Oil Recovers Ahead of Meeting of the U.S. Central Bank
SECTOR COMMENTARY:
The energy sector is set for a higher start, supported by strength in the crude complex. Meanwhile, the major equity futures are flat ahead of today’s central bank meeting where traders expect the Fed to keep rates unchanged.
WTI and Brent crude oil futures are recovering yesterday’s losses ahead of the keenly watched meeting of the U.S. central bank for clues on interest rate policy, falling treasury yields and as the conflict in the Middle East escalates. Israel admitted to striking a refugee camp in Gaza which was being used as a command center by Hamas. An unconfirmed large number of civilians were killed and a number of world leaders have condemned the strikes. OPEC crude output rose by 180K bpd in October driven by Nigeria and Angola. EIA data is set to be reported today, following last night’s API reading which showed a crude build of 1.35 million barrels.
Natural gas futures are pulling back after yesterday’s sharp gains despite forecasts for cooler temperatures.
BY SECTOR:
US INTEGRATEDS
U.S. Senate Majority Leader Charles Schumer urged the U.S. Federal Trade Commission to consider possible anti-competitive harms stemming from recent multi-billion dollar acquisitions by oil and gas giants Exxon Mobil and Chevron.
INTERNATIONAL INTEGRATEDS
Aramco raised official selling prices (OSPs) for liquefied petroleum gas (LPG) in November by 1-2% from October due to rising LPG demand, while Algeria's Sonatrach has reduced OSP for butane by 6% due to increased supply to the Mediterranean region, traders said. Aramco's November OSP for propane was increased by $10 to $610 per tonne PRO-OFFCL-SA, while OSP for butane was raised by $5 to $620 per tonne BUT-OFFCL-SA. Propane and butane are types of LPG with different boiling points.
The head of BP's gas & low carbon business said that the U.S. offshore wind industry is "fundamentally broken", after BP and partner Equinor wrote down $840 million on their U.S. projects. Anja-Isabel Dotzenrath told an FT Energy Transition conference in London that problems in the United States included permitting, the time lag between signing power purchase agreements and projects being built and a lack of inflationary adjustment mechanisms.
Eni Chief Executive Claudio Descalzi said that talks were ongoing with Swiss asset manager Energy Infrastructure Partners (EIP) to sell part of its Plenitude energy transition unit. In August, two sources told Reuters that EIP was working on the details of a potential offer to buy a minority stake in Plenitude.
Equinor, Captura, announced a partnership to develop industrial scale solutions to remove carbon dioxide (CO2) from the ocean. The partnership will begin with an initial 1,000-ton-per-year pilot plant in Norway that can potentially serve as a launchpad to build large-scale, commercial plants in key regions around the world. The partners will form a joint team to collaborate on various configurations of Captura’s technology, with the goal to scale. The initial pilot plant will be located at Equinor’s Kårstø natural gas processing facility on the west coast of Norway. It will have a capture capacity of 1,000 metric tons of CO2 annually. Feasibility and design of the Captura pilot has already commenced, with installation planned in Fall of 2024.
According to Reuters, Shell Petroleum executed share purchase agreement with WAFI Energy for sale of entire stake in Shell Pakistan.
JP Morgan downgraded BP to Underweight from Neutral.
Gerdes Energy Research upgraded BP to Buy from Neutral.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Chesapeake Energy reported third quarter 2023 financial and operating results. Net cash provided by operating activities of $506 million; Net income of $70 million, or $0.49 per diluted share (all per share amounts stated on a diluted basis); adjusted net income of $155 million, or $1.09 per share; Delivered total net production of 3,495 mmcfe per day and adjusted EBITDAX of $580 million; Returned more than $200 million to shareholders through base dividend and share buybacks; announced total quarterly dividend of $0.575 per common share to be paid in December 2023; Cash on hand of approximately $713 million as of September 30, 2023
Chesapeake Energy and Vitol announced the entrance into a Heads of Agreement ("HOA") with Chesapeake Energy Marketing, a subsidiary of Chesapeake Energy Corporation. Under the HOA, Chesapeake will supply up to 1 million tonnes of LNG per annum to Vitol with the purchase price indexed to Japan Korea Marker ("JKM") for a period of 15 years. Following the execution of the HOA, Chesapeake and Vitol will jointly select the most optimal liquefaction facility in the United States to liquify the gas produced by Chesapeake for delivery to Vitol. The HOA has a targeted start date in 2028.
Earthstone Energy announced financial and operating results for the three and nine months ended September 30, 2023. Third Quarter 2023 Highlights : Net income of $87.2 million, and Adjusted Net Income of $106.2 million; Average daily production of 116,967 Boepd; Adjusted EBITDAX of $302.3 million; Net cash provided by operating activities of $285.1 million.
Gran Tierra Energy announced the Company’s financial and operating results for the quarter ended September 30, 2023. Production: Gran Tierra’s total average WI production was 33,940 BOPD, an increase of 1% compared to second quarter 2023 and up 12% from third quarter 2022. Gran Tierra’s production in the Quarter was the Company’s highest quarterly average total production since second quarter 2019. Net Income: Gran Tierra achieved net income of $7 million, compared to a net loss of $11 million in the Prior Quarter and net income of $39 million one year ago. The Company’s net income over the last 12 months was $19 million. Basic (Diluted) Earnings Per Share: Gran Tierra generated net earnings of $0.20 per share basic and diluted, compared to a net loss of $0.33 per share basic and diluted in the Prior Quarter and net earnings of $1.05 per share basic and $1.04 per share diluted one year ago.
Gran Tierra Energy announced the appointment of Mr. Sebastien Morin as Chief Operating Officer. Mr. Morin will be joining Gran Tierra as COO, located in Calgary and will report to Gary Guidry, President and Chief Executive Officer. Mr. Morin was most recently President & COO at WesternZagros Resources Ltd., a privately-owned petroleum operating company with production sharing contracts in the Kurdistan region of Iraq. Prior to WesternZagros Resources, Mr. Morin was previously employed by Gran Tierra, holding progressively more senior positions in Colombia and Calgary with the Company, including Vice President of Operations in Colombia.
Gran Tierra Energy announced that the Toronto Stock Exchange has approved its notice of intention to make a normal course issuer bid (the “Bid”) for its shares of common stock. As of October 20, 2023, there were 33,288,305 Shares issued and outstanding and the public float was 32,349,140 Shares. Pursuant to the Bid, Gran Tierra will be able to purchase for cancellation up to 3,234,914 Shares, representing 10% of the public float, at prevailing market prices at the time of purchase, through the facilities of the TSX, the NYSE American or alternative trading platforms in Canada or the United States, if eligible, or by such other means as may be permitted by the TSX, the NYSE and applicable securities laws for a one year period commencing on November 3, 2023 and ending on November 2, 2024. Gran Tierra has also entered into an Automatic Share Purchase Plan (the “ASPP”) in connection with the Bid. The brokerage firm conducting the Bid on behalf of Gran Tierra and administering the ASPP is Eight Capital. The ASPP is intended to allow for the purchase of Shares under the Bid when Gran Tierra would ordinarily not be permitted to purchase Shares due to regulatory restrictions and customary self-imposed blackout periods.
According to Reuters, Matador Resources announced for Q4 of 2023, the company expects to produce an average of about 145,000 boe per day. The company said they see lower capital expenditures for full-year 2023, primarily due to lower midstream capital expenditures of $25 mln and see achieving mid-to-high end of FY2023 guidance for total oil & natural gas equivalent production, oil production & natural gas production.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Chart Industries announced that it has closed its sale of Cofimco s.r.l. to PX3 Partners, a London-based private equity firm, for an all-cash purchase price of approximately $80 million. Details of the sale were previously announced on July 28, 2023.
Newpark Resources announced results for the third quarter ended September 30, 2023. In the third quarter 2023, Newpark generated net income of $7.7 million, or $0.09 per diluted share, on total revenue of $198.5 million, compared to a net loss of $24.6 million, or ($0.26) per basic share, on total revenue of $219.9 million, in the prior year period. The Company reported third quarter Adjusted Net Income of $8.4 million, or $0.09 per diluted share, compared to Adjusted Net Income of $5.2 million, or $0.06 per diluted share, in the prior year period. Newpark reported Adjusted EBITDA of $22.3 million in the third quarter 2023, or 11.2% of total revenue, compared to $19.6 million, or 8.9% of total revenue, in the third quarter 2022.
ProPetro Holding announced financial and operational results for the third quarter of 2023. Revenue was $424 million, compared to $435 million for the second quarter of 2023. The 2.6% decrease in revenue was attributable to slightly decreased utilization, pricing impacts, and job mix in our hydraulic fracturing and wireline businesses with our cementing business recording record revenues during the quarter. Net income totaled $35 million, or $0.31 per diluted share, compared to net income of $39 million, or $0.34 per diluted share, for the second quarter of 2023.
SECURE ENERGY Services released its 2023 third quarter results. THIRD QUARTER HIGHLIGHTS: Recorded net income of $47 million or $0.16 per basic share, down $13 million from the third quarter of 2022 primarily due to a gain on an asset sale recorded in the prior year period. Achieved Adjusted EBITDA1 of $158 million or $0.54 per basic share, up 8% from Adjusted EBITDA of $0.50 per basic share in the third quarter of 2022.
Select Water Solutions announced its financial and operating results for the quarter ended September 30, 2023. Revenue for the third quarter of 2023 was $389.3 million as compared to $404.6 million in the second quarter of 2023 and $375.1 million in the third quarter of 2022. Net income for the third quarter of 2023 was $15.3 million as compared to $22.6 million in the second quarter of 2023 and $24.7 million in the third quarter of 2022. Adjusted EBITDA was $63.0 million in the third quarter of 2023 as compared to $69.8 million in the second quarter of 2023 and $62.8 million in the third quarter of 2022. Adjusted EBITDA during the third quarter of 2023 was adjusted for $4.7 million of non-recurring transaction costs, $0.6 million of non-cash losses on asset sales, and $1.0 million in other non-recurring adjustments. Non-cash compensation expense accounted for an additional $5.0 million adjustment during the third quarter of 2023.
Standard Lithium announced the exercise of its option agreement with TETRA Technologies for the South West Arkansas Project.
BMO upgraded Toromont Industries to Outperform from Market Perform.
DRILLERS
Noble Corporation reported third quarter 2023 results. Total revenue was $697 million. Contract drilling services revenue for the third quarter of 2023 totaled $671 million compared to $606 million in the second quarter, with the sequential increase driven by both higher average dayrates and utilization. Marketed fleet utilization was 78% in the three months ended September 30, 2023, compared to 76% in the previous quarter. Contract drilling services costs for the third quarter were $354 million, a slight decrease versus $363 million the second quarter due to lower repair and maintenance expense. Net income increased to $158 million in the third quarter, up from $66 million in the second quarter, and Adjusted EBITDA increased to $283 million in the third quarter, up from $188 million in the second quarter. Net cash provided by operating activities in the third quarter was $139 million, capital expenditures were $99 million, and free cash flow (non-GAAP) was $40 million. In addition, Noble's Board of Directors approved an increase of the quarterly interim dividend to $0.40 per share in the fourth quarter of 2023. This dividend is to be payable on December 14th, 2023, to shareholders of record at close of business on November 15th, 2023. The Company intends to continue to pay dividends on a quarterly basis, and the fourth quarter dividend represents $1.60 on an annualized basis.
Noble Corporation updated its prior guidance. Noble announced that for the full year 2023, it is increasing guidance for total revenue to a range of $2.5 to $2.6 billion (previously $2.35 to $2.55 billion) and Adjusted EBITDA to a range of $775 to $825 million (previously $725 to $825 million). Full year 2023 guidance for capital expenditures (net of reimbursable capex) remains unchanged at a range of $325 to $365 million.
REFINERS
No significant news.
MLPS & PIPELINES
Energy Transfer announced Q3 Net Income of USD 272 Million and Q3 revenue USD 6,173 million.
EnLink Midstream reported financial results for the third quarter of 2023. Highlights: Reported net income of $65.8 million and net cash provided by operating activities of $274.2 million for the third quarter of 2023. Generated adjusted EBITDA, net to EnLink, of $341.9 million for the third quarter of 2023, which is flat compared to the third quarter of 2022. Delivered $66.2 million of free cash flow after distributions (FCFAD) for the third quarter of 2023. Remain on track to achieve the midpoint of 2023 adjusted EBITDA guidance, which represents 5% growth compared to 2022 adjusted EBITDA. Repurchased approximately $50 million1 of common units in the third quarter of 2023. EnLink is ahead of pace to complete the 2023 unit repurchase authorization of $200 million.
ONEOK announced higher third quarter 2023 results and increased its 2023 net income and adjusted EBITDA guidance midpoints by $120 million and $125 million, respectively, on a ONEOK pre-acquisition basis to be comparable with the previous guidance provided on August 7, 2023. Third Quarter 2023 Results, Compared With Third Quarter 2022: 5% increase in net income to $454 million, resulting in 99 cents per diluted share; 11% increase in adjusted EBITDA to $1.001 billion.
MARKET COMMENTARY
Wall Street futures edged lower with investors awaiting the Federal Reserve Chair Jerome Powell's press conference after the central bank’s interest rate decision later in the day, which is widely expected to be unchanged. The U.S. Treasury is expected to detail its future refinancing plans, while a slew of data on the labor market, including the ADP National Employment report and a reading on job openings along with ISM and S&P Global manufacturing surveys are also on the radar. European shares were little changed, while Nikkei ended higher after BOJ policy tweak and Toyota results. Oil prices rose as the markets tracked the latest developments in the Israel-Hamas conflict. Gold was little changed, while the dollar inched higher.
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 Rich Pontillo.
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Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.
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