Crude Jumps as EU Releases Plan for Russian Oil Embargo

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The energy sector is set for a higher start, supported by strength in the underlying commodities and the major market futures. Markets edged up during the final countdown to a widely-expected hike in Federal Reserve interest rates while crude oil jumped on the prospect of a sixth wave of sanctions towards Russia. Earnings continued to pour in across energy, with numerous E&Ps, services and MLP and pipeline operators reporting quarterly results. The theme continued to focus on total return metric enhancement and acceleration with few planning to lift spending and production meaningfully.

WTI and Brent crude oil jumped in early trading as the European Union released plans to phase out imports of Russian energy, offsetting demand worries caused by lockdowns in China. Reluctance to deliver sanctions that will hurt EU economies as well as Moscow faded in recent weeks as Russia’s invasion of Ukraine brought horrific images of slaughter in towns and concerns about a renewed offensive in the east of the country. If agreed upon by Western nations, the EU’s sixth round of sanctions would include an oil embargo on Russia, sanctions on its top bank and a ban on Russian broadcasters from European airwaves. In a bid to convince reluctant countries not to veto the proposal, the EU is considering exemptions for Hungary and Slovakia. However, on Wednesday, Brussels said it cannot support a proposed European Union embargo on crude oil imports from Russia as this would destroy its energy security according to Foreign Minister Peter Szijjarto. Also, Slovakia wants a three-year transition period for it to phase in the European Union’s proposed embargo on Russian oil. OPEC+ is set to agree on another small increase in production targets for June this Thursday, as expectations that sanctions will crimp Russian output further counter demand growth concerns from Chinese lockdowns.

Natural gas futures rose this morning on forecasts for warmer weather, higher cooling demand and a possible oil embargo which will increase demand for LNG exports.

BY SECTOR:

US INTEGRATEDS

The United Steelworkers union (USW) seeks this week to renew talks with Chevronover a six-week-old strike at the company’s Richmond, California, refinery, said a USW official.

Guyana has started talks with Exxon Mobil to build a more than 120-mile (190-km) natural gas pipeline from the company’s offshore projects, Natural Resources Minister Vickram Bharrat said.

INTERNATIONAL INTEGRATEDS

Equinor reported adjusted earnings of USD 18.0 billion and USD 5.18 billion after tax in the first quarter of 2022. IFRS net operating income was USD 18.4 billion and the IFRS net income was USD 4.71 billion. The board of directors has decided a cash dividend of USD 0.20 per share, and to continue the extraordinary cash dividend of USD 0.20 per share for the first quarter of 2022, in line with communication at the Capital markets update in February. Based on the very strong first quarter results, the strength of the balance sheet, and the outlook, the board has decided to initiate a second tranche of the share buy-back programme of around USD 1.33 billion. This is in line with communication at the Capital markets update of executing a share buy-back programme for 2022 of up to USD 5 billion, and subject to authorisation from the Annual General Meeting on 11 May 2022. The second tranche will commence on 16 May and will end no later than 26 July 2022.

Europe needs more gas from Norway, and from Equinor, as the continent tries to wean itself from Russian gas, Equinor Chief Executive Anders Opedal said.

Equinor is coming under pressure from cost inflation, but is sticking to its capital spending guidance for now, the Norwegian energy company said.

Brazil’s President Jair Bolsonaro has understood that Petrobras must pass on global oil price rises to the local fuel market, the state-run company’s chief executive was quoted as saying in an interview with newspaper O Estado de S. Paulo.

Prosafe has been awarded a contract by Petrobras for the provision of the Safe Notos semi-submersible vessel for safety and maintenance support offshore Brazil.

CANADIAN INTEGRATEDS

Imperial Oil announced at its annual meeting of shareholders held on May 3, 2022, that each of the seven nominees proposed as directors of the company and listed in its management proxy circular dated March 16, 2022 were elected as directors.

U.S. E&PS

Berry announced first quarter 2022 results, including a net loss of $57 million or $0.71 per diluted share, Adjusted Net Income(1) of $43 million or $0.51 per diluted share, and Adjusted EBITDA of $96 million. The Board of Directors declared dividends on common stock totaling $0.19 per share.

Comstock Resources reported financial results for the quarter ended March 31, 2022. Revenues in the first quarter of 2022 totaled $407.7 million (inclusive of realized hedging losses of $117.2 million). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter was $296.5 million, and net loss available to common stockholders for the first quarter of 2022 was $115.7 million or $(0.50) per share. Net loss in the quarter included a pre-tax $320.3 million unrealized loss on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the first quarter of 2022 was $135.8 million, or $0.51 per diluted share.

As per SEC filing, Coterra Energy filed for a mixed shelf. The size was not disclosed.

Gulfport Energy Corporation Q1 adj EBITDA $235.3M vs FactSet $214.5M, capex $100M vs consensus $100M. Q1 production 1.008 Bcf/d vs SA 987 MMcf/d. 2022 FCF $400M vs FS $384M. 2022 net income $375M to $425M vs FactSet $388.0M. 2022 capex guidance raised to $380M-$420M from $340M-$380M. 2022 production guidance reiterated. Buybacks: The board recently expanded the company’s previously announced common stock repurchase program and Gulfport is now authorized to repurchase up to $200M of its outstanding shares of common stock through 31-Dec-22.. AS of 2-May they have bought back $63M work of stock.

Gran Tierra Energy Inc. Q1 FFO $87.3M, eps $0.04, revenue $174.6M, adj EBITDA $119.4M. Q1 production 29,400 boed vs FS 29,700. 2022 production 30.5-32.5 Mboe/d vs FactSet 31.5 Mboe/d.

Murphy Oil announced its financial and operating results for the first quarter ended March 31, 2022, including a net loss attributable to Murphy of $113 million, or $0.73 net loss per diluted share. Adjusted net income, which excludes discontinued operations and other one-off items, was $113 million, or $0.73 net income per diluted share.

Northern Oil and Gas, Inc. announces further acceleration of dividend plan and shareholder returns; increases repurchase authorizations. Returns to holders: Announced a $0.19/share dividend, a +36% increase. Plans to recommend a $0.25/share dividend for 3Q22. Has authorized buybacks of unsecured notes, convertible preferred stock and increased its common buyback program to $150M from $68.1M.

Ranger Oil announced the signing of separate agreements to acquire three “bolt-on” oil producing properties in the Eagle Ford shale contiguous to Ranger’s existing assets for a total purchase price of approximately $64 million in cash, subject to customary adjustments. The acquisitions are expected to be accretive to key financial metrics, add to the Company’s deep, high-quality inventory of well locations and generate significant near-term operational synergies. As a result of higher cash flow, Ranger’s leverage ratio should continue to strengthen.

VAALCO Energy, Inc Q1 EPS $0.36, revenue $68.7M, EBITDAX $33.5M, cash capex $23.1M. Q1 net production 8,051 bopd, WI 9,254 bopd, exit rate 9,500 with temporary operational issues impacting production in Feb. Q2 production 10,000 to 10,700 bopd. Q2 sales guidance 10,700 to 11,300 bopd. 2022 guidance for all metrics reaffirmed.

W&T Offshore reported financial results for the first quarter 2022. Net loss was $2.5 million or $0.02 per diluted share and Adjusted Net Income was $30.3 million or $0.21 per diluted share in the first quarter of 2022. Revenues for the first quarter of 2022 were $191.0 million, which were 15% higher than fourth quarter 2021 revenue of $165.6 million and 52% higher than $125.6 million in the first quarter of 2021.

CANADIAN E&PS

MEG Energy announced that at its annual meeting of shareholders held on May 3, 2022, each of the nine (9) nominees listed in its Management Information Circular dated March 18, 2022, were elected as directors.

OILFIELD SERVICES

Enerflex announced that all of the nominees listed in its Management Information Circular dated March 4, 2022 were elected as directors of Enerflex until the close of the next annual meeting of shareholders. In light of the voting results, Enerflex is further pleased to announce that Mr. Kevin Reinhart is the new Chair of the Board of Directors and Ms. Maureen Cormier Jackson, Mr. Michael Weill, and Mr. Stanley Marshall are the Chairs of the Audit Committee, Nominating and Corporate Governance Committee and Human Resources and Compensation Committee, respectively.

Matson reported net income of $339.2 million, or $8.23 per diluted share, for the quarter ended March 31, 2022.  Net income for the quarter ended March 31, 2021 was $87.2 million, or $1.99 per diluted share.  Consolidated revenue for the first quarter 2022 was $1,165.5 million compared with $711.8 million for the first quarter 2021.

Newpark Resources announced results for its first quarter ended March 31, 2022. Total revenues for the first quarter of 2022 were $176.4 million compared to $179.6 million for the fourth quarter of 2021 and $141.2 million for the first quarter of 2021. Net income for the first quarter of 2022 was $2.5 million, or $0.03 per diluted share, compared to a net loss of $3.7 million, or ($0.04) per share, for the fourth quarter of 2021, and a net loss of $5.4 million, or ($0.06) per share, for the first quarter of 2021.

ProPetro Holding Corp Q1 EPS $0.11 vs FactSet $0.02, revenue $282.7M vs FactSet $273.8M, adj EBITDA $66.5M vs FactSet $50.9M, adj EBITDA margin 23.5% vs FS 18.5%. Q1 revenue: Pressure Pumping $277.1M vs FactSet $268.1M. Other $5.6M vs FS $6.1M. Q1 adj EBITDA: Pressure Pumping $77.0M vs FS $61.9M. Other ($10.5M) vs FS ($11.6M).

Select Energy Services announced its financial results for the first quarter ended March 31, 2022. Revenue for the first quarter of 2022 was $294.8 million as compared to $255.1 million in the fourth quarter of 2021 and $143.7 million in the first quarter of 2021. Net income for the first quarter of 2022 was $8.0 million as compared to $11.2 million in the fourth quarter of 2021 and a net loss of $27.4 million in the first quarter of 2021.

TechnipFMC plc announced the results as of 5:00 p.m., New York City time, on May 3, 2022 of its previously announced tender offer to purchase, subject to certain terms and conditions, its 6.500% Senior Notes due 2026 and the related solicitation of consents of holders with respect to the Notes to certain proposed amendments to the indenture governing the Notes. The Proposed Amendments will, among other things, eliminate substantially all of the restrictive covenants and certain events of default triggers in the indenture. The Company further announced that it has increased the maximum aggregate principal amount of Notes to be accepted in the Tender Offer from $320,000,000 to $430,187,000. The terms and conditions of the Tender Offer and the Consent Solicitation, as set forth in an Offer to Purchase and Consent Solicitation, dated April 20, 2022, otherwise remain unchanged.

Vulcan Materials announced results for the quarter ended March 31, 2022.  Total revenues increased 44 percent to $1.541 billion, driven by the addition of U.S. Concrete (USCR) operations as well as price and volume growth in the Company’s legacy businesses. Earnings attributable to Vulcan from continuing operations were $0.70 per diluted share. Excluding discrete charges, adjusted earnings from continuing operations were $0.73 per diluted share.

DRILLERS

Patterson-UTI Energy reported that for the month of April 2022, the Company had an average of 118 drilling rigs operating in the United States.

REFINERS

No significant news.

MLPS & PIPELINES

Ardmore Shipping announced results for the three months ended March 31, 2022. The Company reported a net loss of $7.9 million for the three months ended March 31, 2022, or $0.23 loss per basic and diluted share, which includes $6.9 million in respect of the loss on the vessels held for sale as part of the sale and time charter-back transaction described below; adjusted for these costs are $0.9 million, or a $0.03 Adjusted loss per basic and diluted share. This compares to a net loss of $8.5 million, or $0.26 loss per basic and diluted share, for the three months ended March 31, 2021.

Cheniere Energy announced its financial results for the first quarter 2022. Consolidated Adjusted EBITDA increased $1.7 billion during first quarter 2022 as compared to first quarter 2021, primarily due to increased margins per MMBtu of LNG and increased volumes of LNG delivered. This impact was partially offset by a decrease in gains from sales of physical gas as compared to first quarter 2021. Net loss was $865 million for first quarter 2022, compared to net income of $393 million in first quarter 2021. The Company is raising full year 2022 Consolidated Adjusted EBITDA guidance to $8.2 – $8.7 billion and full year 2022 Distributable Cash Flow guidance to $5.5 – $6.0 billion due to increased volumes from maintenance optimization, the accelerated ramp-up of Train 6 of the SPL Project, and general outperformance, as well as sustained higher margins on LNG throughout 2022, and increased lifting margin.

Cheniere Energy announced that its subsidiary, Corpus Christi Liquefaction Stage III, LLC, has entered into a long-term Integrated Production Marketing gas supply agreement with ARC Resources U.S. Corp, a subsidiary of ARC Resources, Ltd., a leading natural gas producer in Canada. Under the IPM agreement, ARC U.S. has agreed to sell 140,000 MMBtu per day of natural gas to Corpus Christi Stage III for a term of 15 years, commencing with commercial operations of Train 7 of the Corpus Christi Stage III Project. The LNG associated with this gas supply, approximately 0.85 million tonnes per annum (“mtpa”), will be marketed by Cheniere. Cheniere will pay ARC U.S. an LNG-linked price for its gas, based on the Platts Japan Korea Marker (JKM), after deductions for fixed LNG shipping costs and a fixed liquefaction fee. ARC Resources, Ltd. will act as guarantor of the IPM agreement on behalf of ARC U.S. The IPM agreement is subject to Corpus Christi Stage III making a positive final investment decision to construct the Corpus Christi Stage III Project.

Enbridge announced that its Board of Directors has declared a quarterly dividend of $0.860 per common share, payable on June 1, 2022 to shareholders of record on May 13, 2022. The amount of the dividend is consistent with the March 1, 2022 dividend.  The Board also declared the following quarterly dividends for Enbridge Inc. Preferred Shares. All dividends are payable on June 1, 2022 to shareholders of record on May 13, 2022.

Enbridge announced that it has exercised its right to redeem all of its outstanding Cumulative Redeemable Preference Shares, Series J on June 1, 2022 at a price of US$25.00 per Series J Share, together with all accrued and unpaid dividends, if any.

EnLink Midstream, LLC reported financial results for the first quarter of 2022 and raised full-year 2022 guidance. Net income was $66.0 million, net cash provided by operating activities of $307.7 million, and adjusted EBITDA, net to EnLink, was $304.3 million for the first quarter of 2022, driven by robust producer activity and strong commodity prices. Based on current producer activity and plans, EnLink expects a significant increase in volumes in 2023. As a result, EnLink expects to spend $325 million to $365 million on capital projects in 2022. These projects leverage existing infrastructure and have high expected returns and quick paybacks. Even with increased investment levels, EnLink is raising full-year 2022 FCFAD guidance to $320 million to $370 million. This result would represent the third consecutive year of FCFAD of over $300 million. As a result of the improved financial outlook, EnLink plans to continue to increase the return of capital to common unitholders from FCFAD in 2022.

EnLink Midstream Operating, LP, a subsidiary of EnLink Midstream, LLC, and Oxy Low Carbon Ventures, LLC, a subsidiary of Occidental, announced they have executed a letter of intent for a Transportation Services Agreement. Under the terms, EnLink would provide CO2 transportation services for OLCV along the Mississippi River corridor from Waggaman to Baton Rouge in Louisiana.

Genesis Energy, L.P. announced its first quarter results. The Company generated Net Loss Attributable to Genesis Energy, L.P. of $5.3 million for the first quarter of 2022 compared to Net Loss Attributable to Genesis Energy, L.P. of $34.2 million for the same period in 2021.

Genesis Energy will increase its footprint in the deepwater Gulf of Mexico with expansion of an existing pipeline system and construction of a new line, it said in its first-quarter earnings release.

International Seaways reported results for the first quarter of 2022. Net loss for the first quarter of 2022 was $13.0 million, or $0.26 per diluted share, compared to a net loss of $13.4 million, or $0.48 per diluted share, for the first quarter of 2021. Consolidated TCE revenues for the first quarter were $98.0 million, compared to $45.2 million for the first quarter of 2021. This increase in TCE revenue reflects an increase of approximately 3,800 revenue days of the significantly larger post-merger fleet. Shipping revenues for the first quarter were $101.5 million, compared to $46.8 million for the first quarter of 2021.

Summit Midstream Partners, LP announced its financial and operating results for the three months ended March 31, 2022, including a net loss of $5 thousand, adjusted EBITDA of $56.8 million and DCF of $31.8 million. Operated natural gas throughput from wholly owned assets averaged 1,306 million cubic feet per day (“MMcf/d”) and liquids throughput averaged 65 thousand barrels per day (“Mbbl/d”). Total quarterly natural gas gathering volume throughput, including SMLP’s proportionate share from OGC, was up by 24 MMcf/d relative to the fourth quarter of 2021, primarily because of strong performance from wells that were connected near the end of calendar 2021, including 8 wells turned-in-line behind SMLP’s wholly owned and operated assets and 3 wells connected behind OGC. First quarter 2022 liquids volume increased by 3 Mbbl/d, or 4.8% relative to the fourth quarter of 2021 due to the impacts from 25 new wells that were connected over the past two quarters. We estimate that operational and weather-related interruptions impacted liquids volumes by 2 Mbbl/d to 3 Mbbl/d during the quarter.

MARKET COMMENTARY

Wall Street’s major index futures edged higher ahead of an expected interest rate hike by the U.S. Federal Reserve, whose accompanying statement will help determine next moves in financial markets. European stocks slipped, dented by disappointing earnings. Chinese and Japanese equity markets were closed, while Australian shares ended lower in volatile trading following a slump in gold and mining stocks. The dollar was little changed against a basket of major currencies. Oil prices gained as the EU gave details of its planned ban on Russian oil imports. Gold prices steadied, a day after hitting an over two-month low.


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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