Oil Up, Backed by CPI Data
SECTOR COMMENTARY:
The energy sector is poised for a higher start, supported by strength in the crude complex and in the major equity futures which surged higher as investors cheered the latest U.S. consumer price index report which came in lower than analysts expected. The 10-year Treasury yield also tumbled below 4.5% following the soft inflation report.
WTI and Brent crude oil futures extended their trend higher for the fourth-straight session, backed by the this morning’s CPI data, weakness in the dollar and another bullish supply report. Despite expecting a slowdown in economic growth in nearly all major economies, the IEA raised its oil demand growth forecasts for this year to 2.4 million bpd from 2.3 million bpd and lifted their 2024 forecast to 930,000 bpd from 880,000 bpd. The news adds to the bullish sentiment from the previous day's OPEC guidance, who made a slight upward revision to its forecast for 2023 global oil demand growth and stuck to its relatively high projection for 2024. A U.S. crackdown on Russian oil exports could also disrupt supply, supporting prices further this morning. The U.S. Treasury Department has sent notices to ship management companies requesting information about 100 vessels it suspects of violating Western sanctions on Russian oil, the biggest step by Washington since a price cap was imposed in an effort to restrict oil revenue to Moscow. In other news, the U.S. energy department plans to buy 1.2 million barrels of oil to help to replenish the SPR, a move which could further buoy demand. Also weighing on fundamentals, Iraq's oil minister expected to reach an agreement with the Kurdistan Regional Government and foreign oil companies to resume oil production from the Kurdish region's oilfields and resume northern oil exports through the pipeline.
After snapping a five-day losing streak in the prior session, natural gas futures resumed their slide lower this morning and are off ~0.75% in early trading, pressured by updated weather forecasts and lingering production concerns.
BY SECTOR:
US INTEGRATEDS
Indonesia's state energy company Pertamina said it had signed a joint study agreement with Chevron and United Arab Emirates' Mubadala Energy to explore geothermal potential in Indonesia's Kotamobagu city in North Sulawesi. The agreement was signed on the sideline of President Joko Widodo's visit to the United States, it said in a statement.
Oil output from Kazakhstan's giant oilfield Tengiz, operated by Chevron-led Tengizchevroil, will remain stable in 2024 from the 2023 plan, Kazakhstan's energy ministry said. Responding to a Reuters request, the energy ministry said that it forecasts oil output from Tengiz will reach 27.9 million metric tons this year (about 608,000 barrels per day), a similar level to 2023's output but around 4% below that of 2022. A Chevron spokesperson declined to comment on future output plans.
Chevron’s deal to buy Hess will unlock $15 billion worth of tax benefits that had once been relegated to the accounting dustbin, as the combined company takes advantage of Hess’s past losses to cut future payments, according to the company and tax experts.
Indonesia's state energy company Pertamina and U.S. oil majors Exxon Mobil and Chevron are moving ahead with their discussions to invest in carbon capture facilities while Exxon eyes a petrochemical project in the country. Pertamina and Exxon agreed to carry out further evaluations for $2 billion in investments in carbon capture and storage (CCS) facilities using two underground basins in the Java Sea, Pertamina said in a statement.
ExxonMobil started production at Payara, Guyana’s third offshore oil development on the Stabroek Block, bringing total production capacity in Guyana to approximately 620,000 barrels per day. The Prosperity floating, production, storage and offloading (FPSO) vessel is expected to reach initial production of approximately 220,000 barrels per day over the first half of next year as new wells come online. This additional capacity will be the third major milestone towards reaching a combined production capacity of more than 1.2 million barrels per day on the Stabroek Block by year-end 2027.
Operations at ExxonMobil's 619,024 barrel per day Beaumont, Texas refinery, the nation's second largest, were back to normal following a brief power interruption on Friday, said people familiar with plant operations. Multiple units, including a 180,000 bpd crude distillation unit (CDU) and the 120,000-bpd fluidic catalytic cracker (FCC), were affected by the power outage, according to a notice filed with the Texas Commission on Environmental Quality.
Indonesia's Coordinating Ministry for Maritime and Investment Affairs has signed an initial agreement with Exxon Mobil to explore potential investment in a petrochemical project in the country, the ministry said in a statement. The potential project is expected to produce polymer and may utilise carbon storage facility Exxon is currently reviewing with state oil company Pertamina, it added.
INTERNATIONAL INTEGRATEDS
National Energy Services Reunited (NESR) recognized its successful, ongoing collaboration with Saudi Aramco in implementing a novel Zero Liquid Discharge (ZLD) technology for water management. This technology, invented and owned by Saudi Aramco, aims to enhance produced water treatment and establish circular water economies across the energy value chain.
Saudi Aramco has produced the first unconventional tight gas from its South Ghawar operational area two months ahead of schedule, the company said in a statement. This development supports the world’s largest oil producer’s strategy to increase gas production by more than half, over 2021 levels, through 2030, subject to domestic demand. Commissioned facilities at South Ghawar have a 300 million standard cubic feet per day (scfd) of raw gas processing capacity and 38,000 barrels per day (bpd) of condensate processing capacity, the statement noted.
Pacific Green is happy to report that control of the first stage of the 99.8 MWh Richborough Battery Energy Park has been handed over to Shell Energy Europe Limited which will provide dispatch trading and optimisation services after testing is concluded.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Hess announced startup of production from the Payara development on the Stabroek Block offshore Guyana, utilizing the Prosperity floating production, storage and offloading (FPSO) vessel. The Prosperity is expected to reach its initial production of 220,000 gross barrels of oil per day over the first half of 2024 as new wells are brought online. Production capacity on the Stabroek Block is now approximately 620,000 gross barrels of oil per day. The Prosperity FPSO arrived in Guyana in April 2023. It is moored in water depth of about 6,300 feet and will develop an estimated resource base of more than 600 million barrels of oil.
Matador Resources announced initial production results from its 21 Margarita wells that were acquired in connection with the purchase of Advance Energy Partners Holdings, LLC in April 2023. In addition, Matador is pleased to announce that the lenders under San Mateo Midstream, LLC’s revolving credit facility have increased their commitments by $50 million from $485 million to $535 million.
Vital Energy announced the promotion of Katie Hill to Senior Vice President and Chief Operating Officer, effective November 13, 2023. Ms. Hill has been with Vital Energy since September 2022 and previously served as Vice President -Operations.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Baker Hughes announced the launch of its new PythonPipe portfolio, the latest in reinforced thermoplastic pipe (RTP) technology that enables faster installation, reduced time to first production and lower lifecycle emissions.
Shawcor its operational and financial results for the three and nine months ended September 30, 2023. Continuing Operations revenue was $225 million, operating income from continuing operations was $26 million and Adjusted EBITDA from continuing operations was $41 million; Discontinued Operations revenue was $289 million, operating income from discontinued operations was $80 million and Adjusted EBITDA from discontinued operations was $87 million, including the results from the Southeast Gateway Pipeline (“SGP”) project in Altamira, Mexico, for which coating operations were approximately 40% complete as of quarter end; On a consolidated basis, (including Continuing Operations and Discontinued Operations) Mattr reported Net Income of $72 million, Adjusted EBITDA of $128 million, fully diluted Earnings Per Share of $1.03 and fully diluted Adjusted EPS of $1.13.
Thermon Group Holdings will host its inaugural investor day in New York City today, Tuesday, November 14, 2023 starting at 9:00 a.m. EST. During the investor day, Thermon will update its financial goals for its fiscal year ending on March 31, 2026 as follows: a.Total Revenue: $600 million - $700 million; Non-Oil & Gas Revenue: ~70%; Adjusted EBITDA Margin: ~24%.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
Wall Street futures surged as investors digested this morning’s key U.S. inflation report for more clarity on the Federal Reserve's monetary policy outlook. European stocks gained, led by basic resources as Glencore touched a near two-week high. Meanwhile, Japan's Nikkei ended higher on expectations that domestic firms would continue posting solid outlook, with the yen hovering near a three-decade low against the dollar. Gold was little changed. Oil prices slid on demand worries based on slower economic growth in nearly all major economies.
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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