Markets

Weakness Across Underlying Commodities Weighing Down On Energy Sector

Wednesday, June 06, 2018

Sector Commentary

The energy sector is poised for a lower start, weighed down by weakness across the underlying commodities as well as the major equity indices following hawkish comments from the European Central Bank.

In deal news, Devon Energy Corp announced plans to sell its interests in EnLink Midstream to an affiliate of fund manager Global Infrastructure Partners for $3.13 billion in cash, in line with their company strategy to simplifying its asset portfolio and returning cash to shareholders. Upon closing of the EnLink transaction, Devon also said it will increase their share repurchase program by $3 billion, up from its previously announced $1 billion.

WTI and Brent crude oil futures are both down over 0.50% in early trading but off session lows. Futures on both sides of the Atlantic initially fell off reports that the U.S. government had asked Saudi Arabia and some other producers to increase output while a lrager than expected draw for crude in last night's API report and news that Venezuela raised the prospect of a halt to some crude exports, helped buoy declines. Traders will be looking toward the EIA data later today to show crude stocks fell 1.8mm barrels last week while refined products are expected to show a build.

Natural gas futures were flat to lower in early trading, driven by broader commodity and equity market weakness mixed with mild weather forecasts that should keep demand limited.

U.S. INTEGRATEDS

Press Release - Equinor sold a 36.5% interest in BM-S-8 to ExxonMobil and a 3% interest to Galp. In return Equinor has received payments totalling around USD 955 million, with further payments of around USD 595 million contingent on future milestones.

Press Release - ExxonMobil said it completed the purchase of half of Equinor's interest in the BM-S-8 block offshore Brazil, which contains part of the 2-billion-barrel, pre-salt Carcara oil field.

INTERNATIONAL INTEGRATEDS

Press Release - Equinor sold a 36.5% interest in BM-S-8 to ExxonMobil and a 3% interest to Galp. In return Equinor has received payments totalling around USD 955 million, with further payments of around USD 595 million contingent on future milestones.

(Late Tuesday) Reuters - Petroleo Brasileiro said in a securities filing an appeals court has suspended the sale of gas pipeline company Transportadora Associada de Gás, known as TAG.

Reuters - Repsol said it expects to increase production to 750,000 barrels per day in 2020, and raise its dividend to 1 euro per share over the next two years.

Societe Generale downgraded Royal Dutch Shell to 'Hold' from 'Buy'.

(Late Tuesday) Reuters - A planned overhaul of the gasoline-producing unit at Royal Dutch Shell 's 227,586-barrel-per-day Convent, Louisiana, refinery was fully under way on Tuesday.

Press Release - Total and Sonangol signed a framework agreement for the future joint venture to jointly develop a network of service stations, including petroleum product logistics and supply, in Angola.

U.S. E&PS

Press Release - Devon Energy announced it has entered into an agreement to sell its aggregate ownership interests in EnLink Midstream Partners, and EnLink Midstream, LLC to an affiliate of Global Infrastructure Partners for $3.125 billion. In conjunction with this sale agreement, Devon's board of directors has increased the size of the company's share-repurchase authorization to $4 billion.

Press Release - EQT Corp intends to sell its oil and gas assets located in the Huron Shale Play, West Virginia, the US. The assets include non-core production and related gathering and pipeline assets.

(Late Monday) Press Release - The Board of Directors of Hess Corp declared a regular quarterly dividend of 25 cents per share payable on the Common Stock of the Corporation on June 29, 2018 to holders of record at the close of business on June 18, 2018.

Press Release - The Board of Directors of Hess Corp declared a quarterly cash dividend of $20 per share on the Company's 8.00% Series A Mandatory Convertible Preferred Stock, which is equivalent to $1.00 per depositary share, each representing 1/20(th) interest in a share of Series A preferred stock. The dividend is payable on August 1, 2018 to holders of record at the close of business on July 15, 2018.

Press Release - ShaMaran Petroleum entered into an agreement to acquire an additional 15% working interest in the production sharing contract-Atrush Block located in Kurdistan Region, Iraq, and certain other assets from Marathon Oil KDV BV, a wholly-owned subsidiary of Marathon Oil Corp , for a purchase consideration of US$60 million, subject to final closing adjustments.

Press Release - Northern Oil and Gas announced that Roy "Ernie" Easley, Senior Vice President - Exploration and Development of CH4 Energy, has been appointed to Northern's board of directors.

CANADIAN E&PS

Press Release - Arrow Exploration entered into a share purchase agreement to acquire Carrao Energy from Canacol Energy for a purchase consideration of US$40 million, subject to customary adjustments.

OIL SERVICES

Press Release - TechnipFMC has been awarded a contract by Woodside to upgrade the Pluto Platform Offshore for water treatment, located offshore Western Australia.

MLPS & PIPELINES

Stifel Nicolaus downgraded DCP Midstream Partners to 'Hold' from 'Buy'.

Press Release - Energy Transfer Partners announced the pricing of its $500 million aggregate principal amount of 4.20% senior notes due 2023, $1.0 billion aggregate principal amount of 4.95% senior notes due 2028, $500 million aggregate principal amount of 5.80% senior notes due 2038 and $1.0 billion aggregate principal amount of 6.00% senior notes due 2048 at a price to the public of 99.926%, 99.819%, 99.647% and 98.900%, respectively, of their face value.

Press Release - Devon Energy announced it has entered into an agreement to sell its aggregate ownership interests in EnLink Midstream Partners , and EnLink Midstream, LLC to an affiliate of Global Infrastructure Partners for $3.125 billion. In conjunction with this sale agreement, Devon's board of directors has increased the size of the company's share-repurchase authorization to $4 billion.

Stifel Nicolaus resumed EnLink Midstream Partners at 'Hold'.

Press Release - Government of Alberta agreed to acquire the Trans Mountain Pipeline System and Trans Mountain Expansion Project located in Canada, from Kinder Morgan Canada Ltd, a midstream company and a subsidiary of Kinder Morgan, Inc. , for a purchase consideration of approximately C$4,500 million.

MARKET COMMENTARY

Wall Street looked set to open higher, tracking global markets, as technology stocks continued to gain. European shares were up, although investors were cautious amid concerns over Italian spending, and Asian equities ended in the green. The euro rallied after hawkish comments from European Central Bank officials. Oil prices edged lower and gold was down.

NASDAQ ENERGY TEAM IN THE NEWS

CNBC "Squawk Box"

Oil price decline 'temporary', says pro

May 31, 2018

Tamar Essner, Nasdaq Corporate Solutions energy director, provides her outlook on oil as prices decline amid production volatility.

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.