Energy Sector Looks To Kick Off New Week On Higher Note
MONDAY, JULY 06, 2020
SECTOR COMMENTARY
The energy sector is poised for a higher start, backed by some mild, choppy strength in the crude complex and a surge in the major equity futures which gained following the extended holiday weekend on reports from China’s state media that stoked bets on China leading the revival from a coronavirus-driven downturn and helped investors look past a surge in new cases of COVID-19 at home.
WTI crude oil futures seesawed in early trading, trailing Brent which was up over ~1% at the start of the session, supported by tighter supplies and positive economic data while domestic futures dropped on concern that a spike in coronavirus cases could cause another curb in fuel demand.
Natural gas futures are up over 4% ahead of the open, off session highs, backed by forecasts calling for above-average temperatures across the nation that should spur demand.
INTERNATIONAL INTEGRATEDS
(Friday) Reuters - Petrobras has begun the binding phase in the sale process of its 10% remaining stake in gas pipeline firm Nova Transportadora do Sudeste SA (NTS), it said in a securities filing. "Potential buyers classified for this phase will receive an invitation letter with detailed instructions on the divestment process," the company said. Petroleo Brasileiro SA, as the firm is formally known, said the transaction is in line with its strategy to streamline its portfolio and better allocate capital.
Reuters - Saudi Aramco has raised official selling prices (OSPs) to all destinations for its Arab light crude, the company said in a statement. Saudi Arabia set the official selling price to Asia at plus $1.20 a barrel versus Oman/Dubai average and to United States at plus $1.65 per barrel over ASCI (Argus Sour Crude Index). It increased the OSP to Northwestern Europe to plus $0.70 per barrel over ICE Brent.
Reuters - Saudi Aramco has raised the August price for its flagship Arab Light grade for Asian customers by $1 a barrel from July to a premium of $1.20 a barrel to the Oman/Dubai average, two sources told Reuters citing pricing documents.
(Friday) Press Release - At the Rencontres Économiques d’Aix-en-Provence, an economic forum attended by many organizations from around the world, 11 international groups have announced they have joined forces to form an international coalition open to new members. AWS, Carrefour Group, CMA CGM Group, Cluster Maritime Français, Crédit Agricole Corporate and Investment Bank, Engie, Faurecia, Michelin, Schneider Electric, Total and Wärtsilä are the existing members. The Coalition aims to accelerate the development of energy sources and technologies to address the challenges posed by sustainable mobility in the transport and logistics industry by reducing emissions, fighting global warming and protecting biodiversity.
U.S. E&PS
(Late Thursday) Press Release - Abraxas Petroleum announced that on Wednesday, July 1, it received notice from The NASDAQ Stock Market that the Company is not presently in compliance with the NASDAQ continued listing rules since the Company has not yet filed its Form 10-Q for the period ended March 31, 2020.
(Sunday) Press Release - Lonestar Resources US reported financial and operating results for the three months ended March 31, 2020. Lonestar reported a net loss attributable to its common stockholders of $113.0 million during 1Q20 compared to a net loss of $60.6 million during 1Q19. Excluding, on a tax-adjusted basis, certain items that the Company does not view as either recurring or indicative of its ongoing financial performance, Lonestar’s adjusted net loss for 1Q20 was $7.8 million. Most notable among these items include: a $93.0 million unrealized hedging gain on financial derivatives and a $199.9 million impairment. Lonestar reported a 27% increase in net oil and gas production to 14,436 BOE/d during the three months ended March 31, 2020, compared to 11,372 BOE/d for the three months ended March 31, 2019. Production was comprised of 73% crude oil and NGLs on an equivalent basis.
(Late Thursday) Press Release - Effective July 1, 2020, the Board of SandRidge Energy appointed Mr. Salah Gamoudi as the Company’s Chief Financial Officer and Chief Accounting Officer. Mr. Gamoudi, most recently served as the Company’s Vice President of Accounting and Finance beginning April 27, 2020. Prior to joining the Company, Mr. Gamoudi served as Vice President and Chief Accounting Officer at Jones Energy, Inc. from October 2018 to April 2020. Immediately before serving as Vice President and Chief Accounting Officer at Jones Energy, Inc., Mr. Gamoudi served as Chief Accounting Officer and Controller of Remora Petroleum, L.P. from 2017 to 2018. From 2015 to 2017, he served as Corporate Controller of Glacier Oil & Gas and its predecessor entity. From 2013 to 2015, he served as SOX and Internal Audit Manager of LRR Energy, L.P. and Lime Rock Resources. Prior to that, he served as an auditor for Deloitte and for Ernst & Young LLP. Mr. Gamoudi has a Bachelor of Arts in Accounting from Portland State University and is a Certified Public Accountant.
OILFIELD SERVICES
Press Release - Forum Energy Technologies provided an update on the status of its business: During the first half of 2020, the COVID-19 pandemic and associated actions taken around the world to mitigate the spread of Coronavirus caused a significant decline in economic activity and oil demand. At the same time, the OPEC+ oil producing nations increased production in a war for market share, which further exacerbated the imbalance between supply and demand. The combination of these shocks in both supply and demand caused a significant decline in oil prices during the first quarter 2020 and created an extremely challenging market for all sub-sectors of the oil and natural gas industry throughout the second quarter 2020. Due to the poor market conditions, exploration and production companies in North America are under pressure to reduce existing production and minimize capital and maintenance expenditures. As a result, Forum has experienced a material reduction in demand for many of its products and thus, its revenue. The Company expects this to have a significant negative impact on demand for its products and results of operations over the next several quarters. In response to the decline in demand for its products and reductions in revenue, Forum has implemented several cost reduction actions, including lowering headcount, reducing salaries for executive officers and the broader workforce, suspension of the Company's matching contribution to the U.S. and Canada defined contribution plans, furloughs for select employee groups and closing certain facilities.
Press Release - Forum Energy Technologies announced it has commenced an offer to exchange its existing notes for new 9.00% convertible secured notes due 2025. The new notes will pay interest at the rate of 9.00% (as compared to the rate of 6.25% on the existing notes). Of such interest, 6.25% will be payable in cash and 2.75% will be payable in cash or additional notes, at the Company’s option. The new notes will mature five years from issuance (as compared to the maturity of October 1, 2021 on the existing notes). The new notes will be secured by a first lien on substantially all of the Company’s assets, except for revolving credit facility collateral, which will secure the new notes on a second lien basis (while the existing notes will remain unsecured).
Evercore ISI upgraded U.S. Silica Holdings to ‘In Line’ from ‘Underperform’.
MLPS & PIPELINES
(Late Thursday) Press Release - Enbridge announced that Algonquin Gas Transmission, LLC (Algonquin) has received approval from the Federal Energy Regulatory Commission (FERC) of its uncontested rate settlement with customers. Additionally, this uncontested Settlement resolves all issues in Docket No. RP19-57-000 and therefore terminated Algonquin's FERC Form No. 501-G proceeding. Algonquin and its customers collaborated to effectively resolve this matter in a mutually satisfactory manner.
Press Release - Plains All American Pipeline and Plains GP Holdings announced their quarterly distributions with respect to the second quarter of 2020. PAA announced a quarterly cash distribution of $0.18 per common unit ($0.72 per unit on an annualized basis), which is unchanged from the distribution paid in May 2020. PAGP announced a corresponding quarterly cash distribution of $0.18 per Class A share ($0.72 per Class A share on an annualized basis), which is unchanged from the distribution paid in May 2020. With respect to PAA’s Series A Preferred Units, PAA announced a quarterly cash distribution of $0.525 per Series A Preferred Unit, or $2.10 on an annualized basis. Each of these distributions will be payable on August 14, 2020 to holders of record of each security at the close of business on July 31, 2020.
MARKET COMMENTARY
Wall Street futures rose as investors looked past the domestic surge in new infections and counted on signs of an economic rebound in China to boost global growth. European shares rallied and Japan’s Nikkei ended higher boosted by shippers and steelmakers. The yuan led commodity currencies higher against the dollar, while spot gold edged up. Brent crude rose, supported by tighter supplies. IHS Markit's Purchasing Managers Index data is scheduled for release later in the day.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities Nasdaq Advisory Services
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio