SECTOR COMMENTARY:
Energy stocks are lower, extending yesterday’s weakness, as U.S. stock index futures fell. New inflation data continued to show a sharp rise in prices while softer commodity prices pressured energy producers.
Both WTI and Brent reversed earlier gains on oversupply fears following more covid headline risk. The IEA yesterday stoked bearish sentiment on headlines that Global oil markets have returned to surplus and face an even bigger oversupply early next year. The IEA reduced its 2021 and 2022 global oil demand estimates by 100K bpd due to lower jet fuel use.
U.S. natural gas futures eased to a one-week low on Tuesday on forecasts for milder weather and less heating demand over the next two weeks than previously expected. That price decline came despite a 3% rise in European gas prices to their highest since hitting a record in early October that should keep U.S. liquefied natural gas (LNG) exports near record highs.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Equinor plans to sell a stake in its Martin Linge oilfield in the North Sea, hoping to raise more than $1 billion, industry and banking sources told Reuters. The sale is aimed at reducing Equinor’s large stake in the field and take advantage of strong demand for Norwegian oil and gas assets, the sources said.
Petroleo Brasileiro SA expects to sign a deal to sell its TBG natural gas pipeline unit next year, Chief Strategy Officer Rafael Chaves said during a presentation to a Rio de Janeiro industry group on Monday, Reuters reported.
Shell New Energies US LLC, a subsidiary of Royal Dutch Shell signed an agreement to buy 100% of Savion LLC (Savion), a large utility-scale solar and energy storage developer in the United States, from Macquarie’s Green Investment Group. With this acquisition, Shell expects to significantly expand its global solar portfolio.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
EQT announced that its Board of Directors approved a $1.0 billion share repurchase program and has determined to reinstate its regular dividend starting in the first quarter 2022. The Company also announced an updated long-term leverage target.EQT’s Board of Directors has approved the reinstatement of the Company’s regular quarterly cash dividend, starting in the first quarter of 2022, at an annual dividend rate of $0.50 per share of the Company’s common stock ($0.125 per quarter), representing a competitive current yield of approximately 2.5 percent. As part of the Company’s continued commitment to attaining investment grade metrics, the Company has revised its long-term leverage target to 1.0x – 1.5x, measured at the lower of $2.75 per MMBtu flat natural gas pricing or NYMEX strip pricing. To achieve this target leverage, the Company has committed to reducing absolute debt by at least $1.5 billion by the end of 2023, which at current pricing is expected to result in leverage of 1.0x or less.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Fluor announced that NuScale Power, LLC, in which Fluor is the majority investor, has signed a merger agreement with Spring Valley Acquisition Corp. Fluor has invested more than $600 million in NuScale Power since 2011 to help bring its technology to market. The proposed transaction is anticipated to close in the first half of 2022 subject to customary closing conditions. Upon completion of the transaction, Fluor projects to own approximately 60 percent of the combined company, based on the PIPE investment commitments received and the current equity and in-the-money equity equivalents of NuScale Power and Spring Valley.
JPMorgan upgraded NOV to Overweight from Neutral.
DRILLERS
No significant news.
REFINERS
Hollyfrontier sees total expected cash spending range for fiscal year 2022 of $590.0 million to $730.0 million, Reuters reported. The Cheyenne renewable diesel unit is mechanically complete and it expect to make first sales of renewable diesel in the first quarter of 2022. The pre-treatment unit, located at the Artesia, New Mexico facility is expected to be completed in the first quarter of 2022, and the Artesia renewable diesel unit is now expected to be completed in the second quarter of 2022. As previously disclosed, it expect to spend a total of $800-900 million for all three projects. Beginning in the first quarter of 2022, renewable diesel operations will cease to be reported in HollyFrontier’s Corporate and Other segment and will be reported under a new Renewables reporting segment.
MLPS & PIPELINES
Scorpio Tankers announced that it has signed a transaction with Ocean Yield ASA involving the sale and leaseback of two LR2 product tankers, STI Gallantry and STI Guard, for a total financing consideration of $70.2 million. Upon completion, which is expected in December 2021, the Company’s liquidity is expected to increase by $27.9 million in aggregate after the repayment of outstanding debt. As part of the agreements, the Company will bareboat charter-in the vessels for a period of 10 years and will have purchase options beginning at the end of the fourth year of each agreement. In addition, the Company executed a credit facility on November 23, 2021 for up to $43.6 million with a European financial institution. The Company drew down the entire $43.6 million from this credit facility on November 29, 2021, and part of the proceeds were used to refinance the outstanding debt on two LR1 product tankers, STI Precision and STI Prestige, that were previously financed under the ABN AMRO/K-Sure Credit Facility, which was scheduled to mature during the second half of 2022.
According to SEC filing, James W. Whalen, age 80, a member of the Board of Directors of Targa Resources retired as a director of the Company, effective December 10, 2021. Mr. Whalen has served as a director of the Company since October 27, 2005. There are no disagreements between Mr. Whalen and the Company on any matter relating to the Company’s operations, policies or practices. Mr. Whalen was a member of the Board’s Risk Management Committee. In connection with Mr. Whalen’s retirement, the Board size is being reduced from 13 to 12 directors.
Williams announced that John D. Porter has been appointed Senior Vice President and Chief Financial Officer (CFO), overseeing all financial aspects of the company, effective Jan. 1, 2022. Porter will replace John Chandler, who announced his planned retirement from Williams earlier this year. Chandler will serve as a strategic advisor until his retirement date in March 2022. Porter currently serves as Williams Vice President, Chief Accounting Officer, Controller and Financial Planning and Analysis.
MARKET COMMENTARY
Wall Street futures and Asian stocks fell, while European shares rose as investors looked beyond the spread of the Omicron coronavirus variant and sought to buy any dip in stock prices ahead of a slew of central bank decisions this week. Gold prices edged lower, as the dollar firmed. Oil prices dipped after the International Energy Agency (IEA) said that the new Omicron coronavirus variant was set to dent the global demand recovery while supplies were set to increase next year.
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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