SECTOR COMMENTARY:
The energy sector is poised for a lower start, pressured by steep declines in the crude complex and in the major equity futures which fell on concerns about the impact of tighter COVID-19 curbs on the global economy and a potentially setback to President Biden’s investment bill.
WTI crude oil futures are down ~4.5% in early trading, trailing Brent, pressured by reports showing surging cases of the Omicron coronavirus variant in Europe and the United States which stoked investor worries that new mobility restrictions to combat its spread could hit fuel demand. The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries. U.S. health officials meanwhile urged Americans yesterday to get booster shots, wear masks and be careful if they travel over the winter holidays, commenting that the Omicron variant was raging across the world and set to take over as the dominant strain in the United States.
Natural gas futures bucked the trend and are up over 3.5% this morning, supported by cold weather forecast in key consuming regions and a +8% surge in European prices to near all-time highs.
BY SECTOR:
US INTEGRATEDS
UBS Asset Management has excluded Exxon Mobil and four other “unresponsive” energy companies from its climate aware range of funds, including one managed for UK pension scheme NEST, the firms said on Monday, Reuters reported. The asset management arm of UBS also divested from Imperial Oil, Kepco, Marathon Oil and Power Assets following a three-year engagement programme with 49 oil and gas companies identified as lagging on climate change performance, the firms said in a statement. The exclusions also apply to UBS’ actively-managed equity and fixed income sustainability funds.
INTERNATIONAL INTEGRATEDS
According to SEC filing, on December 19, 2021, BP Midstream Partners LP, BP Midstream Partners GP LLC, BP p.l.c., BP Midstream Partners Holdings LLC, an indirect wholly owned Subsidiary of BP and BP Midstream RTMS LLC entered into an Agreement and Plan of Merger pursuant to which Merger Sub will merge with and into the Partnership, with the Partnership surviving as an indirect, wholly owned subsidiary of BP. Under the terms of the Merger Agreement, at the effective time of the Merger, (i) each outstanding common unit representing limited partner interests in the Partnership other than Partnership Common Units owned by BP and its subsidiaries will be converted into the right to receive 0.575 BP American Depositary Shares each representing six ordinary shares of BP. In connection with the Merger, (i) any partnership interests that are owned by the Partnership or any of the Partnership’s subsidiaries will be cancelled; and (ii) the Partnership Common Units owned by Parent and its subsidiaries, the General Partner’s general partner interest and the incentive distribution rights in the Partnership will not be cancelled, will not be converted into the right to receive Merger Consideration and will remain outstanding following the Merger.
Repsol will sell its stakes in two Russian joint ventures to its local partner Gazprom Neft, Kommersant business daily reports citing sources. The deal is likely to close before the end of 2021.
Mayflower Wind Energy LLC (Mayflower), the 50-50 joint venture between Shell New Energies US LLC (Shell) and OW North America LLC, has been awarded the right to provide 400 MW of offshore wind energy by the Commonwealth of Massachusetts and its three biggest utilities as part of Massachusetts’ 83C III offshore wind energy procurement.
TotalEnergies will develop a series of photovoltaic and energy storage projects in New Caledonia in order to deliver decarbonized electricity via a 25-year renewable power purchase agreement (PPA) for the industrial operations of mining and metallurgy consortium Prony Resources New Caledonia.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
SM Energy announced targets to reduce Scope 1 and 2 emissions: Zero routine flaring at all SM Energy operations and non-routine flaring not to exceed 1% of natural gas production, each by 2023 based on the full year average; A 50% reduction in Scope 1 and 2 GHG emissions intensity by 2030 with 2019 as the base year; Maintaining its already very low methane emissions intensity at the Company’s 2020 level of 0.04 (metric tons CH4/MBoe) or better going forward.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Shawcor announced that it has sold its Shawcor Inspection Services business to Superior Integrity Inc for approximately C$11.5 million. The SIS business, reported within the Company’s Pipeline and Pipe Services segment, offers non-destructive testing services and related technologies to the US onshore pipeline market. It generated revenue of approximately C$38.4 million with a loss of C$3.3 million on an adjusted EBITDA basis in the twelve months ending September 30, 2021. Proceeds from the sale will be used to reduce the Company’s existing indebtedness.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
EnLink Midstream announced that it intends to increase its quarterly distribution, beginning with the fourth quarter of 2021, and provided an update on common and preferred unit repurchases. EnLink expects to increase its regular cash distribution to $0.1125 per common unit, beginning with the fourth quarter 2021 distribution. This distribution amount would represent an increase of 20% from EnLink’s third quarter 2021 distribution paid on November 12, 2021. EnLink has continued to repurchase common units in the fourth quarter. Since the Board of Directors authorized EnLink’s common unit prepurchase program for the repurchase of up to $100 million of outstanding common units in November 2020, EnLink has repurchased approximately 6.5 million outstanding common units in open market purchases, for an aggregate cost, including commissions, of $41.3 million, or an average of $6.38 per common unit. The Board of Directors has also reauthorized EnLink’s common unit repurchase program and reset the amount available for repurchases of outstanding common units at up to $100 million effective January 1, 2022. EnLink announced that it has redeemed an aggregate of 3,300,330 Series B Cumulative Convertible Preferred Units for total consideration of $50 million plus accrued distributions. The redemption price represents 101% of the preferred units’ par value.
EnLink Midstream announced the appointment of Tiffany (TJ) Thom Cepak to its Board of Directors (Board). As a result of Cepak’s appointment, the Board will have nine directors, two of whom are women.
MARKET COMMENTARY
Wall street futures and global stocks took a hit as worries over Omicron led curbs hurt market sentiment. Oil prices slid. Investors favored safe-haven currencies over risk-sensitive ones, the dollar was little changed. Gold prices fell.
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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