Markets

Traders Await EIA Report

Wednesday, August 08, 2018

Sector Commentary

The energy sector is poised for a lower start, weighed down by pressure in the crude complex while the major equity futures were flat on rising trade tensions with China. Another round of mixed to weaker earnings results from the producers is dominating sector headlines this morning but traders will be looking to the EIA report later today.

On the earnings front, Pioneer Natural Resources posted a 72% drop in quarterly profit after the close yesterday, hurt by higher costs and a derivative loss of $170 million but also provided a tepid outlook for third-quarter production, despite increasing its spending budget for the year. Additionally, Cimarex Energy reported a mixed 2Q with EPS and CFPS below expectations as oil production missed consensus and issued a lower-than-expected FY guidance. After the miss, the company was then downgraded to "Neutral" from "Overweight" by JP Morgan.

WTI crude oil futures are down over 1% in early trading, trailing Brent which is seeing more reserved losses. Futures on both sides of the Atlantic slipped this morning amid relatively weak Chinese import data and despite a bullish API report last night and the recent introduction of sanctions against Iran. China's crude imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a drop-off in demand from the country's smaller independent, or "teapot", refineries. The API data last night had US crude/Cushing stockpiles declining last week and significantly more than expected while gasoline stock rose more than anticipated.

Natural gas futures continued to build on yesterday's gains this morning, jumping amid expectations that the recent heat wave would keep the amount of gas available to go into storage low, despite record production.

U.S. E&PS

Press Release - Abraxas Petroleum reported net loss of $10.6 million, or $0.06 per share. Its adjusted net income was $3.2 million, or $0.02 per share.

JPMorgan downgraded Cimarex Energy to 'Neutral' from 'Overweight'.

(Late Tuesday) Press Release - Cimarex Energy reported second quarter 2018 net income of $141.0 million, or $1.48 per share, compared to $97.3 million, or $1.02 per share, in the same period a year ago. Second quarter adjusted net income (non-GAAP) was $151.9 million, or $1.59 per share, compared to second quarter 2017 adjusted net income (non-GAAP) of $101.0 million, or $1.06 per share. Net cash provided by operating activities was $321.2 million in the second quarter of 2018 compared to $255.3 million in the same period a year ago. Adjusted cash flow from operations (non-GAAP) was $349.5 million in the second quarter of 2018 compared to $278.8 million in the second quarter a year ago.

Press Release - Comstock Resources reported a net loss of $34.0 million or $2.22 per share for the second quarter of 2018 as compared to a net loss of $21.4 million or $1.45 per share for the second quarter of 2017.

(Late Tuesday) Press Release - Continental Resources announced second quarter operating and financial results. The Company reported net income of $242.5 million, or $0.65 per diluted share, for the quarter ended June 30, 2018. The Company's net income includes certain items typically excluded by the investment community in published estimates, the result of which is referred to as "adjusted net income." In second quarter 2018, these typically excluded items in aggregate represented $30.4 million, or $0.08 per diluted share, of Continental's reported net income. Adjusted net income for second quarter 2018 was $272.9 million, or $0.73 per diluted share.

(Late Tuesday) Press Release - Extraction Oil & Gas reported net income of $8.8 million, or $0.03 per basic and diluted share, compared to net income of $7.2 million, or $0.02 per basic and diluted share, for the same period in 2017. Adjusted EBITDAX, Unhedged was $189.5 million for the second quarter, up 154% year-over-year and up 14% sequentially. Adjusted EBITDAX was $153.1 million for the second quarter, up 105% year-over-year and up 9% sequentially.

Press Release - Matador Resources announced that it has priced a private offering of $750 million of 5.875% senior unsecured notes due 2026. The notes will be issued at par. Matador increased the size of the offering from the previously announced $700 million to $750 million. The offering is expected to close on August 21, 2018, subject to customary closing conditions.

Press Release - Northern Oil and Gas announced that it has entered into two additional independent, separately negotiated exchange agreements with holders of its 8% senior unsecured notes due 2020.

(Late Tuesday) Press Release - Parsley Energy said that during 2Q18, net income attributable to its stockholders of $119.2 million, or $0.44 per share, compared to net income attributable to its stockholders of $82.9 million, or $0.32 per share, during 1Q18. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, and adding back the non-controlling interest allocated to Class B stockholders, adjusted net income for 2Q18 was $106.4 million, or $0.39 per share, compared to $81.1 million, or $0.31 per share, in 1Q18.((4))

(Late Tuesday) Press Release - Penn Virginia recorded net loss of $2.5 million, or $0.17 per diluted share, for the second quarter of 2018; Adjusted net income was $37.4 million, or $2.46 per diluted share, for the second quarter of 2018.

Press Release - Pioneer Natural Resources reported second quarter net income attributable to common stockholders of $66 million, or $0.38 per diluted share. Without the effect of noncash mark-to-market derivative losses of $170 million after tax, or $0.99 per diluted share, and asset divestiture related net charges of $7 million, or $0.04 per diluted share, adjusted income for the second quarter was $243 million after tax, or $1.41 per diluted share.

RBC Capital Markets downgraded Sanchez Energy to 'Sector Perform' from 'Outperform'.

OILFIELD SERVICES

GMP Securities upgraded Ensign Energy Services to 'Hold' from 'Reduce'.

(Late Tuesday) Press Release - NCS Multistage Holdings is pleased to announce that it has entered into a 5-year frame agreement with Aker BP ASA for well-stimulation services on the Norwegian Continental Shelf. Work to be performed under the agreement is subject to individual purchase orders. Following a recent Valhall well completion that incorporated NCS's Multistage Unlimited pinpoint hydraulic fracturing technology, Aker BP issued purchase orders for additional wells that are expected to be completed in late 2018 and 2019.

(Late Tuesday) Press Release - NCS Multistage Holdings reported that revenues were $43.4 million for the quarter ended June 30, 2018, an increase of $6.5 million or 18% as compared to the second quarter of 2017.

(Late Tuesday) Press Release - Oil States International announced that its Board of Directors elected Robert "Bob" L. Potter as Chairman of the Board, following the resignation of Mark G. Papa as Director and Chairman.

DRILLERS

Canaccord Genuity upgraded Trinidad Drilling to 'Buy' from 'Hold'.

(Late Tuesday) Press Release - For the three and six months ended June 30, 2018, Trinidad Drilling recorded adjusted EBITDA of $33.0 million and $70.8 million, respectively, an increase of 125.0% and 7.5%, respectively, compared to the prior year.

REFINERS

(Late Tuesday) Press Release - Delek US Holdings announced financial results for its second quarter ended June 30, 2018. Delek US reported second quarter 2018 net income of $79.1 million, or $0.89 per diluted share, versus net loss of $(37.9) million, or $(0.61) per basic share, for the quarter ended June 30, 2017. On an adjusted basis, Delek US reported net income of $89.0 million, or $1.03 per diluted share for the second quarter 2018. This compares to adjusted net loss of $(25.0) million, or $(0.40) per basic share, in the prior-year period. Delek US announced that its Board of Directors had declared its regular quarterly cash dividend of $0.25 per share. Shareholders of record on August 21, 2018 will receive this cash dividend payable on September 4, 2018.

MLPS & PIPELINES

(Late Tuesday) Press Release - DCP Midstream reported net income attributable to partners of $61 million and $123 million for the three and six months ended June 30, 2018, or $0.07 and $0.15 per basic and diluted limited partner unit, respectively. Its generated distributable cash flow was$166 million and $337 million for the three and six months ended June 30, 2018, resulting in a distribution coverage ratio of 1.08 and 1.09 times, respectively.

Press Release - LINN Energy reported quarterly revenue of $128.8 million and quarterly diluted share of $0.06.

(Late Tuesday) Press Release - LINN Energy announced that it has completed the previously announced spin-off of Riviera Resources, Inc. from LINN.

(Late Tuesday) Press Release - Pembina Pipeline announced that its Board of Directors declared a common share cash dividend for August 2018 of $0.19 per share to be paid, subject to applicable law, on September 14, 2018 to shareholders of record on August 24, 2018.

(Late Tuesday) Reuters - Plains All American Pipeline reported quarterly net income per common unit of $0.07 and adjusted net income per common unit of $0.38.

(Late Tuesday) Press Release - Western Gas Partners announced that it has priced an offering of $400 million in aggregate principal amount of 4.75% senior notes due 2028 at a price to the public of 99.818% of their face value and $350 million in aggregate principal amount of 5.50% senior notes due 2048 at a price to the public of 98.912% of their face value. The offering of the senior notes is expected to close on August 9, 2018, subject to the satisfaction of customary closing conditions.

MARKET COMMENTARY

Wall Street futures were little changed as strong earnings were offset by trade war fears which drove Chinese stocks down. Meanwhile, weak earnings kept European shares in check. Oil prices were slightly lower after relatively weak Chinese crude import data. The dollar rally faded, and gold prices were little changed.

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 . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.