Crude Climbs After Two-Day Loss on Increasing Supply Concerns

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The energy sector is set for a higher start, supported by strength in the underlying commodities despite weakness in the major market futures. U.S. stock futures turned negative as investors digested the release of the CPI data, which showed consumer prices rose more than expected in April, fueling concerns about a more hawkish Federal Reserve. As earnings season continues, U.S. oil and gas producer Occidental Petroleum Corp beat Wall Street’s earnings estimates and swung to a profit from a year-ago loss, supported by soaring oil prices.

After two consecutive days of losses, WTI and Brent crude oil are up in early trading as the European Union works on gaining support for a Russian oil embargo, increasing existing supply concerns. Markets also reacted to news that flows of Russian gas to Europe through a key transit point in Ukraine dried up after Kyiv halted use of a major transit route, blaming interference on occupying Russian forces. Additionally, the hopes of Chinese economic stimulus after China’s factory-gate inflation eased and a decline in domestic COVID-19 infections, pushed oil prices higher.

Natural gas futures rose this morning on forecasts for higher demand next week and as Russian gas flows to Europe via Ukraine fell by a quarter, the first-time exports via Ukraine have been disrupted since the invasion.

BY SECTOR:

US INTEGRATEDS

No significant news.

INTERNATIONAL INTEGRATEDS

The Ordinary and Extraordinary Meeting of Eni’s Shareholders resolved the following: to approve the statutory financial statements at December 31, 2021 of Eni S.p.A. which report a net profit amounting to €7,674,594,670.59; to allocate the net profit for the period of €7,674,594,670.59, as follows: to Shareholders in the form of a dividend of €0.43 per share owned and outstanding at the ex-dividend date, excluding treasury shares on that date. The payment will be made on May 25, 2022, with an ex-dividend date of May 23, 2022 and a record date of May 24, 2022. The amount remaining following the distribution of the proposed dividend to the available reserve. The payment of €0.43 per share completes the payment of the 2021 dividend, after the distribution of a 50% interim dividend from Eni S.p.A. available reserves, as resolved by the Board of Directors on July 29, 2021, in accordance with the resolution of the Shareholders’ Meeting of May 12, 2021.

Eni published “Eni for 2021 – A just transition”, the 16th voluntary sustainability report that outlines the company’s contribution and objectives for a just transition, with a view to sharing social and economic results on its path to carbon neutrality by 2050. Specifically, with regards to the 2050 carbon neutrality strategy, Eni further strengthened its objectives, announcing a 35% reduction in net scope 1, 2 and 3 emissions by 2030 and 80% by 2040 with respect to 2018 levels (compared to the -25% and -65% targets in the previous plan). For net scope 1 and 2 emissions, the company will achieve -40% by 2025 (compared to 2018 levels) and net zero emissions by 2035, five years ahead of the previous plan. It will also increase the share of investments dedicated to new energy solutions, targeting 30% by 2025, doubling to 60% by 2030 and reaching 80% by 2040.

Prosafe has been declared the winner of a bidding process for a four-year contract by Petrobras for the provision of the Safe Eurus semi-submersible vessel for safety and maintenance support offshore Brazil. However, a potential contract award and timing of the contract award are subject to a formal process during which other bidders may appeal within the next week.

Petrobras said it has signed a deal with TSE and Toyo Engineering Corp to build a new diesel hydrotreating unit at its Paulinia refinery. The move will require $458 million in investments and is in line with Petrobras’ 2022-2026 business plan, the company said in a securities filing.

CGG has announced the recent signature of an expanded five-year Geovation software licensing agreement with Petrobras. After benefitting from CGG’s best-in-class seismic imaging platform for over a decade, the new agreement will give Petrobras geoscientists access to advanced technology innovations, including full-waveform inversion, and significantly enhance their imaging capabilities.

Petrobras informed that it finalized the sale, together with Sonangol Hidrocarbonetos Brasil Ltda., of all the stakes held by both companies in the onshore exploratory block POT-T-794, belonging to the BT-POT-55A concession, located in the Potiguar Basin, in the state of Rio Grande do Norte, to the company Aguila Energia e Participações Ltda.

Petrobras informed that will pay, on Monday, 05/16/2022, complementary dividends referred to the 2021 fiscal year, based on shareholding position as of 04/13/2022, in connection to the Material Fact released on that date. The amount of dividends to be paid will be adjusted by Selic interest rate from 12/31/2021 to 05/16/2022, according to the interest rate adjustment calculation.

According to Reuters, 3R Petroleum said oil agency ANP approved the concession transference of 14 onshore production fields that form the Reconcavo cluster, owned by Petrobras to 3R Candeias S.A.

Reuters reported that a 300,000 barrel-per-day refinery-petrochemical complex in Malaysia run as a joint venture between Petronas and Saudi Aramco has restarted after a more than two-year closure, a source with knowledge of the matter said.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

Occidental Petroleum beat Wall Street’s earnings estimates and swung to a profit from a year-ago loss, buoyed by soaring oil prices. Occidental reported a $2.1 billion adjusted profit – or $2.12 per diluted share – above the $2.03 per share estimated by analysts consulted by Refinitiv IBES. Occidental, one of the top producers in the prolific Permian Basin of West Texas and New Mexico, said its average realized oil price during the first quarter was $91.91 per barrel, up 65% from a year earlier. Its average daily production was down to 1.08 million barrels of oil equivalent per day (boepd), from 1.14 million boepd in the same quarter last year. But should recover to around 1.145 million boed in the second quarter, it said. The company’s net profit was boosted by a non-cash tax benefit related to its 2019 acquisition of Anadarko Petroleum. It posted a $4.7 billion net profit, or $4.65 per diluted share, from a $346 million loss, or 36 cents per share, a year ago.

W&T Offshore announced that Stephen L. Schroeder, Senior Vice President and Chief Technical Officer, is retiring effective June 1, 2022. Huan Gamblin, who currently serves as Manager of Acquisition and Divestiture, is being promoted to Vice President of Business Development and will assume the majority of Mr. Schroeder’s responsibilities.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

KBR announced that it was awarded a contract for its green ammonia technology, K-GreeN, from JGC Holdings for a project sponsored by New Energy and Industrial Technology Development Organization (NEDO), a national research and development agency in Japan. Under the terms of the contract, KBR will provide technology licensing and basic engineering for a pilot project under NEDO’s Green Innovation Fund in Fukushima, Japan.

DRILLERS

Noble announced that at the Extraordinary General Meeting of shareholders, shareholders approved all proposals related to the previously announced business combination agreement with The Drilling Company of 1972 A/S (“Maersk Drilling”) announced on November 10, 2021. Approximately 99% of the votes cast at the Extraordinary General Meeting were in favor of the Transaction. A Form 8-K disclosing the full voting results will be filed with the U.S. Securities and Exchange Commission.

REFINERS

No significant news.

MLPS & PIPELINES

International Seaways issued the following statement following the open letter published on May 10, 2022, by Famatown Finance Limited, a company indirectly controlled by trusts settled by Mr. John Fredriksen and a member of the Seatankers Group: “International Seaways is singularly focused on delivering value to our shareholders. We have taken decisive steps over the past 18 months to strengthen our industry position, enhance our scale, solidify our balance sheet, optimize our fleet and position ourselves to succeed in today’s improving rate environment. Our 2021 acquisition of Diamond S Shipping doubled our net asset value, tripled our fleet size, and enhanced our earnings power, in particular by adding attractive product tankers that are now leading the market recovery. We note that our momentum has been substantial. International Seaways’ stock is up over 52% year-to-date (based on the April 27, 2022 closing price, the last trading day prior to Famatown’s Schedule 13D filing).” Furthermore, “On May 9, 2022, the Board adopted a short-term stockholder rights plan following Famatown’s stealth accumulation of more than 16% of the Company’s outstanding shares. The rights plan is designed so that no individual stockholder or group of stockholders can gain control of the company through open market accumulation without paying a control premium to all stockholders or by otherwise disadvantaging other stockholders. It is particularly appropriate where, as here, affiliates of one of the company’s competitors have quickly and secretly amassed a significant stake in the company.”

MARKET COMMENTARY

Stock futures were lower in trading Wednesday after a key U.S. inflation report. April’s consumer price index showed an 8.3% jump. Dow Jones economists expected a 8.1% increase. Inflation rose at a 40-year high of 8.5% in March. European stocks extended gains for a second straight session as strong earnings and a surge in economically sensitive sectors boosted sentiment. In major Asian equity markets, China stocks advanced on signs of lower domestic COVID-19 infections, and Japan’s Nikkei gained as investors scooped up companies with an upbeat outlook. Meanwhile, in commodities, oil advanced after plunging nearly 10% in the last two sessions, buoyed by supply concerns. Gold rose, supported by a pullback in the dollar.


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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