Energy stocks are set to open modestly lower this morning, as a reprieve in the rise in oil prices is encouraging investors to consolidate some gains and positions. Corporate news flow is fairly light, while the oil market is digesting news of the JMMC meeting that OPEC+ is “highly likely to agree to an output hike in the range of 600K bpd for July”.
Oil prices fell on Thursday on speculation that Saudi Arabia and other OPEC members may boost crude output to compensate for a drop in Russian production. The benchmarks have marched higher for several weeks as Russian exports have been squeezed by U.S. and EU sanctions against Moscow over its invasion of Ukraine, action Moscow calls a “special operation”.
Natural gas futures are trading just below $9, as summer heating demand is set to pick up and the recent injection season failed to bring storage levels to historical averages.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Norway’s Hammerfest liquefied natural gas plant has restarted LNG production following a fire almost two years ago, boosting the country’s gas exports, operator Equinor said.
In a development that is expected to boost electric vehicle (EV) adoption and mobility in India, MG Motor India and Castrol India are set to collaborate with Jio-bp to explore mobility solutions for electric cars. Under the partnership, Jio-bp, MG Motor and Castrol will explore setting up four-wheeler EV charging infrastructure and expand Castrol’s existing auto service network to cater to EV Customers.
Petrobras said it signed a deal to buy the 50% stake it did not already own in electricity company Ibiritermo, owned by Italy’s Edison SpA, allowing Petrobras to take full control of the firm’s power plant.
Repsol will invest 105 million euros in the Puertollano Industrial Complex to build the first plant in the Iberian Peninsula capable of manufacturing ultra high molecular weight polyethylene (UHMWPE), a material considered a ‘super polymer’ due to its exceptional properties.
France’s strategic oil reserves are not “totally full”, France’s energy minister said when asked about the fallout from new European Union sanctions against Russia which include a progressive phase-out of oil exports. The French government is working closely with TotalEnergies to secure alternative supplies, Agnes Pannier Runacher told France Info radio, declining to give an exact figure for the level of oil stocks.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Earthstone Energy announced it entered into an amendment to the Company’s senior secured revolving credit facility, extending the maturity of the Credit Facility to June 2027, increasing the Borrowing Base from $1.325 billion to $1.4 billion and reducing the interest rate for amounts outstanding, amongst other things. Elected commitments under the Credit Facility remain at $800 million.
Magnolia Oil & Gas announced the proposed underwritten block trade of 7,500,000 shares of the Company’s Class A common stock by certain affiliates of EnerVest, Ltd. Magnolia will not sell any shares of its Class A Common Stock in the Offering and will not receive any proceeds from the sale by the Selling Stockholders of shares of Class A Common Stock. In connection with the Offering, the Company intends to purchase from the Selling Stockholders 2,000,000 shares of the Company’s Class B common stock at a price per share equal to the price per share at which the underwriter purchases shares of the Company’s Class A Common Stock in the Offering. The Offering is not conditioned upon the completion of the Class B Common Stock Purchase, but the Class B Common Stock Purchase is conditioned upon the completion of the Offering.
Ranger Oil announced that its borrowing base under its revolving credit facility was increased 20% to $875 million. Ranger’s elected commitment under the facility remains at $400 million. This is the second announced increase this year for a total of approximately 45%.
CANADIAN E&PS
Vermilion Energy announced the appointment of Mr. Myron Stadnyk to its Board of Directors.
OILFIELD SERVICES
No significant news.
DRILLERS
Valaris announced that Equinor has delivered a termination notice for the drilling contract awarded to drillship VALARIS DS-11. The termination will take effect at the end of June. Our total contract backlog of $2.5 billion as of May 2, 2022 included approximately $428 million related to this contract. As a result of the contract termination, Valaris will receive an early termination fee that is more than sufficient to cover expenses and commitments incurred by Valaris on the project.
REFINERS
Valero Energy reduced its debt by approximately $300 million through the acquisition of $300 million of 4.00 percent Gulf Opportunity Zone Revenue Bonds Series 2010. As previously disclosed, the GO Zone Bonds are due December 1, 2040, but were subject to mandatory tender on June 1, 2022 at a price equal to par plus accrued and unpaid interest up to, but excluding, the Mandatory Tender Date.
MLPS & PIPELINES
Delek Logistics Partners, LP announced the closing of the previously announced acquisition of 3Bear Delaware Holding – NM, LLC, an indirect subsidiary of 3Bear Energy, LLC. The 3Bear operations include crude oil and gas gathering, processing and transportation businesses, as well as water disposal and recycling operations in the Delaware Basin in New Mexico. Total cash consideration is $624.7 million (excluding customary closing adjustments) and the acquisition is expected to result in an investment multiple of approximately 6.25 times preliminary forecasted 2023 EBITDA. The transaction is being funded with cash and debt financing.
MARKET COMMENTARY
U.S. stock index futures were steady following payrolls data which showed ADP rising by 128,000 in May, the slowest growth of the recovery. European shares gained, led by industrial and luxury names. In Asian equity markets, Japan’s Nikkei closed lower, weighed down by healthcare and tech sectors, while Chinese shares ended higher on additional stimulus measures to support the economy. Gold prices rose, with greenback-priced bullion drawing on support from slightly lower Treasury yields and a retreat 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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.