Crude Oil Climbs on Covid Vaccine Rollout Progress
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The energy sector is poised for a mixed to higher start, backed by strength in both the crude complex while major equity indices seesawed as investors weighed swift global vaccine roll outs and stimulus expectations against weak economic data.
After three consecutive days of declines, WTI and Brent crude oil futures bounced higher this morning, backed by rising expectations that OPEC+ producers might decide against increasing output when they meet this week and progress in the coronavirus vaccine rollout in the United States. Ahead of their meeting tomorrow, Reuters reported that OPEC+ Is considering rolling over production cuts from March into April rather than raising output. The gains came despite last night’s API report showing U.S. crude stocks rose by 7.4 million barrels last week, in stark contrast to analysts' estimates for a draw of 928,000 barrels. The build however occurred while U.S. refining capacity was shut during the survey week because of cold weather in Texas.
Natural gas futures continued to build on yesterday’s momentum, supported by cooling forecasts in key consuming regions for the first half of March.
US INTEGRATEDS | INTERNATIONAL INTEGRATEDS | CANADIAN INTEGRATEDS | U.S. E&PS | CANADIAN E&PS | OILFIELD SERVICES | DRILLERS | REFINERS | MLPS & PIPELINES |
According to Reuters, Exxon Mobil said it will cut about 7% of its workforce at its Singapore affiliate as "unprecedented market conditions" due to the COVID-19 pandemic accelerate ongoing reorganization. About 300 positions will be impacted by the end of 2021, the oil major said. Exxon Mobil has more than 4,000 employees in Singapore.
ExxonMobil outlined its plans through 2025 to increase earnings and cash flow to sustain and grow its dividend, reduce debt and fund advantaged projects, while working to commercialize lower emission technologies in support of the goals of the Paris Agreement. ExxonMobil plans capital spending of $16-$19 billion in 2021 and $20-$25 billion per year through 2025 on high-return, cash-accretive projects. Spending plans can be modified to reflect market conditions, as illustrated by successful efforts to preserve the value of investment opportunities while reducing capital spending by more than 30 percent in 2020 as a result of the pandemic. The company also reduced cash operating expenses by 15 percent in 2020 and expects permanent structural savings of $6 billion a year by the end of 2023 versus 2019. Future spending plans take into account potential market volatility as the economy recovers from the pandemic. To grow shareholder value through the transition to a lower carbon economy, ExxonMobil has focused its extensive research and development portfolio on technologies to address hard to de-carbonize sectors of the economy responsible for approximately 80 percent of energy-related emissions -- commercial transportation, power generation and heavy industry.
According to Reuters, Petrobras said that four of its board members would leave at the end of their terms, requesting not to be reappointed after President Jair Bolsonaro decided to replace the company's chief executive. Petroleo Brasileiro SA disclosed messages from the board members in a securities filing stating their reasons for effectively resigning. After complaining about high fuel prices, Bolsonaro has appointed Joaquim Silva e Luna, a retired military officer who had been running the Itaipu hydroelectric dam on the border with Paraguay, to replace Chief Executive Roberto Castello Branco. The move revived old concerns over government interference in Petrobras and its fuel pricing policy, as has happened under previous administrations. Branco will officially step down at a shareholders meeting, whose date has yet to be set. The four board members would also step down at that time.
Suncor Energy remains focused on maintaining the financial health and resiliency of the company. Consistent with its debt management and reduction strategy, Suncor announces the expected repayment of short-term commercial paper with the net proceeds from the issue of the Notes, the early cancellation of the bi-lateral credit facilities that were entered into to ensure access to adequate financial resources in connection with the COVID-19 pandemic and the early repayment of debt maturities due later in 2021. Suncor announced that it has priced an offering of US$ 750 million in aggregate principal amount of senior unsecured notes due on March 4, 2051. The 2051 US Notes will have a coupon of 3.750%. Suncor also announces today that it priced CAD$ 500 million of senior unsecured Series 8 Medium Term Notes due on March 4, 2051. The 2051 Canadian Notes will have a coupon of 3.950%. Both offerings are expected to close on March 4, 2021, subject to customary closing conditions. Neither offering is contingent on the closing of the other offering.
Comstock Resources announced that, subject to market conditions, it intends to offer an additional $250.0 million aggregate principal amount of its 6.75% senior notes due in 2029 in a private placement to eligible purchasers.
Murphy Oil announced that it has priced an offering of $550 million of 6.375% Senior Notes due 2028 pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission.
NuVista Energy announced reserves, financial and operating results for the three months and year ended December 31, 2020. The company reported quarterly earnings per share of C$3.17 and adjusted funds flow per share of C$0.22. It also reported quarterly petroleum and natural gas revenues of C$124.4 MILLION. Capital spending for 2021 has been increased to a range of $230 - $250 million from original range of $180 - $200 million. 2021 production guidance is re-affirmed at 50,000 - 52,000 boe/d.
Paramount Resources reported 2020 annual results. Annual sales volumes averaged 68,340 Boe/d (39% liquids) in 2020. Fourth quarter 2020 sales volumes averaged 73,460 Boe/d (42% liquids), ahead of guidance of 70,000 to 72,000 Boe/d. Cash from operating activities was $81 million in 2020 and $53 million in the fourth quarter. Adjusted funds flow in 2020 was $150 million or $1.12 per share. Fourth quarter 2020 adjusted funds flow was $68 million or $0.51 per share. Capital spending in 2020 totaled $221 million, below guidance of $225 million. Fourth quarter 2020 capital spending was $65 million, resulting in free cash flow of $3 million in the quarter. In addition, the Company's capital budget for 2021 is expected to range between $230 million and $260 million, excluding land acquisitions and abandonment and reclamation activities.
Mizuho downgraded Black Hills to Neutral from Buy.
ION Geophysical Corporation announced that the Company has secured more than $20 million in backstop support for its rights offering. This was a critical milestone in the bond restructuring process, as the supporting bondholders had conditioned their participation in the upcoming bond exchange offer on the Company securing this amount of backstop support.
Oceaneering International announced that John R. Huff will retire as a member and Chairman of the Board of Directors immediately following the 2021 Annual Meeting of Shareholders, and T. Jay Collins will succeed Mr. Huff as Chairman. Mr. Huff will continue to support the Board of Directors as Chairman Emeritus for a transitional period.
Patterson-UTI Energy reported that for the month of February 2021, the Company had an average of 69 drilling rigs operating. For the two months ended February 28, 2021, the Company had an average of 68 drilling rigs operating.
Shawcor announced the appointment of Michael E. Reeves as the new President of Shawcor. Stephen M. Orr, will continue to serve as the Chief Executive Officer of the Company. This change is part of Shawcor’s ongoing management succession planning.
Smart Sand announced results for the fourth quarter and full year ended December 31, 2020. Revenues were $25.3 million in the fourth quarter of 2020, compared to third quarter 2020 revenues of $23.4 million. For the fourth quarter of 2020, the Company had a net loss of $2.9 million, or $(0.07) per basic and diluted share, compared to net income of $36.3 million, or $0.91 per basic and diluted share for the third quarter of 2020, and net income of $2.4 million, or $0.06 per basic share and diluted share, for the fourth quarter 2019.
No significant news.
Calumet Specialty Products Partners reported results for the fourth quarter ended December 31, 2020. For the fourth quarter 2020, the Partnership's $82.1 million Net loss, or $1.03 of net loss per unit, included a $7.0 million favorable net impact related to the non-cash lower of cost or market inventory adjustments and the liquidation of last-in, first-out inventory layers. Excluding the impact of LCM, LIFO and other non-cash and non-recurring items, Adjusted net loss and Adjusted net loss per unit were $69.8 million and $0.89 per unit, respectively. The Partnership's $(8.6) million of Adjusted EBITDA for the fourth quarter of 2020 excluded the favorable net impact of LCM and the liquidation of LIFO layers.
TC Energy and TC PipeLines announced that they have completed the previously announced merger pursuant to an Agreement and Plan of Merger dated December 14, 2020. The Merger resulted in TC Energy acquiring all of the outstanding publicly-held common units of TCP and TCP becoming an indirect, wholly owned subsidiary of TC Energy.
U.S. stock index futures gained, tracking global equities, on hopes of a rebound in economic growth on faster vaccinations and record stimulus support. The dollar fell as investor sentiment improved and government bond yields extended their losses. Oil prices rose, boosted by expectations that OPEC+ producers might decide against increasing crude output. Gold prices slipped.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 – CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 – Bloomberg Day Break – Steady escalation of US-Iran tensions
- 12/5/19 – Bloomberg Balance of Power – OPEC's Limited Efficacy
- 9/17/19 – Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 – Discussion on Bloomberg TV about Impact of Abqaiq Attack
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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