SECTOR COMMENTARY:
U.S. equity-index futures gained on Wednesday along with stocks in Europe after slumping yesterday, as traders assessed the latest news on the omicron variant and the Federal Reserve’s signal of stepped-up efforts to curb elevated inflation. Bonds declined. S&P 500 and Nasdaq 100 futures pushed higher after U.S. stocks slumped in the wake of Fed Chair Jerome Powell’s hawkish pivot Tuesday.
Oil prices rose more than 4% on Wednesday, still struggling to recoup losses of more than 16% in November, as major producers prepared to discuss how much of a threat the new Omicron variant of the coronavirus would pose to energy demand. Both Brent and WTI front-month contracts in November posted their steepest monthly falls in percentage terms since March 2020, down 16% and 21% respectively ahead of a meeting on Thursday of OPEC+.
Some analysts expect OPEC+ to pause plans to add 400,000 barrels per day of supply in January in light of the potential hit to demand from travel curbs to rein in the spread of the Omicron variant. “There is much to suggest that OPEC+ will not initially step up its oil production any further in an effort to maintain current prices at around $70/bbl,” PVM analyst Stephen Brennock said.
Natural gas is down another (3.3%) to $4.417 as warmer forecasts continue to pressure pricing. Some technical selling has come into play after HH pushed below $4.87/mmbtu yesterday. NOAA 6-10 and 8-14 forecasts late yesterday actually got warmer, both expecting the vast majority of the Lower 48 to experience above-normal temperatures. US daily production over the last 7 days has averaged 95 Bcf/d according to S&P Global Platts, the first instances they have gas output above 95 Bcf/d since December of 2019.
BY SECTOR:
US INTEGRATEDS
Reuters reported Halliburton submitted proposal to purchase ExxonMobil stake in Iraq West Qurna 1 Oilfield. Iraq to review Halliburton proposal after completing all procedures with Exxon over selling its stake in West Qurna 1 Field.
ExxonMobil said it has finalized corporate plans, which increase spending to $15 billion on greenhouse gas emission-reduction projects over the next six years while maintaining disciplined capital investments in its industry-leading portfolio. The plans support the corporate strategy of continued structural cost savings, investment in low-cost-of-supply and lower-emission products, and further portfolio high-grading, positioning the company to double earnings and cash flow by 2027 versus 2019.
Exxon Mobil sees its P’nyang gas project and the Papua LNG project, led by TotalEnergies, investing more than $18 billion in Papua New Guinea over a decade, its managing director in the Pacific nation said on Wednesday, Reuters reported. Exxon is in talks with the government of Papua New Guinea to seal an agreement on development of the P’nyang gas field, which will feed its PNG LNG plant after its existing gas sources run down.
INTERNATIONAL INTEGRATEDS
Eni announced that it has taken part in the recent funding round for CFS (Commonwealth Fusion Systems), the spin-out Massachusetts Institute of Technology company, in which Eni is already the largest shareholder.
Berenberg upgraded Eni to Buy from Hold.
Equinor Ventures (EV) is increasing its investment in Commonwealth Fusion Systems (CFS) as part of the Series B funding round raising more than USD 1.8 billion to commercialise fusion energy.
CANADIAN INTEGRATEDS
Cenovus Energy reached agreements to sell its Husky retail fuels network and the Wembley assets in its Conventional business for combined total cash proceeds of nearly $660 million, allowing the company to further focus the portfolio, accelerate deleveraging and support increasing shareholder returns.
Federated Co-operatives Limited (FCL), on behalf of local Co-ops in the Co-operative Retailing System (CRS), has agreed to invest $264 million to purchase 181 Husky retail fuel sites from certain wholly-owned subsidiaries of Cenovus Energy. This represents the largest retail acquisition in Co-op’s history.
U.S. E&PS
Diamondback Energy announced a series of leadership changes. Russell Pantermuehl, currently Executive Vice President and Chief Engineer, will retire from his current role at the end of 2021 after having worked at Diamondback since August 2011, prior to the Company’s initial public offering. Russell and the Company have agreed that following his retirement he will serve as an advisor to Diamondback through December 31, 2022 in a limited role. Al Barkmann, currently Vice President of Reservoir Engineering, has been promoted to Senior Vice President of Reservoir Engineering, and will assume many of Russell’s prior responsibilities, reporting to Danny Wesson, EVP of Operations. Also, Yong Cho, currently Vice President of Drilling, has been promoted to Senior Vice President of Drilling and will continue reporting to Danny. These changes are effective immediately.
CANADIAN E&PS
TD Securities upgraded Vermilion Energy to Buy from Hold.
OILFIELD SERVICES
Reuters reported Halliburton submitted proposal to purchase ExxonMobil stake in Iraq West Qurna 1 Oilfield. Iraq to review Halliburton proposal after completing all procedures with Exxon over selling its stake in West Qurna 1 Field.
As part of its ongoing commitment to debt reduction, Schlumberger announced that Schlumberger Investment SA, an indirect wholly-owned subsidiary of Schlumberger will redeem the entire outstanding principal amount of its 2.40% Senior Notes due 2022 (CUSIP Nos. 806854AD7 / L81445AD7; and ISIN Nos. US806854AD77 / USL81445AD75). The redemption date for the Notes is May 2, 2022.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
TC Energy will host its annual Investor Day in a virtual format today. During the event the company will provide an overview of its corporate strategy, five-year financial outlook and the targets it has set to support its ten sustainability commitments. In addition, the company will outline the vast opportunity set that lies ahead for its natural gas pipelines, liquids pipelines and power and storage businesses in Canada, the United States and Mexico.
MARKET COMMENTARY
U.S. stock index futures were higher along with global equities, as bargain hunters returned after a rough November, although concerns remained on whether the latest COVID-19 variant will derail the economic recovery. The dollar index was slightly lower, while gold prices gained as focus remained on the Fed’s interest rates policy. Oil rose more than 4% as OPEC and its allies prepared to discuss on how to respond to the threat to fuel demand from the Omicron variant. The manufacturing PMI and construction spending data are on the economic calendar.
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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