Crude Steadies Ahead of OPEC Meeting
SECTOR COMMENTARY
US stocks look set to take a breather from yesterday’s record closing highs in the Dow and S&P 500 with Energy stocks also seeing profit-taking with flat oil prices. Sector news is very light with traders continuing to focus on the macro and vaccine-related news.
Oil benchmarks are off slightly ahead of OPEC's Joint Ministerial Monitoring Committee meeting this morning to discuss proposals of the OPEC Joint Technical Committee (JTC) who met yesterday. The JTC lowered their demand growth estimates for 2021 by 300K bpd vs last month to +6.2M bpd. In other bearish demand news, Equinor said that it expects global oil demand to peak around 2027 or 2028, which compares to their prior estimate of 2030 (and 105M bpd) as a result of the pandemic.
Natural gas futures are up slightly after falling 10% yesterday on temperature forecasts that continue to run warm.
U.S. INTEGRATEDS
PDI announced it is extending its 16-year partnership with Chevron. The longtime PDI customer will implement the next generation of PDI Envoy back office and head office software solutions to power its corporate-owned sites in the Asia Pacific (APAC) region.
RBC upgraded Chevron to Sector Perform from Underperform.
INTERNATIONAL INTEGRATEDS
BP notified officials in Chicago and the state of Illinois of possible layoffs affecting more than 250 salaried employees at the company’s offices, BP said in a statement. BP is also reviewing the organizational structure at its Whiting, Indiana, oil refinery 28 miles (45 km) southeast of Chicago. BP’s U.S. Pipelines and Logistics office is located in Chicago and the company has a technology campus in the nearby suburb of Naperville, Illinois.
RBC upgraded BP to Sector Perform from Underperform.
Saudi Aramco began marketing a five-tranche U.S. dollar-denominated bond sale on Tuesday, a document from one of the banks arranging the deal showed. The world's biggest oil producer gave initial price guidance of around 140 basis points (bps) over U.S. Treasuries (UST) for a 3-year tranche, around 155 bps over UST for 5-year bonds, around 175 bps over UST for 10-year notes, around 205 bps over UST for a 30-year tranche and around 230 bps over UST for 50-year bonds, the document showed.
U.S. E&PS
Morgan Stanley downgraded Concho Resources to Equal Weight from Overweight.
Morgan Stanley upgraded Devon Energy to Overweight from Equal Weight.
CANADIAN E&PS
Vermilion Energy announced changes to its senior leadership team. Mr. Michael Kaluza has stepped down as Executive Vice President and Chief Operating Officer, effective immediately. Mr. Dion Hatcher has been appointed to the newly created position of Vice President, North America. Mr. Darcy Kerwin has been appointed to the newly created position of Vice President, International & HSE where he will oversee Vermilion's Health, Safety and Environment efforts and be responsible for all of Vermilion's international operations. In lieu of filling the role of COO the company will rely on Mr. Hatcher and Mr. Kerwin to jointly fulfill the duties and continue to emphasize our focus on cost-control and safe, efficient, profitable operations.
Whitecap Resources confirmed that a cash dividend of Cdn. $0.01425 per common share in respect of November operations will be paid on December 15, 2020 to shareholders of record on November 30, 2020. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).
OILFIELD SERVICES
Subsurface Imaging, part of CGG’s Geoscience division, has been awarded two large-scale complex seismic reprocessing contracts by PTTEP. PTTEP is investing in the rejuvenation of pre-existing data sets from two regions offshore Malaysia by leveraging CGG’s recognized high-end imaging technology and long-standing processing experience in SE Asia. Over the course of the next year, CGG, through its offices in Kuala Lumpur, will conduct merged reprocessing of surveys from many vintages, including towed-streamer and OBC seismic data from offshore Sabah and Sarawak. The fast-track products are expected by mid-next year and final workstation products will be delivered by the end of 2021.
Natural Gas Services Group announced financial results for the three and nine months ended September 30, 2020. Total revenue for the three months ended September 30, 2020 decreased to $15.8 million from $20.9 million for the three months ended September 30, 2019. Net loss for the three months ended September 30, 2020 was $562,000 compared to a net loss of $12.6 million for the three months ended September 30, 2019. Excluding Impairment and Other Non-Cash Charges, adjusted net income was $967,000 in the third quarter of 2019. For the third quarter of 2020, the Company reported a loss per diluted share of $0.04 compared to loss per diluted share of $0.96 in the third quarter of 2019. Excluding Impairment and Other Non-Cash Charges, the company’s adjusted earnings per diluted share was $0.07 in the third quarter of 2019.
HSBC downgraded Petrofac to Reduce from Hold.
MLPS & PIPELINES
BofA upgraded Cheniere Energy to Buy from Neutral.
Summit Midstream Partners announced that substantially all closing conditions to the previously announced consensual Term Loan restructuring transaction involving its wholly owned, indirect subsidiary, Summit Midstream Partners Holdings, LLC have been satisfied. Lenders collectively holding 100% of the aggregate principal amount of claims, including the approximately $155.2 million in principal amount outstanding, under SMP Holdings' Term Loan have consented to the TL Restructuring and, at closing, will receive their pro rata shares of consideration consisting of $26.5 million of cash and approximately 2.3 million SMLP common units currently pledged as collateral under the Term Loan (which have been adjusted to properly reflect the recent 1-for-15 reverse SMLP common unit split) in full satisfaction of SMP Holdings' outstanding obligations under the Term Loan.
Targa Resources Partners announced its monthly distribution on the Partnership’s 9.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units for November 2020. Per the original terms of the Series A Preferred Units, effective November 1, 2020, distributions on the Series A Preferred Units converted from a fixed rate to an annual floating rate equal to the one-month LIBOR plus a spread of 7.71%.
TC Energy and Natural Law Energy (NLE) announced they have signed a definitive agreement which allows NLE to make an equity investment of up to $1 billion in the Keystone XL pipeline project. The first phase of the transaction is expected to close in the third quarter of 2021, with the transaction contingent on NLE securing financing. The agreement also contemplates NLE pursuing an interest in future Liquids projects.
MARKET COMMENTARY
Futures tracking the S&P 500 and the Dow were down, after the indexes closed at record highs in the previous session following news of another promising COVID-19 vaccine. European stocks were lower as tighter coronavirus-driven restrictions across the continent hit travel stocks. Asian equities ended higher. The euro climbed against the dollar, while gold prices were little changed. Oil edged lower with investors focusing on updates from OPEC and its allies on tightening supplies. The U.S. retail sales numbers and industrial production data are scheduled to release later in the day.
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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