Crude Rises on New Warnings of Supply Concerns

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The energy sector is poised for a higher start, supported by strength in the underlying commodities. U.S. stock index futures edged lower as Russia tempered expectations around peace talks with Ukraine, giving back some of yesterday’s rally.

WTI and Brent crude oil futures are up in early trading, attempting to break a three-day losing streak. Oil futures rose after the EIA said three million bpd of Russian oil and products could be shut in from next month. The supply loss would be far greater than an expected drop in demand of one million bpd triggered by higher fuel prices. Morgan Stanley raised its Brent price forecast by $20 for the third quarter 2022 to $120 a barrel, predicting a fall in Russian production of about 1 million bpd from April. Also, Russia’s invasion of Ukraine has drawn a lengthening list of Western sanctions and prompted some customers to stop buying its oil, raising concerns over global supplies. However, Russian seaborne crude oil exports in March have increased from last month.

Natural gas futures inched higher this morning ahead of the EIA weekly storage data due at 10:30 AM ET on forecasts for slightly cooler weather and higher heating demand than previously expected.

BY SECTOR:

US INTEGRATEDS

The U.S. Energy Department said it has awarded contracts for 30 million barrels of crude oil put up for sale from the U.S. Strategic Petroleum Reserve after Russia’s invasion of Ukraine. They included 16.06 million barrels to Marathon Petroleum, 1.27 million barrels to Chevron, 2.55 million barrels to Motiva Enterprises, 4.2 million barrels to Phillips 66, and 4.75 million barrels to Valero Marketing and Supply.

Esso Australia Pty Ltd, a subsidiary of ExxonMobil and operator of the Gippsland Basin Joint Venture, has made a final investment decision to develop additional gas from the Gippsland Basin Kipper field to help secure much needed supply for the Australian domestic market.

INTERNATIONAL INTEGRATEDS                                            

The Board of Directors of TotalEnergies met on March 16, 2022, under the chairmanship of Patrick Pouyanné, Chairman and Chief Executive Officer. The Board decided to convene the Ordinary and Extraordinary Shareholders’ Meeting of TotalEnergies SE on Wednesday, May 25, 2022. On the proposal of the Governance and Ethics Committee chaired by Marie-Christine Coisne-Roquette, Lead Independent Director, the Board of Directors decided to propose to the Shareholders’ Meeting the renewal for a period of three years of the directorships of Mrs. Lise Croteau, Mrs. Maria van der Hoeven and Mr. Jean Lemierre, whose terms of office will expire at the end of the Shareholders’ Meeting. The appointment of a new director representing employee shareholders, replacing Valérie Della Puppa Tibi, whose term of office is also expiring, will also be submitted to the vote at the Shareholders’ Meeting.

Russia’s ambassador to Japan said it was only logical to maintain “mutually beneficial” energy projects in Sakhalin, after withdrawals by Shell and Exxon Mobilraised doubt about the fate of Japan’s stakes in them.

CANADIAN INTEGRATEDS

No significant news.                       

U.S. E&PS

Denbury announced three new lease agreements with large private landowners in Louisiana, securing additional exclusive rights to develop significant carbon dioxide (CO2) sequestration projects in high quality, high-capacity reservoirs underlying deep sealing formations along the state’s industrial corridor.

Ring Energy Inc REI FY GAAP EPS $0.03, revenue $196.3M vs FS $182.0M. Q4 sales volumes were provided on 22-Feb. Q1 sales volume: Total (Boe/d) 8,500-8,700. Oil (Boe/d) 7,200-7,400. FY sales volume: Total (Boe/d) 9,000-9,600. Oil (Boe/d) 7,800-8,350. FY capex $120-140M.

CANADIAN E&PS

MEG Energy announced that following a successful 9-year career at MEG, Eric L. Toews plans to retire effective September 1, 2022.  Mr. Toews has agreed to continue in his role as Chief Financial Officer until his successor is appointed, and then remain with the Corporation during a transition period until his retirement date.

OILFIELD SERVICES

Core Laboratories N.V. announced revised guidance from continuing operations for the first quarter of 2022, as well as commencement of a joint-industry consortium project focused on carbon capture and sequestration. There have been two significant events impacting Core’s financial results since the Company provided its initial guidance for the first quarter of 2022 on 2 February 2022: (1) the outbreak of the Omicron variant of COVID-19 was much more significant than initially predicted; and (2) the geopolitical conflict between Russia and Ukraine. Core’s revised guidance for the first quarter of 2022 revenue ranges from $110,000,000 to $113,000,000. The Company is now projecting operating margins to be approximately 5% to 6%, and Earnings Per Share to be between $0.05 to $0.08 for the first quarter of 2022. 

Granite Construction announced the close of the sale of its trenchless and pipe rehabilitation services business (“Inliner”) to Inland Pipe Rehabilitation, a portfolio company of investment affiliates of J.F. Lehman & Company for a purchase price of $159.7 million.

NASA has awarded the Ground Systems and Mission Operations-3 (GSMO-3) contract to KBR Wyle Services LLC of Greenbelt, Maryland. The contract will provide services including systems engineering, facility engineering, launch and early orbit support, flight operations, flight dynamics support, and sustaining engineering for NASA.

Abu Dhabi National Oil Company (ADNOC) announced the award of framework agreements valued at $658 million (AED 2.4 billion) for cementing services as it continues to invest to enable drilling growth and expand its crude oil production capacity.  The framework agreements were awarded to Haliburton Worldwide Limited Abu DhabiBaker Middle East, Emirates Western Oil Well Drilling & Maintenance Co., NESR Energy Services and Emjel Oil Field Services, following a competitive tender process.

Halliburton Labs announced its next group of companies selected to participate in its collaborative environment to advance and scale cleaner, affordable energy. Chemergy, EVA, and Novamera will receive access to a broad range of industrial capabilities, technical expertise, and global network connections to scale their respective businesses.

Helix Energy Solutions Group Inc announces contract extension for decommissioning project in Brazil. Helix Energy announced that Trident Energy do Brasil Ltda. (Trident Energy) has exercised their option to extend the field decommissioning contract previously awarded by an additional 12 months. The project, located offshore Brazil in the Pampo and Enchova Clusters in the Campos Basin, is expected to commence in late 2022 for a period of two years with multiple options to extend.

Natural Gas Services Group Inc Q4 EPS ($0.42). revenue $18M, adj EBITDA $2.3M.

DRILLERS

No significant news.

REFINERS

Reuters reported that the hydrocracker at Valero Energy’s 125,000 barrel-per-day (bpd) Meraux, Louisiana, refinery is scheduled to remain shut until completion of repairs in mid-May.

MLPS & PIPELINES

The Department of Energy (DOE) issued approvals allowing major supplier Cheniere Energy to export the equivalent of 0.72 billion cubic feet per day (bcfpd) of the supercooled fuel from its Sabine Pass, Louisiana and Corpus Christi, Texas, terminals to countries that do not have free trade agreements with the United States including all of Europe.

MARKET COMMENTARY

U.S. stock index futures were slightly lower, after the Wall Street rallied in the previous session as the Fed raised interest rates and laid out an aggressive plan for further increases to combat inflation. European shares were mostly up on hopes for progress in talks between Russia and Ukraine. Asian equities ended in the green.  The dollar fell, while gold prices rose. Oil prices climbed over 4% after the IEA said three million barrels a day of Russian oil and products could be shut in from next month. Initial jobless claims, housing starts, and manufacturing output data are on the economic calendar.


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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