The energy sector is poised for another lower start, tracking further declines in the major equity futures which fell this morning ahead of the Federal Reserve meeting and a host of major earnings while crude prices steadied.
In deal news, Chesapeake Energy announced this morning it will buy privately held oil and gas producer Chief E&D Holdings LP for about $2.5 billion expanding its position in the gas-rich shale plays of the U.S. northeast. Chesapeake will buy the company and some stakes held by Chief E&D’s asset partner for $2 billion in cash and about 9.44 million worth of shares. Chesapeake also said it agreed to sell its Powder River Basin assets in Wyoming to Continental Resources for about $450 million.
WTI and Brent crude oil futures are flat in early trading, seesawing in and out of positive territory as investors weigh bullish signals from a tight supply picture against falling equities and a possible U.S. rate hike. Tensions between Russia and the west continued to drive additional supply concerns with NATO announcing it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as Western “hysteria” in response to its build-up of troops on the Ukraine border. In the Middle East, Yemen’s Iran-aligned Houthi movement launched a missile attack on Monday on a base in the United Arab Emirates hosting the U.S. military, which was thwarted by U.S.-built Patriot interceptors, U.S. and Emirati officials said. Also fueling the lingering supply concerns, OPEC+ said it was still struggling to hit its targeted monthly output increase of 400,000 barrels per day.
After two-consecutive days of gains, natural gas futures slipped lower this morning amid moderating weather forecasts in key consuming regions that should stunt demand.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
mCloud Technologies announced it had signed a Memorandum of Understanding with Aramco. The MOU sees mCloud joining forces with Aramco to explore the co-development of a digital technology hub for delivering ESG solutions in the Kingdom of Saudi Arabia.
A new milestone has been reached in the partnership between Eni and Aeroporti di Roma, as part of their strategic agreement aimed at promoting decarbonization initiatives in the aviation sector and accelerating the green transition of airports. A shipment of 5,000 litres of pure HVO hydrogenated biofuel arrived at Fiumicino airport from Eni’s Venice biorefinery in Porto Marghera.
Shearwater GeoServices Holding AS and Equinor are extending their collaboration to include Vår Energi and Lundin Energy Norway to accelerate the development and commercialisation of a sustainable marine vibratory source technology to minimise environmental footprint and enhance data quality from seismic data acquisition.
Pensana announced that it has signed a cooperation agreement with leading energy provider, Equinor New Energy Limited, to form a working group to share technical and commercial information to develop a low energy method for recycling of end-of-life magnets at Pensana’s rare earth hub in Saltend Chemical Park.
Hibiscus Petroleum Bhd has successfully completed the acquisition of the Spanish energy giant, Repsol’s operated assets in Malaysia and in Vietnam for US$212.5 million (US$1 = RM4.18).
According to Reuters, Shell has made a significant oil and gas discovery at an closely-watched offshore well in Namibia which could spark a wave of investment in the southern African country.
GCC Services has been selected by international engineering and construction giant McDermott to provide camp services for the Tilenga Project Upstream Facilities in the Lake Albert Basin of Uganda. The Tilenga project, under the overall operation of Total Energies, is the centerpiece of oil projects projected to bring investments of over $10 billion to Uganda and Tanzania. It will eventually have the capacity to process 190,000 to 700,000 barrels of oil a day.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
APA provided supplemental information regarding certain fourth-quarter 2021 financial and operational results: Q4 estimated average realized prices for oil (bbl) in U.S. of $76.00; Q4 estimated average realized prices for NGL (bbl) in U.S. of $34.00; Q4 estimated average realized prices for natural gas (Mcf) in U.S. of $4.70. During the fourth-quarter 2021, the company repurchased approximately 31.8 million shares of APA common stock at an average price of $27.13 per share. The estimated weighted-average basic common shares for the period is 361 million, compared with 379 million for the third quarter 2021.
Chesapeake Energy announced significant transactions designed to strengthen its asset portfolio, deliver higher free cash flow, and increase its projected annual dividend payments. The company signed definitive agreements to acquire Chief E&D Holdings, LP and associated non-operated interests held by affiliates of Tug Hill, for $2.0 billion in cash and approximately 9.44 million common shares. Chesapeake also signed an agreement to sell its Powder River Basin assets in Wyoming to Continental Resources for approximately $450 million in cash. The transaction, which is subject to certain customary closing conditions, is expected to close in the first quarter of 2022. At closing, net proceeds from the sale will go toward the purchase price of the Chief acquisition. Upon closing of the transactions, Chesapeake plans to operate two rigs on the acquired properties during 2022, resulting in a total of 9 – 11 gas-focused rigs and 2 – 3 oil-focused rigs. The company will maintain a disciplined capital reinvestment strategy, anticipating a 2022 reinvestment rate of approximately 47%. At current commodity strip prices, this preliminary capital program is anticipated to generate $3.4 – $3.6 billion in total adjusted EBITDAX.
Chesapeake Energy announced that Josh Viets has been appointed Executive Vice President and Chief Operating Officer, effective February 1, 2022.
Comstock Resources announced that its proved oil and natural gas reserves as of December 31, 2021 were estimated at 6.1 trillion cubic feet equivalent as compared to total proved oil and gas reserves of 5.6 Tcfe as of December 31, 2020.
Hess announced a 2022 Exploration & Production capital and exploratory budget of $2.6 billion, of which approximately 80% will be allocated to Guyana and the Bakken. Net production is forecast to average between 330,000 and 340,000 barrels of oil equivalent per day in 2022, excluding Libya. Bakken net production is forecast to average between 165,000 and 170,000 barrels of oil equivalent per day in 2022.
WhiteWater Midstream, MPLX LP, and West Texas Gas announced the addition of a fourth partner, Rattler Midstream LP, to the companies’ BANGL, LLC joint venture. Concurrent with Rattler’s investment in the project, Diamondback Energy, Rattler’s upstream operating parent, entered into a significant, long-term natural gas liquids (NGL) product dedication with BANGL.
The chiefs of major U.S. oil companies Occidental Petroleum and ConocoPhillipsoffered differing outlooks on the growth of U.S. oil output at a conference on Monday, as the industry rebounds from shutdowns during the first stage of the coronavirus pandemic.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Compass Minerals has appointed Teresa Cook as chief accounting officer. She has been with the company for nearly 17 years, most recently serving as vice president, corporate controller since 2017.
Fluor and its joint venture partner Walsh Construction broke ground to rebuild and straighten a section of Chicago Transit Authority’s (CTA) North Main Line Red and Purple Line track structure, a portion of track on the historic Red and Purple Modernization (RPM) Phase One Project that has been slowing traffic for more than a century.
TechnipFMC has been awarded a large subsea Engineering, Procurement, Construction and Installation (EPCI) contract by Petrobras for its Búzios 6 field (module 7), a greenfield development in the pre-salt area.
DRILLERS
No significant news.
REFINERS
Reuters reported that talks for a new national contract for U.S. refinery and chemical plant workers intensified on Monday between the United Steelworkers Union (USW) and oil companies, the union told members in a message seen by Reuters. Talks for the new pact began on Jan. 13 between the USW and lead company negotiator Marathon Petroleum, the union has said, ahead of the Feb. 1 expiry of an existing three-year agreement covering 30,000 workers across the United States.
Piper Sandler downgraded Marathon Petroleum to Neutral from Overweight.
Piper Sandler upgraded PBF Energy to Overweight from Neutral.
MLPS & PIPELINES
DCP Midstream, LP announced that the board of directors of its general partner declared a fourth quarter 2021 Common Unit cash distribution of $0.39 per unit, or $1.56 per unit on an annualized basis. This quarterly Common Unit distribution will be paid February 14, 2022 to common unitholders of record at the close of business on February 4, 2022.
Equitrans Midstream declared quarterly cash dividends of $0.15 per common share and $0.4873 per share of Series A Perpetual Convertible Preferred Stock for the fourth quarter 2021. The dividends will be paid on February 14, 2022, to all applicable ETRN shareholders of record at the close of business on February 3, 2022.
Bernstein upgraded Plains GP Holdings LP to Outperform from Market Perform.
MARKET COMMENTARY
U.S. stock index futures were down before the start of Federal Reserve’s two-day meeting in which it is expected to give guidance about the trajectory of monetary policy tightening. European shares rose, supported by upbeat results from Ericsson and Logitech. Asian equities ended in the red on concerns about the military conflict in Ukraine. A stronger dollar hurt gold prices. Oil prices bounced back, recovering some of the previous day’s losses. Microsoft and Texas Instruments are among the companies expected to report earnings after market close.
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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