The energy sector is poised for a higher start, supported by strength in the underlying commodities and in the major equity indices. U.S. stock index futures rose in choppy trading after an increase in the October unemployment rate supported expectations that the Federal Reserve could deliver smaller rate hikes starting in December.
WTI and Brent crude oil futures are up in early trading as the dollar eased, with an EU ban on Russian oil looming large and investors weighing the prospects for an easing of China’s COVID curbs. While demand concerns weighed on the market, supply is still expected to be tight, with Europe’s upcoming embargoes on Russian oil starting and a slide in U.S. crude stockpiles. The Group of Seven rich nations and Australia have agreed to set a fixed price when they finalize a price cap on Russian oil later this month, rather than adopting a floating rate. U.S. officials and G7 countries have been in intense negotiations in recent weeks over the unprecedented plan to put a price capon sea-borne oil shipments, which is scheduled to take effect on Dec. 5 – to ensure EU and U.S. sanctions aimed at limiting Moscow’s ability to fund its invasion of Ukraine do not throttle the global oil market.
Natural gas futures are trading higher on forecasts for much colder weather and higher heating demand in mid-November than previously expected.
BY SECTOR:
US INTEGRATEDS
The WSJ reported that Exxon Mobil is considering leasing or selling unused office space at the sprawling Houston-area campus set to become its global headquarters next year, part of its ongoing effort to cut billions in structural costs.
New York Harbor diesel cash differentials rose sharply on Thursday amid news that contractors at Exxon’s Fawley refinery in the United Kingdom could strike this month, traders said.
INTERNATIONAL INTEGRATEDS
Saudi Arabia lowered the December official selling prices (OSPs) for the flagship Arab light crude it sells to Asia to plus $5.45 a barrel versus the Oman/Dubai average, the country’s state oil producer Aramco said.
Petrobras posted a stronger than expected 48% surge in third-quarter profit, the latest in a string of stellar quarters under market-friendly managers whose days may be numbered. Petroleo Brasileiro SA, as it is formally known, reported net profit of 46.1 billion reais ($9.01 billion) or 3.56 reais a share. Earlier on Thursday, Petrobras had said it would distribute some 43.68 billion reais ($8.5 billion) in dividends. The company’s huge payouts have prompted critics to argue it is underinvesting in its core business.
Petrobras informed that its Board of Directors, at a meeting held, approved the payment of a dividend in the amount of R$ 3.3489 per outstanding preferred and common share.
Petrobras informed that a decision was rendered by the Court of appeal of the State of Rio de Janeiro overturning the previous ruling that granted an injunction that freezed the contractual negotiations with the consortium of companies Petroreconcavo and Eneva concerning to the sale process of the onshore production fields located in the Reconcavo and Tucano Basins, in the state of Bahia, jointly called Polo Bahia Terra.
Shell said it signed an agreement with Chinese state refiner Sinopec and steel group Baowu as well as German chemical giant BASF to study a carbon capture, utilisation and storage project (CCUS) in East China.
A strike is continuing at TotalEnergies’ Feyzin oil refinery in northern France, a CGT power union official told Reuters.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
The Board of Directors of ConocoPhillips approved the following changes to the Company’s senior management, which will be effective November 7, 2022: Kontessa S. Haynes-Welsh, currently Chief Accounting Officer, will become vice president and Treasurer. Christopher P. Delk, currently vice president and General Tax Counsel of the Company, will become vice president, Controller and General Tax Counsel.
Coterra Energy reported net income for third-quarter 2022 totaled $1,196 million, or $1.51 per share; adjusted net income (non-GAAP) for third-quarter 2022, excluding non-recurring items, was $1,126 million, or $1.42 per share. On November 3, 2022, Coterra’s Board of Directors approved a total quarterly dividend equal to $0.68 per share ($0.15 base, $0.53 variable), which will be paid on November 30, 2022 to holders of record on November 16, 2022.
Enerplus announced financial and operating results for the third quarter of 2022. The Company reported third quarter 2022 cash flow from operating activities and adjusted funds flow of $409.9 million and $355.6 million, respectively, compared to $182.2 million and $203.1 million, respectively, in the third quarter of 2021. Enerplus reported third quarter 2022 net income of $305.9 million, or $1.28 per share (diluted), compared to net income of $98.1 million, or $0.38 per share (diluted), in the same period in 2021. Adjusted net income for the third quarter of 2022 was $207.9 million, or $0.87 per share (diluted), compared to $87.5 million, or $0.34 per share (diluted), during the same period in 2021.
Enerplus announced that it has received Board approval to increase the amount of its quarterly dividend by 10%. The December 2022 quarterly cash dividend will be in the amount of US$0.055 per share and payable on December 15, 2022 to all shareholders of record at the close of business on November 30, 2022. The ex-dividend date for this payment is November 29, 2022.
EOG Resources reported third quarter 2022 results. The Company earned adjusted net income of $2.2 billion, or $3.71 per share. The Board of Directors declared a regular dividend of $0.825 per share on EOG’s common stock. The dividend will be payable January 31, 2023, to stockholders of record as of January 17, 2023. The new dividend represents an indicated annual rate of $3.30 per share, a 10% increase from the previous level. The Board of Directors also declared a special dividend of $1.50 per share on EOG’s common stock. The special dividend will be payable December 30, 2022, to stockholders of record as of December 15, 2022. EOG has now committed to return $5.1 billion of cash to shareholders in 2022 through regular quarterly and special dividends.
Laredo Petroleum announced its third-quarter 2022 financial and operating results. The Company reported net income attributable to common stockholders of $337.5 million, or $20.08 per diluted share. Adjusted Net Income was $89.2 million, or $5.30 per adjusted diluted share. Adjusted EBITDA was $222.8 million.
Magnolia Oil & Gas announced the proposed underwritten block trade of 7,500,000 shares of the Company’s Class A common stock by certain affiliates of EnerVest, Ltd. The shares will be offered from time to time for sale through negotiated transactions or otherwise at market prices prevailing at the time of sale. Magnolia will not sell any shares of its Class A Common Stock in the Offering and will not receive any proceeds from the sale by the Selling Stockholders of shares of Class A Common Stock. In connection with the Offering, the Company intends to purchase from the Selling Stockholders 2,000,000 shares of the Company’s Class B common stock at a price per share equal to the price per share at which the underwriter purchases shares of the Company’s Class A Common Stock in the Offering. The Offering is not conditioned upon the completion of the Class B Common Stock Purchase, but the Class B Common Stock Purchase is conditioned upon the completion of the Offering.
SM Energy announced financial results for the third quarter 2022. Net income in the third quarter and for the first nine months of 2022 was $481.2 million, or $3.87 per diluted common share, and $853.5 million, or $6.87 per diluted common share, respectively. Adjusted net income in the third quarter and for the first nine months of 2022 was $1.82 and $6.00 per diluted common share, respectively.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Balchem reported third quarter net earnings of $25.2 million for 2022, compared to net earnings of $25.0 million for the third quarter 2021, adjusted net earnings of $32.4 million, compared to $30.0 million in the prior year quarter, and adjusted EBITDA of $53.8 million, compared to $48.3 million in the prior year quarter.
Fluor announced financial results for its third quarter ended September 30, 2022. Revenue for the quarter was $3.6 billion and net income from continuing operations attributable to Fluor was $22 million, or $0.08 per diluted share. Consolidated segment profit for the quarter was $31 million compared to $116 million in the third quarter of 2021. Results for the quarter include $107 million in project adjustments for three legacy infrastructure projects. Excluding adjustments, the company recognized adjusted earnings per diluted share of $0.07.
Granite has been awarded an approximately $30 million dollar construction contract for various Design-Build improvements at East Tongue Point near Astoria, Oregon. The project will be funded by Department of Homeland Security (DHS) and will provide facilities to accommodate the Homeporting of two Coast Guard Fast Response Cutters (FRCs). The new FRCs boast many improvements including a stabilized 25-mm machine gun mount, four crew-served .50-caliber machine guns, and enhanced response times with a minimum top speed of 28 knots. The award is expected to be included in Granite’s fourth quarter CAP.
SLB will raise its quarterly dividend next year by 43% and resume a share buyback program, executives said, offering an upbeat view of energy markets. Although annual revenues have fallen every year since 2019, SLB should see revenue increase this year from last year’s levels and is targeting a 15% compound average revenue growth rate through 2025 from 2021 levels, officials said. The company next year will boost its quarterly dividend by 43% to 25 cents per share, and restart a share buyback program with a $9 billion authorization. The company aims to return a minimum of 50% of its free cash flow to shareholders in the coming years.
DRILLERS
No significant news.
REFINERS
Valero shut relevant units after a fire at the East Plant of its Corpus Christi, Texas oil refinery, according to a regulatory filing.
MLPS & PIPELINES
Enbridge reported third quarter 2022 financial results, announced $3.8 billion of newly secured growth projects, including an expansion of the T-South segment of the B.C. Pipeline, and reaffirmed its 2022 financial outlook. Third quarter GAAP earnings were $1.3 billion or $0.63 per common share, compared with GAAP earnings of $0.7 billion or $0.34 per common share in 2021. Adjusted earnings were $1.4 billion or $0.67 per common share, compared with $1.2 billion or $0.59 per common share in 2021. Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) was $3.8 billion, compared with $3.3 billion in 2021.
Enbridge announced that it will conduct an open season for additional natural gas transportation service on the T-North segment of its B.C. Pipeline (T-North), a natural gas pipeline system in British Columbia (B.C.). T-North runs from the Fort Nelson area and transports natural gas south to the T-South segment of the Company’s B.C. pipeline system (T-South) and east to interconnecting pipelines at the B.C.-Alberta border.
Enbridge announced the successful completion of an open season for increased transportation capacity on the T-South segment of its B.C. Pipeline (T-South), a natural gas pipeline system, which originates near Chetwynd, British Columbia (B.C.) and extends south to the Canada-U.S. border at Huntingdon-Sumas.
Overseas Shipholding Group reported results for the third quarter 2022. Shipping revenues for the third quarter of 2022 were $123.1 million, an increase of $5.1 million, or 4.3%, from the second quarter of 2022. Compared to the third quarter of 2021, shipping revenues increased 31.0% from $94.0 million. Net income for the third quarter of 2022 was $13.2 million, or $0.15 per diluted share, compared with net income of $3.7 million, or $0.04 per diluted share, in the second quarter of 2022. Net loss was $16.0 million, or $(0.18) per diluted share, for the third quarter of 2021.
Summit Midstream Partners, LP announced its financial and operating results for the three months ended September 30, 2022, and also reiterated its expectation of achieving the high-end of its previously announced 2022 Adjusted EBITDA guidance range of $205 to $220 million. Net loss was $7.8 million, primarily driven by non-cash impairments associated with the Bison sale. The Company increased adjusted EBITDA by 8.5% to $54.7 million from $50.5 million for the second quarter of 2022.
MARKET COMMENTARY
U.S. stock futures were higher ahead of the monthly jobs data which could reflect some loosening in labor market conditions, allowing the Federal Reserve to shift towards smaller rate hikes starting in December. Global stocks rose as investors took heart from reports China may relax its COVID rules, boosting major currencies against the dollar and prompting a rally in oil. Gold prices jumped. Japan’s Nikkei ended lower, as a hawkish U.S. Federal Reserve led investors to a selloff on their return from a national holiday, although strong gains in Chinese stocks limited losses.
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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