The energy sector is poised for a lower start, pressured by weakness in the crude complex but supported by the major market indices which are set to open mixed to higher as investors await more corporate earnings reports. Markets are on alert for rate rises in both the Euro zone and the United States after the ECB last week was considered to have adopted a more hawkish tone. This week, investors will be eyeing fresh U.S. inflation data and jobless claims, due on Thursday.
Oil futures are seesawing in and out of negative territory as signs of progress in the U.S.-Iran nuclear talks that could lead to removal of U.S. sanctions on Iranian oil sales offset concerns about supply shortages. Although the sanctions relief will have limited impacts on Iran’s struggling economy, they were perceived by the markets as a positive signal that both sides are determined to reach a deal. Iran could quickly export millions of barrels of crude and help drive down oil prices if U.S. sanctions are lifted as they have been moving oil into place to prepare for the eventual resumption of its exports. Tensions in Eastern Europe are fueling supply shortage concerns, with the White House saying on Sunday that Russia could invade Ukraine within days or weeks.
Natural gas futures eased this morning following forecasts for warmer-than-normal temperatures in the next two weeks than previously expected. The European Union is talking to the United States and other suppliers about boosting gas deliveries to Europe as prices have soared to record levels in recent months and tensions between Ukraine/Russia continue to rise. “We are building a partnership for energy security with the United States, which is primarily about more LNG gas supplies. We are talking to other gas suppliers, for example Norway, about increasing their supplies to Europe,” von der Leyen told a conference organized by German media Der Tagesspiegel, Die Zeit, Handelsblatt and Wirtschaftswoche on Monday.
BY SECTOR:
US INTEGRATEDS
Reuters reported that the Biden administration is considering a Chevron proposal to allow the U.S. oil major to accept and trade Venezuelan oil cargoes to recoup unpaid debt.
Esso Australia Pty Ltd (‘Esso Australia’, a subsidiary of ExxonMobil Australia Pty Ltd and operator of the Gippsland Basin Joint Venture) announced that it had entered into a multi-year agreement with DOF Subsea to charter a Multi-Purpose Supply Vessel to support decommissioning activities in Bass Strait.
INTERNATIONAL INTEGRATEDS
Petrobras informed that it concluded the sale of its entire stake in seven concessions denominated Alagoas Cluster, located in the state of Alagoas, to the company Origem Energia S.A (former Petro+). The operation was concluded with the payment of US$ 240 million to Petrobras. The amount received at closing is in addition to the US$ 60 million paid to Petrobras when the sale contract was signed, totaling US$ 300 million.
Peru’s environmental inspector, responding to fuel supply shortages, on Saturday authorized temporary resumption of hydrocarbon loading and unloading operations at sea at a refinery owned by Repsol which had been halted during a probe of a major oil spill.
Saudi Aramco has raised prices for all crude grades it sells to Asia in March from February, in line with market expectations. The world’s top oil exporter increased its March price for its Arab Light crude grade for Asian customers by 60 cents a barrel versus February to a premium of $2.80 a barrel to the Oman/Dubai average, Aramco said. March Arab Light crude to the United States was raised by 30 cents a barrel versus February to a premium of $2.45 a barrel versus ASCI (Argus Sour Crude Index).
BHP welcomed MV Mt. Tourmaline – world’s first LNG-fuelled Newcastlemax bulk carrier – that will transport iron ore between Western Australia and Asia from 2022. BHP has chartered five LNG-fuelled Newcastlemax bulk carriers from Eastern Pacific Shipping (EPS) for five years and awarded the LNG fuel contract to Shell.
Recent reports by the National Petroleum Corporation of Namibia and Qatar Energy have confirmed previous press reports of a light oil discovery operated by their partner Shell Namibia in the Graff-1 exploration well in the Orange Basin offshore Namibia. This is the first oil discovery ever declared offshore Namibia.
Reference is made to the announcement by Vår Energi ASA earlier regarding the start of the book building and application period in connection with the initial public offering of its shares. The Company has been informed that the Joint Bookrunners have received orders such that the Offering (including the over-allotment option) is oversubscribed within the indicative price range of NOK 28.00 – 31.50 per offer share.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Continental Resources Inc. was upgraded to outperform from sector perform at RBC Capital Markets.
Pioneer Natural Resources announced that it has delivered notices of full redemption of all of its outstanding 0.750% Senior Notes due 2024 and 4.45% Senior Notes due 2026, having aggregate principal amounts of $750 million and $500 million, respectively.
Vaalco operational update: 4Q21 production 7,550 bopd NRI, above the midpoint of guidance, 4Q21 revenue $57M, successfully drilled, completed and placed on production the Etame 8H-ST development well with a lateral of 162 meters in high quality Gamba sands near the top of the reservoir. Initial flow rate 5,000 gross bopd with 2,560 net revenue interest to VAALCO.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Baker Hughes Co holder GE discloses sale of 50.1M shares in connection with settlement of forward transaction. GE’s stake now 11.2%.
Forum Energy Technologies announced that fourth quarter 2021 operating results are expected to be below previously provided guidance levels. Results in the fourth quarter were negatively affected by further supply chain disruptions, which caused both revenue to be deferred and costs to increase. In addition, the company incurred excess logistics and freight costs in an effort to mitigate these supply chain disruptions. Also, medical benefit costs were higher than expected in the fourth quarter due to the direct and indirect effects of the COVID pandemic. As a result of these factors, revenue and adjusted EBITDA for the fourth quarter of 2021 are now expected to be approximately $148 million and $4 million, respectively. On a full year basis, 2021 revenue of $541 million and adjusted EBITDA of $20 million are expected to exceed prior year revenue by $29 million and adjusted EBITDA by $40 million, respectively.
Cris Gaut, FET’s Chairman and Chief Executive Officer, commented, “While the ongoing business impact from supply chain disruptions and increased expediting cost
JPMorgan upgraded Minerals Technologies to Overweight from Neutral.
National Energy Services Reunited Corp has been awarded one of the major contracts for Testing Services in Abu Dhabi from ADNOC Onshore. These contracts, worth $169M for surface testing over up to five years, will deploy best-in-class technologies while minimizing environmental impact and support ADNOC’s flagship in-country value program.
JPMorgan downgraded Nov Inc. to Neutral from Overweight.
DRILLERS
PATTERSON-UTI ENERGY reported that for the month of January 2022, the Company had an average of 113 drilling rigs operating in the United States.
REFINERS
Marathon Petroleum’s 593,000 barrel-per-day (bpd) Galveston Bay Refinery and Valero Energy’s 225,000-bpd Texas City Refinery were knocked out of production on Friday by a citywide power outage, according to the Texas City emergency management department.
MLPS & PIPELINES
Cheniere Energy Partners, L.P., a subsidiary of Cheniere Energy, announced that Substantial Completion of Train 6 at the Sabine Pass liquefaction project in Cameron Parish, Louisiana was achieved on February 4, 2022. Commissioning is complete and Cheniere’s engineering, procurement and construction partner, Bechtel Oil, Gas and Chemicals has turned over care, custody, and control of Train 6 to Cheniere Partners.
MARKET COMMENTARY
U.S. stock index futures fell after a week of volatile trading spurred on by mixed quarterly results from Big Tech, while Peloton jumped on reports of interest from potential buyers including e-commerce giant Amazon. European shares were mixed as fears over geopolitical tensions capped gains. Japanese shares ended in the red following disappointing earnings. Inflationary concerns boosted gold prices. The dollar was little changed. Oil prices fell as progress in U.S.-Iran talks signaled removal of U.S. sanctions on Iranian oil sales.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
www.nasdaq.com