SECTOR COMMENTARY:
Energy stocks slumped on Friday amid a drop in global technology shares and commodity prices as investors worry about the impact of higher interest rates and the fast-spreading omicron virus variant. Investors also braced for a quarterly rebalancing of the S&P 500 Index after the market close and the so-called triple witching expiration of equity derivatives that could magnify market moves.
Oil fell for the first time in three days as traders grew more concerned about the demand impact from the omicron variant and tighter monetary policy. Futures in New York dropped toward $71 a barrel after rising 2.3% over the past two sessions. Daily Covid-19 cases in the U.K. have jumped to a record, while hospitalizations have surged across the U.S. The Bank of England unexpectedly raised interest rates for the first time since the pandemic struck in a sign that inflation is now of bigger concern to leading central banks than the virus.
U.S. natural gas futures fell about 3% on Friday to a one-week low on record output and forecasts for milder weather through late December than previously expected. Mostly mild weather since mid-November has kept heating demand low and allowed utilities to leave so much gas in storage that there will soon be more of the fuel in stockpiles than is usual for the time of year for the first time since April.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
bp and Maersk Tankers, with support from the Danish Maritime Authority, have successfully completed trials using biofuel-blended marine fuel in product tankers, demonstrating that sustainable biofuels can be used as a marine ‘drop-in fuel’ to help reduce carbon emissions in shipping.
BP‘s floating, production, storage, and offloading vessel (FPSO) for the Greater Tortue Ahmeyim gas project offshore West Africa is expected in Senegal waters for commissioning and testing by the end of 2022, a company executive said on Friday, Reuters reported. The FPSO for the project, which straddles Senegal and Mauritania, is being build in China by France’s Technip Energies
On the initiative from Lundin Energy, Equinor and Lundin Energy have entered into an agreement where Equinor continues as operator in the operations phase for the Barents Sea Wisting field. Equinor has been the operator of the Wisting field development phase since 1 December 2019. Based on the agreement with LundinEnergy, Equinor will continue its Wisting operatorship into the operations phase following an investment decision for the project.
CANADIAN INTEGRATEDS
Cenovus Energy reached an agreement to sell its Tucker thermal asset for total cash proceeds of $800 million. Proceeds from this transaction will further accelerate the company’s reduction of net debt and enhance its capacity to increase shareholder returns. Including this transaction, the company expects to realize almost $2 billion of total proceeds from asset sales announced in 2021.
Imperial provided an update on its corporate guidance outlook for 2022. The company’s corporate strategy remains focused on maximizing performance of existing assets, prioritizing shareholder returns and progressing key sustainability initiatives. Capital spending is forecast at $1.4 billion, reflecting continued capital discipline and efficient project execution. In the Upstream, production is forecast to be between 425,000 and 440,000 gross oil equivalent barrels per day, underpinned by strong operating performance in the company’s core oil sands assets and continued production growth at Kearl. In the Downstream, throughput is forecast to be between 395,000 and 405,000 barrels per day with capacity utilization between 92% and 94%.
U.S. E&PS
EOG Resources files for potential mixed shelf offering; size not disclosed, Reuters News.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
NOW announced that it has entered into an amendment to the existing senior secured credit facility with a syndicate of lenders, with Wells Fargo Bank, National Association serving as the administrative agent. The First Amendment amends certain terms, provisions and covenants of the Credit Agreement, including, among other things: (i) extends the maturity date under the Credit Agreement to December 14, 2026; (ii) provides for a five-year $500 million global revolving credit facility, with potential to further increase the credit facility to $750 million; (iii) increases availability under the Credit Agreement by expanding the borrowing base definition to include certain pledged cash deposits of the Borrowers; and (iv) decreases by 0.250% the applicable rate for borrowings of base rate loans and Eurocurrency rate loans when the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) is less than or equal to 1.50 to 1.00.
Shawcor announced that its pipe coating division has received a formal notice to proceed from SAIPEM AUSTRALIA PTY LTD for the Scarborough Project, located offshore in Australia’s north-west. The Scarborough gas resource is located in the Carnarvon Basin, approximately 375 km west-north-west of the Burrup Peninsula in Western Australia.
TETRA Technologies and Eos Energy Enterprises announced that they have signed a strategic term sheet regarding a long-term supply and collaboration agreement to support the manufacturing of Eos’ innovative Znyth® aqueous zinc battery. Key to the operational success of the Zynth system is high purity zinc-bromide, which is part of Eos’ patented electrolyte system.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Citi upgraded DCP Midstream to Buy from Neutral and downgraded Williams to Neutral from Buy.
Mizuho upgraded DCP Midstream to Buy from Neutral.
MARKET COMMENTARY
Wall Street futures and global stocks fell as traders wrestled with this week’s surprisingly hawkish turn from major central banks in the fight against inflation, and as rising Omicron cases spark worries about the hit to the global economy. The dollar edged up, and gold climbed. Oil prices dipped as surging cases of the Omicron coronavirus variant raised fears new curbs may hit fuel demand.
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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