March 12, 2022 [Nasdaq] – The energy sector is poised for a higher start, supported by further strength in the crude complex but pressured by weakness in the major equity futures which fell as a possible ban on oil imports from Russia added to concerns over spiraling inflation and slowing economic growth.
News flow is active in the sector, with rumors of a possible merger between Bakken operators Oasis Petroleum and Whiting Petroleum, according to the Wall Street Journal. Additionally, Occidental Petroleum holder Carl Icahn reportedly exited his position by the end of last week, while Warren Buffett’s Berkshire Hathaway purchased approximately 61 million shares of the E&P simultaneously throughout last week. And CERAWeek begins today and spans the week and is expected to provide plenty of commentary from corporate executives.
WTI and Brent crude futures are up in early trading and have spiked to their highest levels since 2008 amid market supply fears as the United States and European nations consider banning Russian oil imports and prospects for a quick return of Iranian crude to global markets receded. U.S. President Joe Biden plans to hold a video teleconference with the leaders of France, Britain, and Germany to discuss developments in Ukraine as Washington pushes its allies on a possible Russian oil ban. The U.S. Department of Energy has also approved the twelfth exchange of 2,700,000 barrels of crude oil for release to ExxonMobil Corp from the nation’s Strategic Petroleum Reserve, as an effort to boost the U.S. fuel supply.
Natural gas futures rose this morning following increased geopolitical tensions in Eastern Europe and forecasts for cooler weather and higher heating demand than previously expected.
BY SECTOR:
US INTEGRATEDS
The U.S. Department of Energy has approved the twelfth exchange of 2,700,000 barrels of crude oil for release to ExxonMobil from the nation’s Strategic Petroleum Reserve, the department said in a statement.
INTERNATIONAL INTEGRATEDS
BP p.l.c. announced that Tushar Morzaria, non-executive director of BP p.l.c., has been appointed to the Board of Legal & General Group Plc as an independent non-executive director with effect from 27 May 2022. He will also become Chair of L&G’s Group Audit Committee upon appointment, and will join L&G’s Group Risk Committee, Group Remuneration Committee, and Group Nominations and Corporate Governance Committee.
Italy and Qatar will try and boost their energy cooperation, Italy’s Foreign Minister Luigi Di Maio said on Sunday as Rome looks to break its reliance on Russian gas imports in the wake of the Ukraine conflict. Di Maio and the head of Italian energy group Eni, Claudio Descalzi, held two days of talks over the weekend with officials in the Gulf state.
According to headlines, Eni’s renewable unit Eni Gas E Luce changed its name into Plenitude.
Reuters reported that Petrobras chairman, Eduardo Bacellar Leal Ferreira, told Reuters on Saturday he plans to step down from his position to spend more time with this family.
Petrobras, following up on the releases disclosed on 09/29/2021 and 10/04/2021, informed that it has signed a contract with its partner CNOOC Petroleum Brasil Ltda. (CPBL) for the assignment of 5% of its interest in the Production Sharing Contract of the Transfer of Rights Surplus, for the Búzios field, in the Santos Basin pre-salt area.
Reuters reported that Petrobras executives this week will seek government approval to increase wholesale fuel prices at its Brazil refineries.
Royal Dutch Shell will put profits from any Russian oil it purchases into a fund that will go towards humanitarian aid to Ukraine, the company said on Saturday.
A consortium of investors reached an agreement on a $13.4 billion financing with banks to fund the purchase of a stake in Saudi Aramco’s gas pipelines, Al Arabiyareported.
Saudi Arabia’s state oil producer Aramco raised its April official selling price (OSP) for all crude grades it sells to Asia in line with market expectations. The world’s top oil exporter raised its April OSP to Asia for its flagship Arab Light crude to $4.95 a barrel versus Oman/Dubai crude, up $2.15 from March, the company said.
U.S. liquefied natural gas (LNG) exporter Venture Global LNG said that Shell Plc has agreed to buy LNG produced at its proposed Plaquemines LNG export plant in Louisiana.
Saft, a subsidiary of TotalEnergies, has won a turnkey contract for an energy storage system (ESS) for the world’s most northerly community of Longyearbyen in Svalbard, the island group in the Norwegian Arctic region.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Devon Energy Corp Cramer positive following an interview with its CEO Rick Muncrief.
Whiting Petroleum and Oasis Petroleum announced they have entered into an agreement to combine in a merger of equals transaction. The combined company will have a premier Williston Basin position with top tier assets across approximately 972K net acres, combined production of 167.8 thousand boepd, significant scale and enhanced free cash flow generation to return capital to shareholders. Upon closing, Whiting’s President and CEO, Lynn Peterson, will serve as Executive Chair of the Board of Directors of the combined company. Oasis’ CEO, Danny Brown, will serve as President and Chief Executive Officer and as a member of the Board. The combined company will be headquartered in Houston upon closing but will retain the Denver office for the foreseeable future. The combined company will operate under a new name and is expected to trade on the NASDAQ under a new ticker to be announced prior to closing.
Activist investor Carl Icahn exited a bet on Occidental Petroleum, selling the last of what was once a roughly 10% stake in the oil-and-gas producer, the Wall Street Journal reported on Sunday, citing a letter he sent to Occidental’s board.
As per SEC filing, on March 4, 2022, Andrew Langham and Gary Hu each notified Occidental Petroleum that he was resigning from the Board of Directors of the Company and all committees of the Board on which he sits, effective immediately. As previously disclosed, Mr. Langham and Mr. Hu were directors designated by Carl C. Icahn and certain other parties pursuant to that certain Director Appointment and Nomination Agreement, dated as of March 25, 2020, entered into by and among Carl C. Icahn, Andrew Langham, Nicholas Graziano, HighRiver Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP and Beckton Corp. and the Company.
CANADIAN E&PS
Vermilion Energy reported Q4 2021 fund flows from operations was $322 million, an increase of 23% from the prior quarter. Net earnings increased to $345 million in Q4 2021, compared to a net loss of $147 million in the prior quarter.
Vermilion Energy announced a cash dividend of $0.06 CDN per share payable on April 18, 2022 to all shareholders of record on March 31, 2022. The ex-dividend date for this payment is March 30, 2022.
OILFIELD SERVICES
Independence Contract Drilling Inc, Q4 EPS ($1.35) ex-item. revenue $28.6M, adj EBITDA $1.5M. Q4 exited with 16 rigs operating and 17 contracted. The 17th rig was reactivated in January. The Q4 operating rig count averaged 15. Q1 operating days to increase +8% q/q. Q1 revenue per day to increase +14% q/q.
KBR announced the General Accounting Office (GAO) decision to uphold the award of the US Transportation Commands Global Household Goods Contract. The contract ceiling value is approximately $20B with a potential 9 year term, inclusive of all options periods. HomeSafe Alliance will be the exclusive household goods move management service provider for the U.S. Armed Forces, Department of Defense civilians and their families.
D.A. Davidson upgraded KBR to Buy from Neutral.
Piper Sandler upgraded Oil States International to Overweight from Neutral.
Schlumberger announced an enterprise-wide deployment of the cloud-based DELFI cognitive E&P environment for ConocoPhillips. ConocoPhillips will use Schlumberger digital solutions enabled by the DELFI environment to bring its reservoir engineering modeling, data and workflows to the cloud.
DRILLERS
Patterson-UTI Energy reported that for the month of February 2022, the Company had an average of 116 drilling rigs operating in the United States. For the two months ended February 28, 2022, the Company had an average of 114 drilling rigs operating in the United States.
REFINERS
Delek US Holdings announced it entered into a stock purchase and cooperation agreement with Carl C. Icahn and certain of his affiliates. The Agreement includes the purchase of $64 million of the Company’s common stock beneficially owned by the Icahn Group, at a purchase price of $18.30 per share, which is the closing price of the Company’s common shares on March 4, 2022, the last trading day prior to the execution of the Agreement. Under the Agreement, the Icahn Group will, among other things, (i) withdraw its nomination of directors and (ii) agree to a standstill restriction through the completion of the Company’s 2023 annual meeting of stockholders, including refraining from acquiring additional shares of the Company’s common stock. Delek US will utilize cash on hand to fund the share repurchase.
Reuters reported that Valero Energy put the restart of the gasoline-producing fluidic catalytic cracker (FCC) on hold until at least late next week at its 335,000 barrel-per-day (bpd) Port Arthur, Texas, refinery, people familiar with operations said on Friday.
MLPS & PIPELINES
Cheniere Energy announced that its subsidiary, Cheniere Corpus Christi Liquefaction Stage III, LLC, has entered into a lump sum, turnkey, engineering, procurement and construction contract with Bechtel for the Corpus Christi Stage III Project. In addition, CCL Stage III has released Bechtel to commence early engineering, procurement and other site work at the Corpus Christi Stage III Project under a limited notice to proceed.
MARKET COMMENTARY
Oil prices soared, while Wall Street’s major index futures sank, together with global equities as the risk of a U.S. and European ban on imports from Russia and delays in Iran’s renewed nuclear talks boosted commodities and threatened a stagflationary shock for world markets. The euro extended its slide, while the dollar was firmer against its major peers. Palladium shot up to an all-time high, while gold tested the psychological $2,000 mark in response to demand for safe-haven assets.
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.
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