Crude Rises Ahead of OPEC+ Meeting on Production Levels
SECTOR COMMENTARY:
Energy stocks as well as broader U.S. stock futures nudged higher early Thursday as Wall Street looked to build on a solid March following the rollout of President Joe Biden’s infrastructure plan. The move in futures came after Biden introduced his multitrillion-dollar infrastructure proposal. The plan includes spending on roads and bridges as well as green energy and water system upgrades.
WTI and Brent are moderately higher, trading near their morning lows ahead of the OPEC+ ministerial meeting today to decide on production levels from May. Reports indicated several OPEC+ nations would like to rollover existing production cuts.
Natural gas is down nearly 1% ahead of inventory data that is expecting a build of +20 Bcf. It would be the first injection since week-ended 13-November. Bloomberg reports JKM LNG prices are at a 6-week high, above $7/mmbtu for the first time since February.
According to Reuters, Exxon Mobil expects rising first-quarter results across its three major businesses, with an at least $2 billion improvement from prices for oil and gas driving profits, the company signaled in a securities filing on Wednesday. The filing, detailing factors that affected the business, showed higher oil prices sequentially lift its oil and gas operating results by between $1.6 billion and $2 billion over the fourth quarter. Natural gas pricing added another up to $700 million to operating profit, it indicated. The filing also signaled a gain of as much as $1 billion in refining from better margins and unsettled derivatives. Exxon's chemicals business is seen recording an up to $600 million boost over fourth quarter results in its chemicals business from better margins.
According to Reuters, Exxon Mobil expects to restore its contribution to the U.S. employee retirement savings plan this year and does not plan another major set of layoffs, Chief Executive Darren Woods told employees in a meeting this week. The top U.S. oil producer last year slashed project spending and reduced output as it incurred a historic loss of $22.4 billion. Deep cuts included suspending its match for the 401(k) plan and launching job cuts to reduce its global employee and contractor headcount by about 15%.
Earthstone Energy announced that it has entered into definitive agreements to acquire privately held operated assets located in the Midland Basin from Tracker Resource Development III, LLC and an affiliate and from affiliates of Sequel Energy Group LLC, which hold well-bore interests in certain of the producing wells operated by Tracker. The aggregate purchase price of the Tracker Acquisition is approximately $126.5 million consisting of $81.6 million in cash, subject to customary closing adjustments, and 6.2 million shares of Earthstone’s Class A common stock valued at $44.9 million based on a closing share price of $7.24 on March 30, 2021. The effective date of the Tracker Acquisition will be March 1, 2021, with closing anticipated early in the third quarter of 2021.
Reuters reported that Boru Energy, backed by private equity giant Carlyle Group, is in discussions with Occidental Petroleum to acquire its oil and gas fields in Ghana for around $500 million, industry and banking sources said.
ARC Resources and Seven Generations Energy announced that the shareholders of each company have voted in favour of the proposed business combination to create the premier Montney producer and leader in responsible energy development. The Business Combination is expected to be completed on or about April 6, 2021 and is subject to the satisfaction of all closing conditions.
BTIG initiated coverage of Helix Energy Solutions with a Neutral rating.
TechnipFMC provided an update on the Share Purchase Agreement with Bpifrance Participations SA related to its recent separation into two industry-leading, independent, publicly traded companies – TechnipFMC and Technip Energies.Bpifrance, a substantial shareholder of TechnipFMC since 2009, has agreed to an investment of $100 million in Technip Energies, which has been acquired from TechnipFMC’s retained stake in Technip Energies. The shares acquired by Bpifrance through this investment are in addition to those received through the dividend distribution made at the time of separation to all shareholders of TechnipFMC. The investment reflects Bpifrance’s commitment as a long-term reference shareholder of Technip Energies. The sale of shares to Bpifrance reduced the Company’s ownership in Technip Energies to 82.3 million ordinary shares. TechnipFMC’s current stake in the new company was valued at $1.2 billion as of the market close on March 31, 2021.
BTIG initiated coverage of TechnipFMC with a Buy rating.
BTIG initiated coverage of Dril-Quip with a Neutral rating.
Simmons Energy downgraded Phillips 66 to Neutral from Overweight.
JPMorgan downgraded Crestwood Equity Partners to Neutral from Overweight.
JPMorgan upgraded DCP Midstream to Overweight from Neutral.
According to Reuters, Inter Pipeline said it has adopted a limited-purpose shareholder rights protection plan, weeks after investment firm Brookfield Infrastructure Partners said it was committed to its C$7.1 billion hostile takeover offer.
Wall Street futures were in green as chipmakers gained, while investors awaited weekly jobless claims data. European stocks traded higher, shrugging off concerns over another lockdown order in France. Japan's Nikkei ended higher with focus on semiconductor outlook and hopes over roboust corporate earnings. Gold prices rose as yields eased and the dollar slipped. Oil rise on hopes that OPEC and its allies will keep production curbs in place when they meet. Data for weekly jobless claims and manufacturing are scheduled for release.
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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