Crude Surges on COVID-19 Vaccine Hopes, Signal OPEC+ Deal Could be Adjusted
SECTOR COMMENTARY
Energy stocks are set to surge at the open, supported by significant gains in the crude complex and U.S. stock index futures which are set to break record highs following the announcement from Pfizer that their COVID-19 vaccine is more than 90% effective. At this time, Dow futures are up 1,500 points, or 5.5%, the S&P 500 is up 150 points, or 4.5%, while the NASDAQ in only up 1.50%.
Oil prices on both sides of the Atlantic are rallying more than 10% this morning, their highest daily rise in almost 6 month, on news that Pfizer’s COVID-19 vaccine is 90% effective, and Saudi Arabia said OPEC+ deal on output cuts could be adjusted to offset rising supply and weak demand. Also lending support to futures, the US dollar fell to a 10-week low.
Natural gas futures bucked the trend and are off slightly in early trading, as more mild weather in the next week across the U.S. should hurt demand.
INTERNATIONAL INTEGRATEDS
HSBC upgraded Royal Dutch Shell PLC to Buy from Hold.
Reliance Industries and Saudi Aramco are resuming talks over a 20% stake sale by the Indian conglomerate in its oil-to-chemical business after a brief pause due to COVID-19 pandemic.
CANADIAN INTEGRATEDS
Headwater Exploration announced it has entered into a definitive agreement withCenovus Energy for a transformational transaction to acquire 100% of Cenovus' assets in the Marten Hills area of Alberta for approximately $100 million. Pursuant to the Transaction, Headwater will acquire a 100% working interest in approximately 2,800 barrels per day of medium oil production and 270 net sections of Clearwater rights.
U.S. E&PS
Bonanza Creek Energy and HighPoint Resources announced that they have entered into a definitive merger agreement to combine Bonanza Creek and HighPoint in a transaction valued at approximately $376 million as of November 6, 2020.
Bonanza Creek Energy announced that its Board of Directors has adopted a Tax Benefits Preservation Plan designed to protect the availability of the Company’s existing net operating loss carryforwards and other tax attributes, which can potentially be utilized in certain circumstances to reduce the Company’s future income tax obligations.
Callon Petroleum Company announced that the counterparties to the privately negotiated debt exchange announced on November 2nd have agreed to exercise substantially all of the remaining capacity under the negotiated agreement. Under the terms of the upsized transaction, the Company will now exchange a total of $389 million of principal of the Company's existing unsecured senior notes for $217 million aggregate principal of new 9.00% Second Lien Notes due 2025, payable semi-annually, to be issued by Callon at a weighted average exchange ratio of approximately $557 per $1,000 of principal exchanged. Participants in the exchange will receive a total of 1.76 million warrants with a strike price of $5.60.
HighPoint Resources announced third quarter of 2020 financial and operating results, reporting a net loss of $16 million, or $3.72 per diluted share. Adjusted net income for the third quarter of 2020 was $17 million, or $4.01 per diluted share. EBITDAX for the third quarter of 2020 was $64 million.
On November 2, 2020, HighPoint Resources Corporation, as a guarantor, its wholly owned subsidiary, HighPoint Operating Corporation, as borrower, and the Borrower’s subsidiary entered into a Second Amendment to Fourth Amended and Restated Credit Agreement with certain lenders, including JPMorgan Chase Bank, N.A., as administrative agent. The Amendment amends the Borrower’s Fourth Amended and Restated Credit Agreement dated as of September 14, 2018. In connection with the Amendment and as part of our semi-annual redetermination of our borrowing base, the aggregate elected commitment amount was reduced from $300.0 million to $185.0 million, and the borrowing base was reduced from $300.0 million to $200.0 million.
Kosmos Energy announced the financial and operating results for the third quarter of 2020. For the quarter, the Company generated a net loss of $37 million, or $0.09 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss of $50 million or $0.12 per diluted share for the third quarter of 2020.
CANADIAN E&PS
Seven Generations Energy reported third quarter 2020 results and 2021 guidance. Third quarter drilling and completions costs averaged $6.5 million dollars per well, an 11% improvement relative to the per-well costs achieved in the first half of 2020. Its quarterly funds flow were $0.50 per share.
Vermilion Energy is pleased to report operating and condensed financial results for the three and nine months ended September 30, 2020 and the release of its 2020 Corporate Sustainability Report. Fund flows from operations in Q3 2020 was $115 million ($0.73/basic share), an increase of 40% from the prior quarter.
OILFIELD SERVICES
KBR has secured a $47 million recompete to assist the U.S. Navy's F/A-18 and EA-18G Program Office (PMA-265) with foreign military sales (FMS) to Kuwait and Finland. The Naval Air Warfare Center Aircraft Division (NAWCAD) awarded this cost-plus-fixed-fee contract.
HSBC upgraded TechnipFMC PLC to Buy from Hold.
MLPS & PIPELINES
National Bank of Canada downgraded Pembina Pipeline to Sector Perform from Outperform.
MARKET COMMENTARY
Wall Street futures pointed to a sharply higher open and world stocks hit a record high after President-elect Joe Biden was declared the winner in a highly contentious election. The dollar stabilized after tumbling to a 10-week low, while gold prices were in the negative territory. Oil prices rose, with Brent topping $40 a barrel, supported by Saudi oil minister’s comment that an OPEC+ deal on output cuts could be adjusted to offset rising supply and weak demand.
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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