SECTOR COMMENTARY:
Energy stocks are poised for a mixed to higher start, backed by strength in the underlying commodities while the broader index futures ticked lower as investors continued to monitor higher yields, looming Fed tapering, and inflation worries.
Oil futures are higher to start the week ahead of the OPEC+ meeting today where production targets will be reviewed to determine if the recent surge in prices because of supply issues and Covid-19 recovery is sustainable. OPEC+ has been facing pressure from countries to add back more barrels to help lower prices. Bank of America is bullish on oil and has forecasted oil prices could hit $100 per barrel over the next six months if we have a colder than usual winter.
Natural gas futures are up 3.7% to $5.82, rebounding from a volatile Friday after expectations were that the United States would have enough gas supplies for this winter. Prices of natural gas have more than doubled since the same time last year as the demand for fuel has accelerated as economies have recovered.
BY SECTOR:
US INTEGRATEDS
Chevron U.S.A. Inc., a subsidiary of Chevron announced that it closed its previously announced acquisition of an equity interest in American Natural Gas LLC and its network of 60 compressed natural gas stations across the United States from Mercuria Energy Trading.
According to Reuters, an Iraqi governmental committee approved on Monday that a dialogue be conducted with Chevron to develop four exploration blocks in the southern Zhi Qar province, Iraq’s oil ministry said in a statement. The ministerial energy committee also approved the expansion of the Diwaniya oil refinery, in the south, it added.
INTERNATIONAL INTEGRATEDS
According to Reuters, Petroleo Brasileiro SA said it has paid $853.2 million to the U.S. Department of Justice and Securities Exchange Commission as part of an agreement with U.S. authorities in 2018. The payment ends the DOJ’s monitoring of the company after a corruption probe that began with the Car Wash investigation.
Repsol produced renewable hydrogen using biomethane as raw material for the first time. This renewable hydrogen was used to manufacture fuels with a low carbon footprint, such as gasoline, diesel, or kerosene for aviation. This milestone took place at Repsol’s Cartagena Industrial Complex, where 10 tons of renewable hydrogen were produced from 500 MWh of biomethane, thus avoiding the emission of about 90 tons of CO2.
Shell signed a framework agreement with the renewable energy developer Island Green Power to develop solar PV projects with co-located battery storage potential, with an initial collaboration on over 700MW total generating capacity. Shell also partnered with Clearstone Energy to develop several utility-scale solar PV projects in the South-East of England.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Coterra Energy announced that its Board of Directors has declared a special cash dividend of $0.50 per share payable on October 22, 2021, to shareholders of record as of the close of business on October 14, 2021.
Earthstone Energy announced that it has entered into definitive agreements to acquire privately held operated assets located in the Midland Basin from two sellers unaffiliated with Earthstone. The aggregate purchase price of the Bolt-On Acquisition is approximately $73.2 million consisting of $49.2 million in cash, subject to customary purchase price adjustments, and approximately 2.6 million shares of Earthstone’s Class A common stock valued at $24.0 million based on a closing share price of $9.20 on September 30, 2021. The Bolt-On Acquisition is expected to close by the middle of the fourth quarter of 2021 with an effective date of July 1, 2021.
CANADIAN E&PS
Canacol Energy provided the following information concerning its September 2021 natural gas sales, the San Marcos 1 well, and remaining exploration drilling plans for 2021. Average realized contractual natural gas sales (which are gas produced, delivered, and paid for) were approximately 200 million standard cubic feet per day for September 2021. The San Marcos 1 well was spud on September 13, 2021 and reached a total depth of 7,317 feet measured depth on September 18, 2021. The rig is currently being mobilized to drill the Corneta 1 exploration well. Corneta 1 is targeting gas bearing sandstones within the Tertiary Tubara Formation, a new shallow exploration play that the Corporation is pursuing on the VIM 5 Exploration and Production Contract. Corneta 1 will spud in mid October and is anticipated to take up to 4 weeks to drill, complete and test.
Surge Energy and Fire Sky Energy announced that they have entered into an amalgamation agreement pursuant to which Surge has agreed to acquire all of the issued and outstanding common shares of Fire Sky by way of a statutory amalgamation for total consideration of approximately $58 million. The Transaction is to be funded by the issuance of approximately 11.2 million Surge common shares and the assumption of approximately $3 million of net debt1, inclusive of transaction costs.
OILFIELD SERVICES
CGG announced the completion of the previously announced sale of CGG’s GeoSoftware business to Topicus.com and Vela Software (for the total cash consideration of US$95 million (subject to certain customary closing adjustments).
Kirby announced that Raj Kumar will be joining Kirby Corporation as Executive Vice President and Chief Financial Officer in November 2021. Mr. Kumar will succeed Bill Harvey, who previously announced his intention to retire. Mr. Harvey will stay on until his retirement date in early 2022 as Executive Vice President, to ensure an orderly transition.
Natural Gas Services Group announced that its Board of Directors has authorized the repurchase of up to $10 million of its outstanding shares of common stock. The repurchase program will expire on September 30, 2022, subject to earlier termination of the program by the Board of Directors. As of September 30, 2021, the Company had approximately 13,183,262 common shares outstanding.
Patterson-UTI Energy announced that it has closed its previously announced acquisition of Pioneer Energy Services Corp. Total consideration for the acquisition included the issuance of approximately 26.3 million shares of Patterson-UTI common stock and payment of $30 million of cash, which based on the most recent closing price for Patterson-UTI of $9.44 valued the transaction at approximately $278 million, including the retirement of all Pioneer Energy Services’ debt.
Petrofac was fined 77 million pounds ($104.57 million) and a former executive jailed after pleading guilty to bribery in Iraq, Saudi Arabia and the UAE, Reuters reported. A spokesman for the company said former executive David Lufkin was sentenced to two years, 18 months of which were suspended.
DRILLERS
Dril-Quip announced that Raj Kumar, Vice President and Chief Financial Officer, has resigned his position with Dril-Quip effective November 1, 2021 to take another opportunity and will assist in a smooth transition of his duties. The Company has engaged an executive search firm to conduct a search for its next Chief Financial Officer.
REFINERS
HC Wainwright initiated coverage of Calumet Specialty Products Partners with a Buy rating.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures ticked lower, drawing from weakening sentiment in World stocks on worries about property developer China Evergrande, while Tesla shares rose after reporting a record number of electric vehicle deliveries. Gold eased off a more-than one-week high as Treasury yields firmed and the dollar recouped some losses but bullion held above key technical support of $1,750 buoyed by concern in wider markets about inflation. Oil was steady ahead of a meeting by OPEC which may determine whether a recent rally in prices amid a recovery from the COVID-19 pandemic will be sustained.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
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