The energy sector is set for a higher start, supported by strength in the crude complex. U.S. equity futures are lower as disappointing results and warnings from Microsoft and Alphabet sparked losses in mega cap companies and raised fears of slowing economic growth.
WTI and Brent crude oil are slightly up in morning trading despite signs of rising inventories. U.S. crude inventories rose by about 4.5 million barrels in the week ended Oct. 21, according to market sources citing figures from the American Petroleum Institute, above expectations from five analysts polled by Reuters. Rising stockpiles reinforce fears of a global recession that would further cut demand, weakness in which has also been apparent in softer Chinese crude import data.
Natural gas futures fell on record output and forecasts for less demand than previously expected.
BY SECTOR:
US INTEGRATEDS
ExxonMobil announced two discoveries at the Sailfin-1 and Yarrow-1 wells in the Stabroek block offshore Guyana, adding to its extensive portfolio of development opportunities. ExxonMobil has made more than 30 discoveries on the block since 2015, and it has ramped up offshore development and production at a pace that far exceeds the industry average. The Sailfin-1 well encountered approximately 312 feet (95 meters) of hydrocarbon-bearing sandstone and was drilled in 4,616 feet (1,407 meters) of water. The Yarrow-1 well encountered approximately 75 feet (23 meters) of hydrocarbon-bearing sandstone and was drilled in 3,560 feet (1,085 meters) of water. Both wells were drilled by the Stena Carron drillship.
INTERNATIONAL INTEGRATEDS
PTTEP further expands its investment in the United Arab Emirates (UAE) by acquiring 25% participating interest in the Sharjah Onshore Area A from Eni. The investment is PTTEP’s fifth project in the UAE as the company continues to strengthen presence and growth in the petroleum prolific area in the Middle East.
Equinor Energy AS, operator of production licence 943, has concluded the drilling of wildcat well 6607/12-5.
Norway’s giant Johan Sverdrup oilfield is expected to start phase-two production in December, Aker BP, a partner in the Equinor-operated field, said.
The Petroleum Safety Authority Norway (PSA) has given Equinor consent for exploration drilling in block 16/2 in the North Sea.
Saudi Aramco CEO Amin Nasser said there were many uncertainties in the oil market ahead of planned European embargoes on Russian crude and products.
Aramco announced the creation of a $1.5 billion Sustainability Fund to invest in technology that can support a stable and inclusive energy transition. It was unveiled at the sixth edition of the Future Investment Initiative (FII) and is among the largest sustainability-focused venture capital funds globally.
Shell Eastern Petroleum, a unit of Shell, said it had signed a memorandum of understanding (MoU) with Brunei Shell Petroleum (BSP) to explore carbon transport and storage options in Brunei and Singapore.
Bloomberg reported that Namibia would consider joining the Organization of Petroleum Exporting Countries if recent oil discoveries by TotalEnergies and Shellturn out to be significant, according to the African nation’s government.
Lebanon’s caretaker cabinet approved a decision to waive TotalEnergies’ 40% share in a consortium to explore Lebanon’s maritime Bloc 9 to firm DAJA 215.
TotalEnergies and Casa dos Ventos, Brazil’s leading renewable energy developer, announced the creation of a 34%(TTE)/66%(CDV) joint venture to jointly develop, build and operate the renewable portfolio of Casa Dos Ventos.
TotalEnergies ENEOS will develop solar rooftop project for PTT Global Chemical (GC), a leading global chemical company to provide a total of 5.7 MWp solar photovoltaic (PV) system to its facilities in Thailand.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Crescent Point Energy announced its operating and financial results for the quarter ended September 30, 2022, its formal 2023 budget, a quarterly dividend and a special dividend, while also updating its five-year outlook. Adjusted funds flow totaled $576.5 million during third quarter 2022, or $1.02 per share diluted, driven by a strong operating netback of $59.28 per boe. Crescent Point reported net income of $466.4 million, or $0.82 per share diluted, for the quarter ended September 30, 2022. In conjunction with its 2023 budget, the Company has updated its five-year outlook, which is expected to generate approximately $5.0 to $6.0 billion of cumulative after-tax excess cash flow from 2023 to 2027, at US$75/bbl to US$85/bbl WTI. Crescent Point’s five-year plan assumes annual average production increasing to approximately 145,000 boe/d by 2027, subject to commodity prices. This plan remains disciplined with a continued focus on returns and long-term sustainability.
Crescent Point Energy announced its Board of Directors has declared both a special dividend in alignment with the Company’s return of capital framework and a quarterly base dividend. A special cash dividend of CDN $0.035 per share based on Crescent Point’s third quarter 2022 financial results will be paid on November 14, 2022 to shareholders of record on November 4, 2022. The base dividend amount of CDN $0.08 per share will be paid on January 3, 2023 to shareholders of record on December 15, 2022.
Hess reported net income of $515 million, or $1.67 per common share, in the third quarter of 2022, compared with net income of $115 million, or $0.37 per common share, in the third quarter of 2021. On an adjusted basis, the Corporation had net income of $583 million or $1.89 per common share, compared with $86 million, or $0.28 per common share, in the third quarter of 2021. The improvement in adjusted after-tax earnings compared with the prior-year period was primarily due to higher realized selling prices and sales volumes in the third quarter of 2022. 2022 Updated Guidance includes: Net production, excluding Libya, is forecast to be approximately 370,000 boepd in the fourth quarter and approximately 325,000 boepd for the full year; Full year E&P capital and exploratory expenditures are expected to be approximately $2.7 billion, unchanged from previous guidance.
Hess announced two new discoveries at the Yarrow-1 and Sailfin-1 wells on the Stabroek Block offshore Guyana. The discoveries, which are the eighth and ninth this year, will add to the block’s previously announced gross discovered recoverable resource estimate of approximately 11 billion barrels of oil equivalent.
Matador Resources reported financial and operating results for the third quarter of 2022. Third quarter 2022 net income (GAAP basis) was $337.6 million, or $2.82 per diluted common share, a 19% sequential decrease from net income of $415.7 million in the second quarter of 2022, but a 66% year-over-year increase from net income of $203.6 million in the third quarter of 2021. Third quarter 2022 adjusted net income (a non-GAAP financial measure) was $321.7 million, or adjusted earnings of $2.68 per diluted common share, a 23% sequential decrease from adjusted net income of $415.6 million in the second quarter of 2022, but a 116% year-over-year increase from adjusted net income of $148.6 million in the third quarter of 2021. Due to the better-than-expected well performance across its Delaware Basin asset areas in the third quarter of 2022, it is increasing the midpoints of 2022 total oil and natural gas production guidance from 21.7 million barrels to 21.85 million barrels for oil and from 95.5 billion cubic feet to 97.0 billion cubic feet for natural gas.
Susquehanna upgraded Range Resources to Positive from Neutral.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Panametrics, a Baker Hughes business and industry leader in flow meters and moisture, oxygen and hydrogen measurement systems, announced the launch of ground-breaking new moisture measurement technology, HygroProII.
ChampionX announced third quarter of 2022 results. Revenue was $1.0 billion, net income attributable to ChampionX was $23.1 million, and adjusted EBITDA was $166.1 million. Income before income taxes margin was 3.7% and adjusted EBITDA margin was 16.3%. Cash from operating activities was $187.2 million and free cash flow was $167.4 million. ChampionX also announced that the Board of Directors approved an increase to its share repurchase program. Pursuant to such increase, ChampionX is authorized to repurchase up to $750 million of its outstanding common stock, which is an increase of $500 million to the original amount of the Share Repurchase Program previously announced on March 7, 2022. The increased share repurchase authority is effective immediately.
Eagle Materials reported financial results for the second quarter of fiscal 2023 ended September 30, 2022. Record Revenue was $605 million, up 19%. Record Net Earnings were $139 million, up 36%, and Net Earnings per share was $3.72, up 51%. Prior year’s Net Earnings were affected by a Loss on Early Retirement of Senior Notes and the write-off of related debt issuance costs of $11.2 million, or $0.27 per share. Adjusted EBITDA was $227 million, up 21%.
Granite has been selected by the City of Long Beach for an approximately $33 million project on Artesia Great Boulevard R-7191 in Long Beach, California. The project will be funded by the City of Long Beach, the Metropolitan Transportation District, and the California Department of Transportation. The award is expected to be included in Granite’s fourth quarter CAP.
KBR announced its third quarter 2022 financial results and raised its FY 2022 financial guidance. Revenue of $1.6 billion in the quarter declined 12% compared to the same period in 2021 primarily attributable to the completion of work associated with the Operations Allies Welcome (OAW) program in early 2022 that commenced in 3Q’21. Excluding OAW, revenue increased ~$165 million or 11%, 8% organic, attributable to increased activity to support exercises, training and other activities in the European Command, the acquisition of Frazer-Nash in October 2021, and increased revenues in Sustainable Technology Solutions (STS) primarily from engineering and professional services and technology licensing. For the quarter ended September 30, 2022, net income attributable to KBR increased to $74 million; diluted earnings per share increased to $0.49; adj. EBITDA increased to $171 million; and adj. EBITDA margins expanded to 11%. KBR updates and/or increases its FY 2022 guidance as follows: Consolidated revenue: $6.5 billion to $6.7 billion (narrowed); Adjusted EBITDA margin: ~10%; Effective tax rate: 23% to 24% (lowered); GAAP earnings per share (EPS): $1.11 to $1.16 (updated); adjusted EPS: $2.60 to $2.65 (raised midpoint); GAAP operating cash flow (OCF): $345 million to $370 million (raised midpoint); adjusted OCF: $375 million to $400 million (raised midpoint).
NexTier Oilfield Solutions reported third quarter 2022 financial and operational results and announced a $250 million shareholder return program. Total revenue was $896.0 million, a 6% sequential increase and up 128% year-over-year. Net income was $104.7 million ($0.42 per diluted share), compared to $68.5 million ($0.27 per diluted share) in the prior quarter and net loss of $44.0 million in third quarter of 2021. Adjusted net income was $129.5 million ($0.52 per diluted share), compared to $98.5 million ($0.39 per diluted share) in the prior quarter and adjusted net loss of $24.3 million in third quarter of 2021.
For the quarter ended September 30, 2022, RPC generated revenues of $459.6 million, an increase of 22.4 percent compared to $375.5 million in the second quarter of 2022, due to higher customer activity levels and pricing improvements, as well as an increasingly favorable job mix. Operating profit for the third quarter of 2022 was $92.2 million compared to an operating profit of $60.4 million in the second quarter of 2022. Net income for the third quarter of 2022 was $69.3 million, or $0.32 diluted earnings per share, compared to net income of $46.9 million, or $0.22 diluted earnings per share, in the second quarter of 2022. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter of 2022 was $113.0 million, an increase of 40.3 percent, compared to $80.6 million in the second quarter of 2022.
RPC announced that its Board of Directors declared a regular quarterly cash dividend of $0.02 per share payable December 9, 2022 to common stockholders of record at the close of business on November 10, 2022.
Weatherford International announced its results for the third quarter of 2022. Revenues for the third quarter of 2022 were $1,120 million, an increase of 5% sequentially and 19% year-over-year. Operating income was $121 million in the third quarter of 2022, compared to $104 million in the second quarter of 2022 and $71 million in the third quarter of 2021. The Company’s third quarter of 2022 net income was $28 million, compared to $6 million in the second quarter of 2022 and a net loss of $95 million in the third quarter of 2021.
DRILLERS
Nabors Industries reported third quarter 2022 operating revenues of $694 million, an increase of approximately 10%, compared to operating revenues of $631 million in the second quarter of 2022. The net loss attributable to Nabors shareholders for the quarter was $14 million, or $1.80 per share. This compares to a loss of $83 million, or $9.41 per share, in the second quarter. The third quarter results included a non-cash gain of $34 million, or $3.74 per share, related to mark-to-market treatment of Nabors’ warrants, while the second quarter results included a non-cash charge for the warrants of $22 million, or $2.42 per share. Third quarter adjusted EBITDA was $191 million, a 21% increase compared to $158 million in the previous quarter.
REFINERS
No significant news.
MLPS & PIPELINES
Cheniere Energy highlighted details of its quarterly dividend, which was previously announced on September 12, 2022. Cheniere’s Board of Directors has declared a quarterly cash dividend of $0.395 per common share payable on November 16, 2022 to shareholders of record as of the close of business on November 8, 2022.
Delek Logistics Partners, LP declared its quarterly cash distribution for the third quarter 2022 of $0.99 per common limited partner unit, or $3.96 per common limited partner unit on an annualized basis. This distribution represents a 0.5 percent increase from the distribution for the second quarter 2022 of $0.985 per common limited partner unit ($3.94 per common limited partner unit annualized) and a 4.2 percent increase over Delek Logistics’ distribution for the third quarter 2021 of $0.95 per common limited partner unit ($3.80 per common limited partner unit annualized). The third quarter 2022 cash distribution is payable on November 10, 2022 to unitholders of record on November 4, 2022.
Energy Transfer LP announced a quarterly cash distribution of $0.265 per Energy Transfer common unit ($1.06 on an annualized basis) for the third quarter ended September 30, 2022, which will be paid on November 21, 2022 to unitholders of record as of the close of business on November 4, 2022. The distribution per unit is more than a 70 percent increase over the third quarter of 2021 and is a 15 percent increase over the second quarter of 2022.
Equitrans Midstream declared quarterly cash dividends of $0.15 per common share and $0.4873 per share of Series A Perpetual Convertible Preferred Stock for the third quarter 2022. The dividends will be paid on November 14, 2022, to all applicable ETRN shareholders of record at the close of business on November 2, 2022.
MARKET COMMENTARY
Wall Street futures fell, and European stocks slipped after disappointing results from technology giants Microsoft and Alphabet sparked losses in other megacap companies and raised fears of slowing economic growth. Japan’s Nikkei closed higher, though gains were limited amid a slide in U.S. futures. The euro climbed back above parity against the U.S. dollar for the first time in a month, while gold prices jumped after poor U.S. economic data reinforced speculation that the Fed will slow its interest rate hikes. Oil prices struggled for direction after data showed U.S. crude stockpiles rose more than expected, though supply concerns and a weaker dollar gave support. Meta Platforms is scheduled to report earnings after markets close. Building permits and new home sales data will be released later during the day.
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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