarter 2023, the Company reported net cash provided by operating activities of $846 million and adjusted free cash flow of $332 million (cash capital expenditures), or $0.47 per adjusted basic share. It delivered total return of capital of $183 million, or $0.24 per share: quarterly base dividend of $0.05 per share; variable dividend of $0.10 per share and repurchased 5.0 million shares for $67 million at an average weighted price of $13.32 per share.

Permian Resources announced that its Board of Directors declared a quarterly base cash dividend of $0.05 per share of Class A common stock, or $0.20 per share on an annualized basis. Additionally, the Board has declared a quarterly variable cash dividend of $0.10 per share of Class A common stock. Combined, the base and variable dividends represent a total of $0.15 per share. The base and variable dividends are payable on March 21, 2024 to shareholders of record as of March 13, 2024.

CANADIAN E&PS

News.

OILFIELD SERVICES

Chart Industries reported results for the fourth quarter and full year ended December 31, 2023. Record fourth quarter 2023 backlog of $4.28 billion was supported by record fourth quarter 2023 orders of $1.21 billion. Full year pro forma 2023 orders of $4.50 billion included approximately $385 million of global Big LNG related orders. Fourth quarter 2023 sales were a record of $1.02 billion. When compared to the fourth quarter 2022, sales increased $113 million or 12.5%, and $117 million or 13% compared to the third quarter 2023. Fourth quarter 2023 reported operating income of $156.0 million was a record and represented 15.4% of sales. Adjusting for unusual or one-time items primarily related to the Howden integration, adjusted operating income was $213.4 million which represents 21.0% of sales. Reported diluted earnings per share for the fourth quarter 2023 was $0.88 and when adjusted for one-time costs, adjusted diluted EPS was $2.25. The Company anticipates full year 2024 sales to be in a range of $4.7 to $5.0 billion with forecasted full year 2024 adjusted EBITDA in the range of $1.175 to $1.30 billion. Reported free cash flow guidance of $575 to $625 million is defined as operating cash flow less capital expenditures. Capital expenditures are forecast in a range of $115 to $125 million. The Company anticipated 2024 full year adjusted EPS range is $12.00 to $14.00. This range is based on a tax rate of approximately 20% and a diluted share count of 47 to 48 million.

Oceaneering International announced that Ms. Reema Poddar has been elected to its Board of Directors as an independent, non-executive director in Class I, effective as of February 22, 2024. Ms. Poddar has also been appointed to the Nominating, Corporate Governance and Sustainability Committee of the Board. Her initial term of office will extend until Oceaneering’s Annual Meeting of Shareholders in 2026. 

TETRA Technologies announced fourth quarter and total year 2023 results. Fourth quarter 2023 revenue of $153 million increased 1% from the third quarter of 2023 reflecting the early production facility sale in Argentina, partially offset by lower than usual onshore year-end activity in the United States and some customer year-end inventory de-stocking for our industrial chemicals business. Net loss before discontinued operations was $4.2 million, inclusive of $8.0 million of non-recurring charges and expenses and compares to net income from continuing operations of $5.5 million in the third quarter of 2023, inclusive of $3.7 million of non-recurring charges and expenses. Net loss per share from continuing operations in the fourth quarter was $0.03 and compares to net income per share of $0.04 in the third quarter of 2023. Adjusted net income per share from continuing operations was $0.03 in the fourth quarter, which compares to $0.07 in the third quarter 2023.

Barclays initiated coverage of Weatherford International at Overweight. 

DRILLERS 

Diamond Offshore Drilling reported results for the fourth quarter of 2023. Revenue for the fourth quarter totaled $298 million compared to $245 million in the third quarter of 2023. Contract drilling expense for the fourth quarter was $189 million, or a $7 million increase from the prior quarter, largely due to higher charter rental costs associated with the managed rigs and the annual bonus expense related to the drillships' BOP service agreement.

REFINERS

Par Pacific reported its financial results for the fourth quarter and twelve months ended December 31, 2023. Par Pacific reported net income of $728.6 million, or $11.94 per diluted share, for the twelve months ended December 31, 2023, compared to $364.2 million, or $6.08 per diluted share, for the twelve months ended December 31, 2022. Full year 2023 net income includes a deferred income tax benefit of $126.2 million, primarily related to the release of valuation allowances on deferred tax assets. Adjusted Net Income for 2023 was $501.2 million, compared to $474.7 million for 2022. 2023 Adjusted EBITDA was $696.2 million, compared to $643.4 million for 2022. Par Pacific reported net income of $289.3 million, or $4.77 per diluted share, for the quarter ended December 31, 2023, compared to $84.7 million, or $1.40 per diluted share, for the same quarter in 2022. Fourth quarter 2023 net income includes a deferred income tax benefit of $126.2 million, primarily related to the release of valuation allowances on deferred tax assets. Fourth quarter 2023 Adjusted Net Income was $65.2 million, compared to $132.8 million in the fourth quarter of 2022. Fourth quarter 2023 Adjusted EBITDA was $122.0 million, compared to $174.9 million in the fourth quarter of 2022.

Par Pacific announced a leadership transition effective as of the Company’s May 2024 shareholders’ meeting. William Pate will retire as Chief Executive Officer at the upcoming annual shareholders’ meeting after eight years as leader of the rapidly growing energy company. The company’s Board of Directors unanimously appointed Will Monteleone to become the company’s President and Chief Executive Officer. Monteleone has been with Par Pacific for more than a decade and has served in several leadership positions for the company. Pate and Monteleone will each continue to serve as members of the company’s Board of Directors.

Vertex Energy announced its financial results for the fourth quarter ended December 31, 2023. Vertex reported fourth quarter 2023 net loss attributable to the Company of ($63.9) million, or ($0.84) per fully-diluted share, versus net income attributable to the Company of $44.4 million, or $0.07 per fully-diluted share for the fourth quarter of 2022. Adjusted EBITDA was ($35.1) million for the fourth quarter 2023, compared to Adjusted EBITDA of $75.2 million in the prior-year period. For the full-year 2023, the Company reported a net loss attributable to the Company of ($71.5) million versus ($4.8) million for the full-year 2022, largely attributable to losses in the Renewables segment due to elevated costs for Refined, Bleached and Deodorized soybean oil feedstock, and increased corporate segment expenses for overhead to support business expansion. The Company also reported Adjusted EBITDA of $17.1 million, versus $161.0 million for the full years 2023 and 2022, respectively. 

MLPS & PIPELINES

The Awilco LNG Group (Awilco LNG ASA together with its subsidiaries) reported unaudited results for the three months ended December 31, 2023. Awilco LNG achieved the best ever quarterly net result of USD 14.9 million and earnings per share of USD 0.11 in the fourth quarter, up from a net result of USD 3.3 million and USD 0.03 per share in the third quarter 2023. The result for the year 2023 ended at an all-time high of USD 38.2 million and USD 0.29 per share. Net freight income of USD 22.2 million in fourth quarter 2023, up from USD 14.8 million in third quarter 2023. Net freight income for the year 2023 ended at USD 79.4 million. EBITDA in fourth quarter 2023 ended at USD 22.8 million, up from USD 11.1 million in third quarter 2023. EBITDA for the year 2023 ended at USD 68.9 million. 

MARKET COMMENTARY

Wall Street futures ticked lower as investors braced for a key inflation report, scheduled later in the week, that could alter course for the Federal Reserve's interest rates policy. European shares were trading in the green as a raft of weak earnings weighed on sentiment. Japan's Nikkei ended slightly lower, easing back from an all-time peak hit in the previous session. Gold prices slipped as the dollar strengthened. Oil prices fell on a rise in U.S. crude stocks. The second estimate of the U.S. fourth-quarter gross domestic product is due for release later in the day.


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 Energy News

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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