SECTOR COMMENTARY:
Energy stocks are set to open lower, pressured by weakness in the crude complex and in the major equity futures which carried over last week’s sell-off into this morning’s session amid geopolitical tensions in Ukraine and ahead of the highly anticipated Federal Reserve policy meeting this Wednesday. The market will pay close attention to how worried the U.S central bank is over inflation and how aggressive they will be in trying to contain it.
Earnings season continued to ramp up this morning with Halliburton reporting a fourth-quarter adjusted profit which doubled from a year earlier, beating analysts’ forecasts and prompting the oilfield services company to lift its dividend following a rebound in crude and natural gas prices. The company’s CEO said “I expect the macro industry environment to remain supportive and the international and North America markets to continue their simultaneous growth.”
WTI and Brent crude oil futures are down in early trading, erasing earlier gains that took benchmarks to seven year highs amid a drop in market sentiment ahead of the FOMC meeting. Worries about supply disruption, concerns about Russia-Ukraine discord and rising tensions in the Middle East, which could make an already tight market even tighter, initially supported prices.
Natural gas futures edged lower this morning, pressured by forecasts for less cold and lower heating demand. However, European gas prices rose by 14% in early trading over concerns about a possible conflict between Russia and Ukraine.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
The United Steelworkers union on Friday said proposals by BP Plc would undermine its 56-year-old national program for refinery and chemical plant worker contracts.
Eni and Point Resources Holding, a HitecVision portfolio company, owning respectively of 69.85% and 30.15% of Vår Energi AS, announced the intention to launch an initial public offering for Vår Energi and for the company to apply for a listing on Oslo Børs. The IPO will provide access to the Norwegian and international capital markets, allow the Company to diversify its ownership structure and create a strong long-term shareholder base.
Abu Dhabi Ports Group has signed a new agreement with Eni Abu Dhabi B.V., a branch of the Italian energy company, to establish a marine logistics base at Mugharraq Port supporting offshore drilling operations in the heart of Al Dhafra region.
The Petroleum Safety Authority Norway has given Equinor consent to drill an exploration well in the Barents Sea.
The Petroleum Safety Authority Norway has given Equinor Energy consent to use the Floatel Superior mobile accommodation facility at Grane from 1 April 2022.
Repsol said on Friday a clear-up operation for a major oil spill on the coast near Peru’s capital Lima would take until the end of February, in an environmental incident declared a ‘catastrophe’ by the government.
Saudi Aramco CEO Amin Al Nasser said that the demand for oil is nearing pre-pandemic levels, Asharq Business reported in a tweet.
Aramco’s supply chain resilience has been further enhanced by the signing of 50 new Memoranda of Understanding (MoUs) at the In-Kingdom Total Value Add (iktva) Forum and Exhibition.
TotalEnergies and its partner CMA CGM, have launched Marseilles’ inaugural ship-to-containership Liquefied Natural Gas (LNG) bunkering operation in the Port of Marseille Fos, Southern France.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Talos Energy provided select estimated operational and financial results for the fourth quarter and full year of 2021. Preliminary estimated results include: Average daily production between 67.5 and 69.0 thousand barrels of oil equivalent in the fourth quarter and between 64.0 and 64.5 MBoe/d in the full year 2021, representing new quarterly and annual record highs for the Company. Fourth quarter production was above the previously indicated range due to better than expected uptime and was approximately 69% oil and 77% liquids. Cash operating and general and administrative costs are expected to be in line with the Company’s previously issued financial guidance for the full year 2021. Capital expenditures for the fourth quarter between $63 – $68 million putting the Company near the low end of its previously issued full year capital guidance range.
Geopark LTD announced its first hydrocarbon discovery in the Perico block (GeoPark non-operated, 50% WI) in the Oriente basin in Ecuador. The Jandaya 1 exploration well was drilled and completed to a total depth of 10,975 feet where a total of 70-80 feet vertical depth of potential hydrocarbon bearing reservoir was encountered in three formations, with the Hollin formation as the main target.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
EdgePoint Investment Group announced that on January 21, 2022, it acquired 136,152 common shares of CES Energy Solutions, representing approximately 0.05% of the outstanding Shares, on behalf of an account it manages.
Enerflex and Exterran announced a business combination to create a premier integrated global provider of energy infrastructure. The company will operate as Enerflex Ltd. and will remain headquartered in Calgary, Alberta, Canada. The companies will combine in an all-share transaction pursuant to which Enerflex will acquire all of the outstanding common stock of Exterran on the basis of 1.021 Enerflex common shares for each outstanding share of common stock of Exterran, resulting in approximately 124 million Enerflex common shares outstanding upon closing, representing an implied combined enterprise value of approximately US$1.5 billion. The transaction value for Exterran is approximately US$735 million, which represents an 18% premium to Exterran’s enterprise value as at January 21, 2022. One Exterran director will be appointed to Enerflex’s Board of Directors at closing. Mr. Marc Rossiter will continue to serve as Enerflex’s President and Chief Executive Officer and a member of the Board of Directors of Enerflex and will oversee all aspects of integration. Mr. Sanjay Bishnoi will continue to serve as Enerflex’s Chief Financial Officer. Enerflex’s Executive Management Team will continue to serve in their current roles.
Halliburton announced net income of $824 million, or $0.92 per diluted share, for the fourth quarter of 2021. This compares to net income for the third quarter of 2021 of $236 million, or $0.26 per diluted share. Adjusted net income for the fourth quarter of 2021, excluding tax adjustments, was $320 million, or $0.36 per diluted share. This compares to adjusted net income for the third quarter of 2021, excluding special items, of $248 million, or $0.28 per diluted share. Halliburton’s total revenue for the fourth quarter of 2021 was $4.3 billion compared to revenue of $3.9 billion in the third quarter of 2021. Halliburton’s board of directors has declared a 2022 first quarter dividend of twelve cents ($0.12) a share on the Company’s common stock payable on March 23, 2022, to shareholders of record at the close of business on March 2, 2022.
Halliburton announced that it has called for redemption $600,000,000 aggregate principal amount of its 3.800% Senior Notes due 2025. The redemption date for the Notes is February 23, 2022. The aggregate principal amount of the Notes currently outstanding is approximately $1 billion.
KBR announced it has been awarded an engineering contract by Biojet AS for a concept study for its renewable energy facility in Ringerike, Norway.
DRILLERS
Nabors Industries Ltd. closed, on January 21, 2022, a secured $350 million revolving credit facility maturing on January 21, 2026. The new credit facility replaces the Company’s 2018 Revolving Credit Facility, which would have matured on October 11, 2023.
REFINERS
According to Reuters, Marathon Petroleum reported a discovered leak at El Paso, Texas refinery on Jan. 21.
MLPS & PIPELINES
Delek Logistics Partners, LP declared its quarterly cash distribution for the fourth quarter 2021 of $0.975 per common limited partner unit, or $3.90 per common limited partner unit on an annualized basis. This distribution represents a 2.6 percent increase from the distribution for the third quarter 2021 of $0.95 per common limited partner unit ($3.80 per common limited partner unit annualized) and a 7.1 percent increase over Delek Logistics’ distribution for the fourth quarter 2020 of $0.91 per common limited partner unit ($3.64 per common limited partner unit annualized). The fourth quarter 2021 cash distribution is payable on February 8, 2022 to unitholders of record on February 1, 2022.
DHT Holdings announced that after more than 11 years with the Company and a 35-year long career in shipping, Co-CEO Trygve P. Munthe has decided to retire and leave the Company on April 8, 2022 and return to his native Norway.
The Board of Directors of Holly Energy Partners, L.P. has declared a cash distribution of $0.35 per unit for the fourth quarter of 2021. The distribution will be paid on February 11, 2022 to unitholders of record on February 1, 2022. In 2022, HEP expects to hold the quarterly distribution constant at $0.35 per unit, or $1.40 on an annualized basis. HEP remains committed to its distribution strategy focused on funding all capital expenditures and distributions within operating cash flow and maintaining distributable cash flow of 1.3x or greater with the goal of reducing leverage to 3.0-3.5x.
MARKET COMMENTARY
U.S. stock index futures were down, mirroring global equities, as the prospect of a Russian attack on Ukraine suppressed demand for riskier assets. European shares fell, as concerns of tighter monetary policies fueled more selling in technology stocks. The dollar was higher, supported by the possibility of a more hawkish stance from the Federal Reserve this week. Oil prices were up amid worries about supply disruption. Gold was trading in the positive territory. IBM is among the companies scheduled to report results after the closing bell.
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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