Oil Prices Trending Lower Amid Concerns of a Slowing Global Economy
SECTOR COMMENTARY:
Energy stocks are set to open lower as falling oil prices continue to weigh in on the sector. The major market futures are higher ahead of the release of notes from the most recent Federal Reserve Meeting in hopes the Fed will ease their stance on aggressive interest rates.
WTI and Brent crude oil futures continue to trend lower, after slumping in the previous session, amid concerns over weak demand due to a slowing global economy. Additionally, rising COVID-19 cases in China have pushed investors to the edge of their seat as the possibility of the nation reintegrating coronavirus curbs increases. Signs of a weakening global economy are being seen across the world, with nations such as China which recently increased export quotas for refined oil products in the first batch for 2023, signaling expectations of poor domestic demand. Also, Saudi Arabia may further cut the prices for its flagship Arab Light crude grade to Asia in February, after they were set at a 10-month low for this month, as concerns of oversupply continued to cloud the market.
Natural gas futures are slightly higher after plunging more than 10% yesterday as North America continues to experience warmer-than-normal temperatures.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Petrobras said its board of directors had approved the early departure of chief executive officer Caio Paes de Andrade, which will take effect immediately, and will also resign from the board. Reuters had first reported on Tuesday, citing sources, that Andrade had informed the board of directors of his resignation, ahead of the end of his term in April. Petrobras' production head, Joao Henrique Rittershaussen, has been named the firm's interim CEO, it said in a securities filing.
Brazil's mines and energy ministry appointed Jean Paul Prates to head Petrobras, officially starting the transition in leadership at the state-run oil firm.
Shell has shut down one of its two liquefied natural gas (LNG) trains, or production units, at its Queensland Curtis LNG (QCLNG) plant since Dec. 7 after finding a "minor issue" with a pipe, a spokeswoman for the global energy major said.
LANXESS and TotalEnergies have entered into a cooperation on the supply of biocircular styrene.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Devon Energy announced that Michael Mears and Gennifer Kelly have joined its board of directors. Michael Mears is the former chairman, president and CEO of Magellan Midstream Partners. Gennifer Kelly previously held the role of chief operating officer and SVP of Western Midstream Partners. Following these appointments and Dave Hager’s retirement as board chair on January 7, the board will have 12 members, of which 10 are independent. Michael Mears will serve on the governance, environmental, and public policy and audit committees. Gennifer Kelly will serve on the audit and reserves committees.
JPMorgan downgraded SM Energy to Neutral from Overweight.
Talos Energy announced that the Company's Lime Rock and Venice prospects both successfully discovered commercial quantities of oil and natural gas during sequential drilling operations in the fourth quarter of 2022. Talos holds a 60% working interest in the two deepwater discoveries, both of which are located near the Company's 100% owned and operated Ram Powell platform, where future production from both wells will flow via subsea tiebacks.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Chart Industries and BNG Clean Fuel execute Memorandum of Understanding for hydrogen liquefaction and equipment supply
JPMorgan upgraded Chart Industries to Strong Buy from Market Perform.
Morgan Stanley upgraded Nov Inc to Overweight from Equal weight.
ProFrac Holding Corp. reported that it has closed on its previously-announced acquisition of REV Energy Holdings, LLC, a privately owned pressure pumping service provider with operations in the Rockies and Eagle Ford. ProFrac acquired REV for $140 million, consisting of $70 million in ProFrac Class B common shares, approximately $39 million in seller-provided financing, and the balance with cash on hand and debt assumption of approximately $5.5 million. ProFrac also closed the acquisition of Producers Services Holdings LLC, an employee-owned pressure pumping services provider serving Appalachia and the Mid-Continent. Under the terms of the agreement, ProFrac has acquired Producers for approximately $35 million of total transaction value, of which approximately half was paid in ProFrac Class A common shares. With these transactions, ProFrac has expanded its geographic footprint to include the Rockies and Bakken and increased its pressure pumping and manufacturing presence in the Northeast. By the end of January, ProFrac expects to have 45 active fleets, with an additional four electric fleets under construction that the Company expects to deploy in the first half of 2023.
SECURE Energy Services announced that, in connection with its previously announced normal course issuer bid to purchase for cancellation up to 22,055,749 common shares of the Corporation, the Corporation has entered into an automatic share purchase plan with a designated broker. The ASPP has been pre-cleared by the Toronto Stock Exchange and is expected to be implemented on January 6, 2023. Since the beginning of the NCIB, the Corporation has purchased 882,700 common shares at a weighted average price per share of $6.92 for a total of $6.1 million. All common shares purchased under the NCIB have been cancelled.
DRILLERS
Patterson-UTI Energy announced that it expects its net income for the fourth quarter of 2022 to exceed $100 million and its adjusted EBITDA for the fourth quarter of 2022 to surpass $230 million, based on current projections. The Company also demonstrated its commitment during the fourth quarter to returning capital to its shareholders while maintaining a strong balance sheet. In aggregate, the Company returned $74.3 million to shareholders in the fourth quarter through its regularly scheduled dividend and the purchase of approximately 3.3 million shares of its common stock for $57.2 million. The Company also repurchased $22.4 million of its long-term indebtedness during the fourth quarter.
REFINERS
No significant news.
MLPS & PIPELINES
As previously disclosed, a subsidiary of Antero Midstream was involved in a lawsuit with Veolia Water Technologies in the district court of Denver County, Colorado relating to Antero’s Clearwater Treatment Facility. On January 3, 2023, the Court found that Antero Midstream’s subsidiary had prevailed on its claims for breach of contract and fraud, and awarded approximately $242 million in damages to Antero, plus pre- and post-judgment interest and reasonable costs and attorneys’ fees. The Court also found in Antero’s favor on all of Veolia’s affirmative claims. The Court has yet to enter judgment on its findings, but any such judgment will be subject to appeal.
Enbridge announced that the Toronto Stock Exchange (TSX) has approved the Company's new normal course issuer bid (NCIB) to purchase, for cancellation, up to 27,938,163 of its outstanding common shares to an aggregate amount of up to $1.5 billion.
Enterprise Products Partners L.P. announced that its operating subsidiary, Enterprise Products Operating LLC, has priced a public offering of $1.75 billion aggregate principal amount of notes comprised of (i) $750 million principal amount of senior notes due January 10, 2026, and (ii) $1.0 billion principal amount of senior notes due January 31, 2033.
Nordic American Tankers Founder, Chairman & CEO Herbjorn Hansson said: “I thought I would share with you my thoughts for what I think 2023 holds for our company. The last days of 2022 are a good harbinger for the future: We concluded four contracts at rate levels of about USD 40,000 to USD 50,000 per day ranging between 30 days to 50 days each.” Furthermore, “Finally, NAT in particular stands to benefit from the fact that the supply of Suezmax tankers will remain at historic low levels for at least the next two or three years. Environmental regulations, increased steel and production costs, and higher interest rates make investing in new ships quite challenging. A smaller order book for new tankers has always helped our industry.”
Targa Resources announced the pricing of an underwritten public offering of $900 million aggregate principal amount of its 6.125% senior notes due 2033 and $850 million aggregate principal amount of its 6.500% senior notes due 2053 at a price to the public of 99.858% and 97.843% of their face value, respectively. The Offering is expected to close on January 9, 2023, subject to customary closing conditions.
MARKET COMMENTARY
Wall Street futures edged higher as hopes of an economic recovery in China lifted sentiment, while focus was also on minutes from the Federal Reserve's December policy meeting for clues on the outlook for interest rate hikes. Positive economic data lifted sentiment in the European markets. Japan's Nikkei closed at its lowest level in 10 months. The dollar fell against a basket of major currencies while gold prices jumped more than 1%. Oil fell on concerns about weak demand. ISM's reading for U.S. manufacturing PMI and job openings data are scheduled for 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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