Oil Prices Advance Further Amid Major Supply Disruption
SECTOR COMMENTARY:
Energy stocks are poised for another strong start, backed by gains in the crude complex while the broader equity markets seesawed near the flat line as concerns of rising bond yields and higher inflation offset upbeat corporate earnings and better-than-expected economic data. Furthermore, the XOP ETF touched a fresh 52-week high yesterday and looks to extend that further today.
In company news, shares of Chevron are up just over 2% this morning after Warren Buffett’s Berkshire Hathaway disclosed a $4.1 billion stake in the oil company as of December 31st, signaling to investors as to where he sees value.
Oil prices are higher by more than 1.5%, underpinned by a major supply shortage in the Southeast. Both contracts were at their highest level since January 2020. "WTI clocked in at $60 a barrel this week, joining its transatlantic peer (Brent) above the psychological level for the first time since January 2020. At this price point, any oil production is profitable," said Stephen Brennock of broker PVM. Citigroup estimate at least 2M bpd of US shale oil production has been shut-in due to the freezing temperatures. Meanwhile, the Oil Minister urged OPEC+ to ease production cuts as high oil prices are impacting growth in developing countries. The API stockpile data will be released this afternoon ahead of tomorrow’s holiday delayed government report. A Platts surveyed showed another decline in crude inventories for the week while gasoline stocks edged higher.
Natural gas futures are off session lows and trading at $3.15, aided by gains in the crude complex, blistering cold weather in much of the United States, while the deep freeze in the Southeast has major production offline.
BY SECTOR:
US INTEGRATEDS | INTERNATIONAL INTEGRATEDS | CANADIAN INTEGRATEDS | U.S. E&PS | CANADIAN E&PS | OILFIELD SERVICES | DRILLERS | REFINERS | MLPS & PIPELINES |
According to Reuters, Warren Buffett's Berkshire Hathaway announced two major new investments, saying it has taken an $8.6 billion stake in Verizon Communications and a $4.1 billion stake in Chevron. The investments were disclosed in a regulatory filing detailing Berkshire's U.S.-listed stock holdings as of Dec. 31.
Brightmark LLC and Chevron announced the expansion of their previously announced joint venture, Brightmark RNG Holdings LLC, to own projects across the United States to produce and market dairy biomethane, a renewable natural gas (RNG).
According to Reuters, Total said it had found no signs of problems in its servers equipped by Centreon, an IT monitoring firm targeted by hackers. Total also said in a statement that it would keep monitoring its systems because of the Centreon situation. Centreon said on Tuesday that none of its customers were affected by a hacking campaign.
No significant news.
For the fourth quarter of 2020, Comstock Resources reported net income available to common stockholders of $77.5 million or $0.30 per diluted share. The quarter results included a $80.2 million unrealized gain on the mark-to-market value of the Company's derivative financial instruments that are held to hedge oil and natural gas prices. The adjusted net income available to common stockholders excluding the unrealized gain on the hedge contracts and other non-recurring items for the fourth quarter of 2020 was $34.6 million or $0.14 per diluted share.
Continental Resources announced its fourth quarter 2020 operating and financial results. The Company reported a net loss of $92.5 million, or $0.26 per diluted share, for the quarter ended December 31, 2020. In fourth quarter 2020, typically excluded items in aggregate represented $10.6 million, or $0.03 per diluted share, of Continental's reported net loss. Adjusted net loss for fourth quarter 2020 was $81.9 million, or $0.23 per diluted share (non-GAAP). Net cash provided by operating activities for fourth quarter 2020 was $487.5 million and EBITDAX was $572.0 million (non-GAAP). In addition, the Company is projecting a $1.4 billion capital expenditures budget, net of Franco Nevada's share of mineral costs, which approximates to a 58% cash flow from operations (CFFO) reinvestment rate for 2021. Annual crude oil production is projected to range between 160,000 to 165,000 Bopd. Annual natural gas production is projected to range between 880,000 to 920,000 Mcfpd.
Devon Energy reported financial and operational results for the fourth quarter 2020.Devon reported a net loss of $102 million, or $0.27 per diluted share, in the fourth quarter of 2020. Adjusting for items analysts typically exclude from estimates, Devon’s core earnings were $0.00 per diluted share. Due to strong operating results in the Delaware Basin, Devon is raising its full-year 2021 oil production forecast to a range of 280,000 to 300,000 barrels per day. This compares to the company’s preliminary outlook issued last year of greater than 280,000 barrels per day. Devon expects to deliver this improved 2021 oil production outlook with an upstream capital budget of $1.6 billion to $1.8 billion. Devon intends to provide detailed first-quarter 2021 guidance once the company can properly access the impact of the extreme winter weather on its field operations.
Devon Energy announced that its board of directors has declared a $128 million variable cash dividend in the amount of $0.19 per share based on the company’s pro forma fourth-quarter 2020 financial results. The variable dividend is in addition to Devon’s previously declared fixed quarterly dividend of $0.11 per share. Both the fixed and variable dividends are payable on Mar. 31, 2021 to shareholders of record at the close of business on Mar. 15, 2021.
EQT Corporation announced financial and operational performance results for the fourth quarter 2020. Net income for fourth quarter 2020 was $64 million, $0.23 per diluted share, compared to net loss for fourth quarter 2019 of $1,177 million, $4.61 per diluted share. The increase was attributable primarily to decreased impairments and increased operating revenues, partly offset by a lower income tax benefit.
Whiting Petroleum issued preliminary fourth quarter 2020 operating results. For the fourth quarter of 2020, oil production exceeded the high end of the Company’s guidance as it was positively impacted by a higher oil percentage from wells turned in line during the quarter, as well as a slightly lower decline rate on base production.Lease operating expense was lower than guidance primarily due to less well repair activity, primarily related to extended ESP run times. Capital expenditures were also slightly lower than expected due to the timing of some facility expenditures and completion activity. General and administrative expenses included restructuring and related non-recurring costs totaling approximately $3 million for the fourth quarter of 2020 and $45 million for the full year of 2020. Net of this amount, the expenses were in line with the Company’s expectations and, for the quarter, reflect the lower cost structure that was implemented during 2020. As reflected in its guidance, the Company expects G&A to increase from this past quarterly amount as certain costs are resumed post-bankruptcy and as the pandemic environment recedes. In addition, the Company will begin accruing for its redesigned employee and executive performance incentive plan.
No significant news.
No significant news.
No significant news.
Credit Suisse upgraded CVR Energy to Neutral from Underperform.
EnLink Midstream reported financial results for the fourth quarter of 2020. The company reported total revenue of $1,064.3 million and net loss attributable to ENLC per unit of $0.31. Adjusted EBITDA, net to EnLink, for 2021 is forecasted to be roughly flat compared to 2020, when excluding the $56 million of minimum volume commitment (MVC) deficiency payments received from Devon Energy Corp. during 2020. Capital expenditures scheduled for 2021 are predominantly related to highly efficient well connect capital projects, and wells are projected to be connected fairly evenly throughout the year.
Energy Transfer and Enable Midstream Partners announced that they have entered into a definitive merger agreement whereby Energy Transfer will acquire Enable in an all-equity transaction valued at approximately $7.2 billion. Under the terms of the agreement, Enable common unitholders will receive 0.8595 ET common units for each Enable common unit, an exchange ratio that represents an at-the-market transaction, based on the 10-day volume-weighted average price of ET and Enable common units on February 12, 2021. In addition, each outstanding Enable Series A preferred unit will be exchanged for 0.0265 Series G preferred units of Energy Transfer. The transaction will include a $10 million cash payment for Enable’s general partner.
Summit Midstream Partners announced preliminary financial and operating results for the three months ended December 31, 2020. The Partnership expects fourth quarter 2020 net income of $119 million to $121 million and adjusted EBITDA of $61 million to $63 million. Net income for the quarter was primarily driven by approximately $124 million of gain on the early extinguishment of debt from the Partnership's open market repurchase of its senior unsecured notes and the consensual debt discharge and restructuring of a subsidiaries' $155.2 million term loan, partially offset by an approximate $5 million asset impairment charge for an $8 million sale of compressor equipment completed in January 2021. Financial guidance for full year 2021 includes $210 million to $230 million of adjusted EBITDA, and $20 million to $35 million of total capital expenditures.
U.S. stock index futures fluctuated in early morning trading on Wednesday as investors weighed improving economic data with rising inflation expectations and ahead of minutes from the U.S Federal Reserve's January meeting due later in the day. European shares slipped as concerns about a possible rise in inflation tempered optimism around a vaccine-led global economic recovery, while Japanese shares declined on profit booking. The dollar rose pushing gold prices down. Oil prices advanced due to supply disruption in the south of the United States caused by a winter storm in Texas.
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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