Crudes Rises, Tracking First Weekly Gain Since Early January
Energy stocks are set to open higher on the final trading session of the week, backed by strength in the crude complex and broader equity futures which rose on a handful of upbeat corporate earnings and despite new economic data that showed consumer spending slowed in January. Sector news is relatively quiet and macro headlines continue to dictate equity prices leading into the extended holiday weekend.
Oil prices on both sides of the Atlantic are higher by ~1% and on track for their first weekly gain since early January as investors bet the economy impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown. “It would seem in our view that the oil price is on a more positive footing in the past couple of days, with improved sentiment reflected in Asian equity prices holding up,” said BNP Paribas analyst Harry Tchilinguirian. Traders will be looking ahead to the weekly Baker Hughes rig count data released later this afternoon as the next catalyst for prices.
Natural gas futures bucked the trend and are off half a percent as forecasts for mild weather and lower heating demand in two weeks and near record low liquefied natural gas prices offset projections for more cold next week than earlier expected.
Reuters – Exxon Mobil has sold two Russian Sokol crude cargoes SOK-DUB loading in April to early May at lower premiums as China’s coronavirus hits oil demand, four trade sources said. The cargoes, loading April 8-11 and April 29-May 2, were sold at premiums of around $3.50 a barrel to Dubai quotes, they said. The buyers were not immediately known Prior to this, Indian oil explorer ONGC Videsh sold one cargo of Russian Sokol crude loading April 8-14 at a premium of around $4.30 a barrel to Dubai quotes to China’s Unipec.
Reuters – The chief executive officer of Petrobras, Roberto Castello Branco, said on Friday the company’s contingency plan to deal with a workers’ strike will last as long as necessary. On the sidelines of an event in a hotel in Rio de Janeiro, he reiterated the strike had not affected oil production. Petrobras has hired during a strike called by unions to protest against layoffs at a money-losing fertilizer factory.
Reuters – Shell said sit had identified an employee at its main Singapore office who had been in contact with a coronavirus case and had advised other staff close to him to work from home. The firm did not say how many staff it had impacted at its office in The Metropolis building. “Shell can confirm that an employee who works at The Metropolis has been identified as having close contact with a COVID-19 case who tested positive this morning,” a spokesperson for the firm said in an emailed statement. “The colleagues he has been in close contact with have been advised to work from home with immediate effect until further notice,” the spokesperson added.
Reuters – Total is considering stopping sales of fuel oil to power markets as the energy giant seeks to reduce its carbon footprint and grow its renewable power business, its chief executive told Reuters. Fuel oil is one of the most carbon intensive refined oil products, used mainly for power generation and as a marine fuel. “We want to stop selling fuel oil for making power,” Total Chief Executive Patrick Pouyanne told Reuters in an interview on Feb. 6. Total, Europe’s largest refiner, produced and traded over 4% of all oil products consumed globally last year.
(Late Thursday) Press Release – Bonavista Energy reported its financial and operating results for the three months and year ended December 31, 2019. For the fourth quarter, the company reported a net loss and comprehensive loss of $44.2 million ($0.17 per share, basic) compared to a net loss and comprehensive loss of $307.5 million ($1.16 per share, basic) reported in the prior quarter. Cash flow from operating activities in the fourth quarter of 2019 was $48.0 million, a 29% increase from the third quarter of 2019 of $37.1 million, due to a 23% increase in production revenues, inclusive of gains on financial instrument commodity contracts and on a per boe basis increased to $19.23 per boe from $15.78 per boe in the prior quarter. Adjusted funds flow for the quarter was $47.7 million as compared to $34.6 million in the previous quarter for similar reasons as discussed above. Net capital expenditures increased to $68.0 million in the quarter from $27.3 million in the third quarter of 2019. Production volumes for the quarter averaged 62,923 boe per day consisting of 260 mmcf per day of natural gas, 18,003 boe per day of natural gas liquids and 1,587 bbl per day of oil.
(Late Thursday) Press Release – Whitecap announced that a cash dividend of C$0.0285 per common share in respect of February operations will be paid on March 16, 2020 to shareholders of record on February 29, 2020. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).
(Late Thursday) Press Release – CES Energy announced that it will pay a cash dividend of $0.005 per common share on March 13, 2020 to the shareholders of record at the close of business on February 28, 2020.
Press Release – NuScale Power, whose majority investor is Fluor, announced that it has signed a memorandum of understanding (MOU) with Ukraine’s State Scientific and Technical Center for Nuclear and Radiation Safety. The MOU states that the SSTC NRS and NuScale will collaborate on the regulatory and design gaps between the U.S. and Ukraine processes for the licensing, construction, and operation of a NuScale small modular reactor power plant in Ukraine.
(Late Thursday) Press Release – Halliburton announced that its board of directors has declared a 2020 first quarter dividend of eighteen cents ($0.18) a share on the Company’s common stock payable on March 25, 2020, to shareholders of record at the close of business on March 4, 2020.
Press Release – Transocean issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs. Since its last Fleet Status Report in October, Transocean added approximately $366 million in contract backlog, bringing total backlog to $10.2 billion. This quarter’s report includes the following new contracts: Leiv Eiriksson. – Awarded a two-well contract, plus three one-well options in Norway; Discoverer Inspiration – Awarded a three-well contract, plus three one-well options in the U.S. Gulf of Mexico; Deepwater Asgard – Awarded an estimated 200-day contract, plus four 74-day options in the U.S. Gulf of Mexico; Development Driller III – Awarded a one-year contract in Trinidad; Dhirubhai Deepwater KG2 – Awarded a 180-day contract, plus three one-well options in Myanmar; Leiv Eiriksson – Awarded a one-well contract in Norway; Deepwater Invictus – Customer exercised a one-year option in the U.S. Gulf of Mexico; Transocean Norge – Customer exercised two one-well options in Norway; Deepwater Nautilus – Customer exercised 180-day option in Malaysia; and Deepwater Asgard – Customer exercised a 74-day option in the U.S. Gulf of Mexico.
(Late Thursday) Reuters – Valaris announced new contracts and extensions since October 25, 2019 Fleet Status Report. In Floaters, Valaris DS-18 (Relentless) contract is extended. Valaris 6002 was sold and retired from the offshore drilling fleet. Valaris 5006 sold and retired from the offshore drilling fleet. Valaris JU96 was sold and retired from the offshore drilling fleet. Valaris JU-70 Classified as held for sale. Valaris JU-68 sold and retired from the offshore drilling fleet.
MLPS & PIPELINES
Press Release – Enbridge reported fourth quarter and full year 2019 financial results and provided a quarterly business update. GAAP earnings attributable to common shareholders for the fourth quarter of 2019 decreased by $343 million or $0.23 per share compared with the same period in 2018. Adjusted earnings in the fourth quarter 2019 increased by $62 million. Adjusted earnings for the year ended 2019 increased by $773 million compared with the year ended 2018. DCF for the fourth quarter was $2,051 million, an increase of $188 million over the comparable prior period in 2018, while DCF for the year ended 2019 was $9,224 million, which is an increase of $1,606 million over 2018. Enbridge provided its financial guidance for 2020 including EBITDA of approximately $13.7 billion and a projected range of 2020 DCF of $4.50 to $4.80 per share. The Company also announced a 9.8% dividend increase for 2020 to a quarterly dividend of $0.81 per share, commencing with the dividend payable on March 1, 2020, to shareholders of record on February 14, 2020.
Press Release – Enbridge announce that its Board of Directors has appointed Gregory J. Goff as a director of Enbridge.
(Late Thursday) Press Release – NextDecade and Enbridge announced that they have entered into a definitive agreement whereby Enbridge will acquire Rio Bravo Pipeline Company, LLC from NextDecade for a cash purchase price not to exceed $25 million, with $15 million paid at closing and the balance paid upon NextDecade’s reaching a positive final investment decision (FID) on its Rio Grande LNG export facility in the Port of Brownsville, Texas. Upon closing of the transaction, Enbridge will own one hundred percent of RBPL and assume all responsibility for the development, financing, construction, and operations of the Rio Bravo Pipeline. NextDecade will continue to be responsible for the development, financing, construction, and operations of its Rio Grande LNG export facility.
(Late Thursday) Reuters – TC Energy sees too much uncertainty to commit immediately to the long-delayed Keystone XL oil pipeline project, company executives said on Thursday, even as TC prepared for construction. The Canadian company has recently cleared some regulatory hurdles, including receiving a fresh environmental impact statement from the U.S. State Department. But it needs permits to access U.S. water crossings from the U.S. Army Corps of Engineers and resolution to a court challenge of the project’s 2018 U.S. presidential permit before making a final investment decision, Executive Vice-President of Liquids Pipelines Paul Miller said on a quarterly conference call.
The S&P 500 and Nasdaq futures, along with European shares hit record highs as investors across geographies assessed whether the coronavirus outbreak would cause long lasting damage to global economy. Most Asian shares ended higher. Dollar buying improved amid the virus fear, while gold prices were little changed. Hopes of impact of the virus being short-lived pushed oil prices higher. Investors will be looking out for data on import and export prices, retail sales and industrial production.
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