SECTOR COMMENTARY:
Energy stocks are set to open the session higher on escalating tensions in the Red Sea, as an oil tanker was seized off the coast of Oman and diverted by armed Houthi rebels this morning, which boosted oil prices. Broader equities were set to rise, though the 8:30 AM ET release of December CPI data showed inflation remains persistent, as consumer prices rose 0.3%, pushing the annual rate to +3.4%.
Meanwhile, in deal news, Chesapeake Energy Corporation and Southwestern Energy Company announced that they have entered into an agreement to merge in an all-stock transaction valued at $7.4 billion, or $6.69 per share, based on Chesapeake’s closing price on January 10, 2024. Under the terms of the agreement, Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock outstanding at closing. “This powerful combination redefines the natural gas producer, forming the first U.S. based independent that can truly compete on an international scale. The union creates a deep inventory of advantaged assets adjacent to high demand markets, allowing for the application of proven operational practices and the power of an Investment Grade quality balance sheet to drive significant synergies benefiting energy consumers and shareholders alike,” said Nick Dell’Osso, Chesapeake’s President and Chief Executive Officer.
Oil prices rose on Thursday after an oil tanker was boarded by an armed group in Oman, raising the prospect of escalating conflict in the Middle East. The United Kingdom Maritime Trade Operations authority received a report on Thursday that a vessel about 50 nautical miles east of Oman’s coast was boarded by four to five armed individuals. “Slowing demand, unrest in Middle East and muted price reaction have producers, consumers and market participants alike feeling paranoid about oil prices,” Barclays said on Thursday as the bank lowered its 2024 Brent forecast by $8 to $85 a barrel.
Natural gas futures are lower by ~1% ahead of weekly inventory data. Analysts expect a draw of 119 bcf.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
No significant news.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Chesapeake Energy and Southwestern Energy announced that they have entered into an agreement to merge in an all-stock transaction valued at $7.4 billion, or $6.69 per share, based on Chesapeake’s closing price on January 10, 2024. Under the terms of the agreement, Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock outstanding at closing.
Occidental Petroleum announced that the company sees Q4 total company production gas up 25.3%; sees Q4 total company production oil up 51.7%; due to co’s outstanding operational performance during q4 co overcame a third party outage in eastern gulf of Mexico; sees Q4 gulf of Mexico oil and gas sales volumes 127 mboed; total company production is expected to remain within the guidance range for Q4.
1PointFive, a wholly owned subsidiary of Occidental, and Boston Consulting Group (BCG), one of the world’s leading management consulting firms, today announced that BCG agreed to purchase 21,000 metric tons of carbon dioxide removal (CDR) credits over three years from 1PointFive. BCG is collaborating with 1PointFive through consulting services, including to develop business processes that support Direct Air Capture (DAC) CDR credits.
Benchmark downgraded Range Resources to Hold.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
No significant news.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
Futures for Wall Street indexes fell after the consumer price index increased 0.3% for the month, higher than the 0.2% estimate at a time when most economists and policymakers see inflationary pressures easing. On a 12-month basis, the CPI closed 2023 up 3.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 3.2%. European equities rose as the automobile and technology sectors gained. Meanwhile, the Nikkei closed higher as a weak wage data reduced expectations of an early BoJ rate hike. Chinese shares saw a slight rebound through dip-buying, while economic concerns lingered. The focus also turned to crypto markets, driven by the approval of the first U.S.-listed ETFs tracking bitcoin by U.S. regulators, which bolstered crypto stocks. The dollar slightly declined against a basket of currencies, boosting the appeal of gold.
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 Rich Pontillo.
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