SECTOR COMMENTARY:
Energy stocks are set to open flat to slightly higher, as cross currents preside with lower broader index futures being offset by modestly higher front month oil prices. A handful of analyst recommendation changes, as well news flow out of the Barclays CEO Energy-Power Conference will continue to add some catalysts.
Oil prices rose on Thursday as U.S. crude output remained largely offline after Hurricane Ida, though gains were capped by a clouded outlook for demand recovery owing to the spread of the Delta variant of the coronavirus. About 77% of U.S. Gulf oil production had yet to resume on Tuesday, equating to about 1.4 million bpd. The market has lost about 17.5 million barrels of oil so far. API data showed that crude drawdown for the week ended September 3 was smaller than expected in a Reuters poll, but gasoline and distillate drawdowns were bigger than expected. U.S. crude oil production is expected to fall by 200,000 bpd in 2021 to 11.08 million bpd, the EIA said on Wednesday, noting that Hurricane Ida should force a bigger decline than its previous forecast for a drop of 160,000 bpd. “Crude Oil remains rangebound, with support being provided by a very slow return of U.S. production halted by Hurricane Ida and API data pointing to another price-supportive weekly drop in U.S. oil and fuel stocks,” Saxo Banks analysts said in a note.
Natural gas futures are down a nickel, but still flirting near 7-year highs, trading around $4.87. Inventory data is expected to show an injection of 36 bcf.
BY SECTOR:
US INTEGRATEDS
Chevron U.S.A. Inc., a subsidiary of Chevron and Caterpillar announced a collaboration agreement to develop hydrogen demonstration projects in transportation and stationary power applications, including prime power.
Chevron U.S.A. Inc., through its Chevron New Energies division, announced it has agreed on a framework to acquire an equity interest in ACES Delta, LLC, which is a joint venture between Mitsubishi Power Americas Inc. and Magnum Development, LLC that owns the Advanced Clean Energy Storage project. This project will produce, store and transport green hydrogen at utility scale for power generation, transportation and industrial applications in the western United States.
ExxonMobil said it made a discovery at Pinktail in the Stabroek Block offshore Guyana. The Pinktail well encountered 220 feet (67 meters) of net pay in high quality hydrocarbon bearing sandstone reservoirs. In addition to successful appraisal of the Turbot discovery, the Turbot-2 well encountered 43 feet (13 meters) of net pay in a newly identified, high quality hydrocarbon bearing sandstone reservoir separate from the 75 feet (23 meters) of high quality, oil bearing sandstone reservoir pay encountered in the original Turbot-1 discovery well. This follows the additional pay in deeper reservoirs encountered at the previously announced Whiptail discovery. These results will be incorporated into future developments.
INTERNATIONAL INTEGRATEDS
According to Reuters, Indian refiner Mangalore Refinery and Petrochemicals Ltd has signed a six-month deal to supply BP with 80,000 tonnes of diesel per month from October, said two trade sources close to the matter. MRPL will supply diesel to BP for the Australian market at a premium of about $1.40 a tonne for the six months, the sources said, with pricing based on the average of Argus and Platts’ Mideast Gulf spot assessments of 10ppm sulphur gasoil.
Royal Dutch Shell is weighing whether to mandate vaccines for employees and firing those who refuse to comply, the Financial Times reported on Wednesday.
Bloomberg reported that Saudi Aramco is considering a bold move to open up one of the world’s largest unconventional gas fields to foreign investors, as it looks to fund a $110 billion project to help it diversify from oil sales, according to people familiar with the matter. The state-controlled producer is working with an adviser as it explores raising new equity or debt for its vast Jafurah site and has started preliminary talks with potential investors, including large commodity traders, the people said.
CANADIAN INTEGRATEDS
Cenovus Energy entered into agreements with its partners in the Atlantic region to restructure its working interests in the Terra Nova and White Rose projects, providing improved economics for the company’s regional portfolio. These agreements will increase Cenovus’s working interest in Terra Nova and, if a decision is taken to restart West White Rose, reduce the company’s working interest in the White Rose field.
Suncor announced that the co-owners of the Terra Nova Floating, Production, Storage and Offloading facility and associated Terra Nova Field have finalized the agreement to restructure the project ownership and move forward with the Asset Life Extension Project. Suncor, Cenovus and Murphy Oil, now control 100% of the project with the following increased ownership positions: Suncor – 48% (previously approximately 38%); Cenovus – 34% (previously 13%); and Murphy Oil – 18% (previously approximately 10%).
Suncor announced it has entered into a conditional agreement to increase its interest in the White Rose asset subject to a restart decision on the West White Rose project.As part of the conditional agreement, Cenovus, the operator, will complete a restart evaluation for the West White Rose project by mid 2022. Should the project economics be robust enough to lead to a restart decision, Suncor has agreed to increase its interest in the White Rose offshore field by 12.5% (from 27.5% to approximately 40%) in exchange for a cash payment by Cenovus to Suncor. Suncor would assume capital commitments on the 12.5% additional interest on a go-forward basis only.
U.S. E&PS
According to SEC filing, on September 8, 2021, Cabot Oil & Gas announced that, in connection with the anticipated merger of Cimarex Energy and a wholly owned subsidiary of Cabot, Cabot has commenced offers to exchange any and all outstanding notes issued by Cimarex for up to $2,000,000,000 aggregate principal amount of new notes to be issued by Cabot and cash. In conjunction with the Exchange Offers, Cimarex is soliciting consents to adopt certain proposed amendments to each of the indentures governing the Existing Cimarex Notes to eliminate certain of the covenants, restrictive provisions and events of default from such indentures.
KeyBanc initiated coverage of California Resources with an Overweight rating.
Goldman Sachs removed Devon Energy from Conviction List.
Hess Corporation announced another oil discovery on the Stabroek Block offshore Guyana at Pinktail. The Pinktail well encountered 220 feet (67 meters) of net pay in high quality oil bearing sandstone reservoir. Pinktail is located approximately 21.7 miles (35 kilometers) southeast of the Liza Phase 1 development, which began production in December 2019, and 3.7 miles (6 kilometers) southeast of Yellowtail-1. Pinktail was drilled in 5,938 feet (1,810 meters) of water by the Noble Sam Croft.
Goldman Sachs added Pioneer Natural Resources to Conviction List.
According to Reuters, Talos Energy expects its crude and natural gas output this year to reach between 63,000 and 67,000 barrels of oil and gas per day (boepd), if operations are not affected by storms, the company said in a presentation on Wednesday.
JPMorgan initiated coverage of Westport Fuel Systems with a Neutral rating.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Forum Energy Technologies announced that it has entered into an amendment to its asset-based revolving credit facility. The key elements of the amendment include: (i) the maturity has been extended, subject to certain exceptions, to September 2026; (ii) the facility size has been reduced from $250 million to $179 million; and (iii) interest rates on borrowings outstanding under the Credit Facility were modified to LIBOR plus a margin of 2.25% to 2.75%, subject to the Company’s quarterly net leverage.
MIND Technology announced financial results for its fiscal 2022 second quarter ended July 31, 2021. Revenues from Marine Technology Products sales for the second quarter of fiscal 2022 were $6.8 million compared to $4.2 million in the first quarter of fiscal 2022 and $5.1 million in the second quarter of fiscal 2021. The Company reported a net loss from continuing operations for the second quarter of fiscal 2022 of approximately $2.7 million compared to a net loss of $3.7 million in the first quarter of fiscal 2022 and a net loss of $1.9 million in the second quarter of fiscal 2021. Second quarter of fiscal 2022 net loss from continuing operations attributable to common shareholders was $(0.25) per share compared to the first quarter of fiscal 2022 net loss per share of $(0.31) and a net loss of $(0.20) per share in the second quarter of fiscal 2021.
RBC assumed coverage of Baker Hughes, Halliburton, and Schlumberger with Outperform ratings. It also assumed coverage of Patterson-UTI Energy and NOV with Sector Perform ratings.
RBC upgraded Trican Well Service to Outperform from Sector Perform.
DRILLERS
RBC assumed coverage of Helmerich and Payne with an Outperform rating.
According to SEC filing, Noble is providing the following updated guidance for 2021 and preliminary guidance for 2022. The preliminary guidance for 2022 is unchanged from previously provided guidance. The company now sees 2021 adjusted revenue $860 million – $890 million, 2021 adjusted EBITDA $95 million – $115 million, 2021 capital expenditures $175 million – $195 million, preliminary 2022 adjusted revenues $975 million – $1.05 billion, preliminary 2022 adjusted EBITDA $265 million – $300 million, and preliminary 2022 capital expenditures $105 million – $120 million.
REFINERS
No significant news.
MLPS & PIPELINES
Plains All American Pipeline files for mixed shelf of up to $1.1 billion, according to SEC filing.
MARKET COMMENTARY
Wall Street futures were lower amid concerns about a looming reduction in central bank stimulus. European shares were down ahead of the ECB policy decision. Asian equities ended mostly in the red, weighed down by the latest regulatory crackdown in China. A weaker dollar pushed gold prices up.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
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