Crude Flat on Expectations that OPEC+ Will Keep Supply Tight
SECTOR COMMENTARY:
Energy stocks are poised for a mixed to higher start, weighed down by weakness in the broader index futures which fell on weak earnings from Apple and Amazon, while oil prices trade near the flat line. Earnings are in focus across the sector today, which will dictate individual stock performance.
Exxon Mobil posted its highest quarterly profit in nearly four years, powered by surging oil and gas prices and higher margins from motor fuels demand. Meanwhile, Chevron also posted its highest quarterly profit in eight years on the back of surging oil and gas prices that have touched multi-year highs while a recovery fuel boosted refining margins.
Oil futures are trading near the flat line and within sight of a multi-year high hit this week, as expectations that OPEC and its allies will keep supply tight countered rising U.S. inventories and the prospect of more Iranian exports. Futures are tracking a weekly decline.
Natural gas futures are down 3.0% to $5.606, following more mild temperature forecasts for next week, higher production, and LNG feedgas flows approaching all-time highs.
BY SECTOR:
US INTEGRATEDS
Chevron reported earnings of $6.1 billion ($3.19 per share - diluted) for third quarter 2021, compared with a loss of $207 million ($(0.12) per share - diluted) in third quarter 2020. Included in the current quarter were asset sale gains of $200 million and pension settlement costs of $81 million. Foreign currency effects increased earnings by $305 million. Adjusted earnings of $5.‘7 billion ($2.96 per share - diluted) in third quarter 2021 compares to adjusted earnings of $340 million ($0.18 per share - diluted) in third quarter 2020.
Exxon Mobil announced estimated third-quarter 2021 earnings of $6.8 billion, or $1.57 per share assuming dilution. Revenue rose 59.7% to $73.79 billion from a year ago and quarterly adjusted earnings was $1.58 per share. Third-quarter capital and exploration expenditures were $3.9 billion, bringing year-to-date 2021 investments to $10.8 billion, as the company continued strategic investments in its advantaged assets, including Guyana, Permian Basin, and in Chemical. Oil-equivalent production in the third quarter was 3.7 million barrels per day.
INTERNATIONAL INTEGRATEDS
Eni said its profits in the third quarter jumped back to pre-Covid levels to beat expectations, boosted by higher gas prices, Reuters reported. The group swung to an adjusted net profit of 1.431 billion euros ($1.67 billion), from a 153 million euro loss a year earlier, outstripping a 1.08 billion euro consensus. The group said it expected production this year to be almost 1.7 million barrels of oil equivalent per day compared to 1.688 mboe/d in the third quarter.
Petrobras beat profit and margin estimates in the third quarter, according to a figures released on Thursday night, as strong sales and proceeds from asset disposals buoyed the company's performance, Reuters reported. Petroleo Brasileiro SA, as the state-run firm is formally known, posted a net income of 31.14 billion reais ($5.34 billion), well above the Refinitiv estimate of 20 billion reais. Earnings before interest, taxes, depreciation and amortization, or EBITDA, came in at 60.74 billion reais.
According to Reuters, Royal Dutch Shell Plc’s storm-idled 230,611 barrel-per-day (bpd) Norco, Louisiana, plans to begin restarting the crude distillation unit (CDU), gasoline- and diesel-producing units as early as this weekend, sources familiar with plant operations said on Thursday. The restarts of the 240,000-bpd DU-5 CDU, 112,000-bpd gasoline-producing residual catalytic cracking unit (RCCU) and 40,000-bpd diesel-producing hydrocracker will continue into next week, the sources said.
CANADIAN INTEGRATEDS
Imperial Oil reported estimated net income in the third quarter of $908 million or $1.29 per share on a diluted basis and cash flow from operating activities of $1,947 million, up from net income of $366 million and cash flow from operating activities of $852 million in the second quarter of 2021. During the quarter, Imperial returned $508 million to shareholders through dividend payments and share repurchases, with year-to-date shareholder returns now exceeding $2 billion. The company also declared a fourth quarter dividend of 27 cents per share.
U.S. E&PS
Bonanza Creek Energy announced its third quarter 2021 financial results. During the third quarter of 2021, the Company reported average daily sales of 43.7 MBoe/d. The Company's production guidance for the third quarter 2021 had been a range of 41 to 44 MBoe/d with oil representing 48% to 52% of total volumes. Net oil and gas revenue for the third quarter of 2021 was $190.0 million compared to $156.0 million for the second quarter of 2021. The increase was a result of higher oil, natural gas, and NGL realized prices. GAAP net income for the third quarter was $40.7 million. Adjusted EBITDAX was $116.5 million, or $3.74 per diluted share.
JPMorgan upgraded EQT to Overweight from Neutral.
Extraction Oil & Gas reported certain preliminary financial and operational results for the third quarter of 2021. The company achieved average net sales volumes of 74 MBoe/d, including 25 MBbl/d of crude oil and 21 MBbl/d of NGLs. Crude oil, natural gas and NGL sales revenue was $261 million for the third quarter of 2021 compared to $158 million for the third quarter of 2020 for the Predecessor company1 representing an increase of $103 million, driven primarily by higher crude oil, natural gas and NGL prices.
SM Energy announced operating and financial results for the third quarter 2021. Third quarter 2021 net income was $85.6 million, or $0.69 per diluted common share, compared with a net loss of $(98.3) million, or $(0.86) per diluted common share, for the same period in 2020. The current year period benefited from 46% higher oil production and a 118% increase in the realized price per Boe before the effects of hedges, leading to a 169% increase in revenue. Higher revenue in the current year period was partially offset by a $209.1 million net derivative loss, compared with a net derivative loss of $63.9 million in the prior year period and by a $41.0 million charge to other operating expense for various legal settlements. Third quarter 2021 adjusted net income was $91.5 million, or $0.74 per diluted common share, compared with adjusted net loss of $(5.5) million, or $(0.05) per diluted common share, for the same period in 2020.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Balchem reported GAAP net earnings were $25.0 million, an increase of $3.4 million, or 16.0% from the prior year. These net earnings resulted in GAAP earnings per share of $0.77. Adjusted net earnings were $30.0 million, an increase of $3.1 million or 11.3% from the prior year. These adjusted net earnings resulted in adjusted earnings per share of $0.92. Net sales were $197.9 million, an increase of $22.7 million, or 13.0%, compared to the prior year quarter, with record third quarter sales in all three segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.
Fluor announced that it has signed a memorandum of understanding (MOU) with Bulgarian Energy Holding EAD for the consideration of new nuclear units in Bulgaria. Bulgarian Energy Holding is comprised of a group of companies engaged in the electricity generation, supply and transmission, natural gas transmission, supply and storage and coal mining market in Bulgaria.
Secure Energy Services reported the Corporation's operational and financial results for the three months ended September 30, 2021. Record results with Adjusted EBITDA of $105 million in the third quarter, up 184% compared to Q3 2020, and up 47% on a per share basis, demonstrating the strength and scale of the combined business. Net loss attributable to shareholders was $22 million- an increase of $17 million compared to the third quarter of 2020.
U.S. Silica Holdings announced a net loss of $20.0 million, or $0.27 per diluted share, for the third quarter ended September 30, 2021. This compared with net income of $26.0 million, or $0.34 per diluted share, for the second quarter of 2021 which benefited from a pre-tax customer settlement of $48.9 million.
DRILLERS
Dril-Quip reported operational and financial results for the third quarter of 2021.Consolidated revenue for the third quarter of 2021 was $83.0 million, up $2.2 million from the second quarter of 2021 and down $8.3 million from the third quarter of 2020.For the third quarter of 2021, the Company reported net loss of $11.1 million, or $0.31 per share, compared to a net loss of $19.1 million, or $0.54 per share, for the second quarter of 2021 and net income of $14.3 million, or $0.41 per diluted share, for the third quarter of 2020.
REFINERS
No significant news.
MLPS & PIPELINES
Holly Energy Partners, L.P. announced that Mark Cunningham has notified the Board of Directors of Holly Logistic Services, L.L.C., the ultimate general partner of HEP, that he will retire as Senior Vice President, Operations and Engineering of HEP in February 2022. Mr. Cunningham joined HEP in 2004 and held roles of increasing responsibility prior to his appointment to his current role. In connection with Mr. Cunningham’s retirement, his responsibilities will be transferred to four individuals at the company, effective January 1, 2022. To assist with the transition of his responsibilities, Mr. Cunningham has agreed to serve as a consultant for a 12 month period following his retirement.
Phillips 66 Partners announced third-quarter 2021 earnings of $242 million, or $1.00 per diluted common unit. Cash from operations was $338 million, and distributable cash flow was $268 million. Adjusted EBITDA was $367 million in the third quarter, compared with $337 million in the prior quarter. On Oct. 19, 2021, the general partner’s board of directors declared a third-quarter 2021 cash distribution of $0.875 per common unit, or $3.50 per unit on an annualized basis.
Shell Midstream Partners, L.P. reported net income attributable to the Partnership of $127 million for the third quarter of 2021, which equated to $0.29 per diluted common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $145 million. Total cash available for distribution was $122 million, which is $64 million lower than the prior quarter.
MARKET COMMENTARY
Wall Street futures were lower as results from mega-cap firms Apple and Amazon reignited concerns of labor and supply shortages that have been at the forefront of this quarterly earnings season. Asian indexes ended lower and European shares were also trading in the red. The Euro slipped against the dollar a day after the European Central Bank struck a dovish note at a policy meeting while gold prices fell. Oil rose as expectations OPEC and its allies will keep supply tight countered rising U.S. inventories and the prospect of more Iranian exports.
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.
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