Crude Slips on China’s COVID-19 Curbs

The energy sector is poised for a higher start, supported by strength in the major market futures. U.S stocks are expected to open in positive territory as investors shift focus to Tuesday’s U.S midterm elections that will determine the control of Congress.

WTI and Brent crude oil are trading lower this morning, weighed down by China’s COVID-19 curbs. Chinese officials reiterated their commitment to their zero COVID-19 policy, leading investors to remain worried the continuation of coronavirus containment measures will dent oil demand. However, futures remain close to $100 a barrel amid support from a weaker dollar and tight supply. Oil prices continue to hover around their current price on expectations supply will tighten once the EU’s embargo on Russian energy begins.   

Natural gas futures jumped in early trading amid forecasts for colder weather and more demand in mid-November, despite hotter-than-normal temperatures in the U.S. this week.

BY SECTOR:

US INTEGRATEDS 

The Contra Costa County District Attorney on Friday said it has reached a settlement with Chevron over a diesel spill into the San Francisco Bay from the company’s 245,271 barrel-per-day Richmond, California refinery last year.

ExxonMobil and partners have made a new hydrocarbon discovery in the offshore Bavuca Sul-1 exploration well off Luanda’s coast, Angola’s National Agency of Petroleum, Gas and Biofuels (ANPG) said.

ExxonMobil will take up to a $2 billion loss on the highly leveraged sale of a troubled California offshore oil and gas field that have been idled since a 2015 pipeline spill.

INTERNATIONAL INTEGRATEDS

Wells Fargo Securities upgraded BP to Equal Weight from Underweight.

Equinor announced its interest in developing gigawatt scale floating offshore wind in the Celtic Sea, with the upcoming Celtic Sea floating wind seabed leasing round in view.

Petrobras, regarding the news in the media about the dividend payment approved by its Board of Directors, clarified that it has not yet had access to the representation made by the TCU’s Public Prosecution Service. However, the company is at the disposal of the Court to provide all information, in line with what was already done in a similar representation regarding the payment of dividends for the 2nd quarter of 2022. At that time, the Court did not identify the need to grant an injunction.

Petrobras informed that it has finalized the sale of the shares of the company Paraná Xisto S.A, which was formed to hold the Shale Industrialization Unit (SIX), located in São Mateus do Sul, Paraná, to Forbes Resources Brazil Holding S.A. (F&M Brazil), a company owned by Forbes & Manhattan Resources.

Guilherme Estrella, former director of Petrobras, filed a lawsuit in court to block the payment of dividends by the company. In a late Friday filing, Petrobras reported that Estrella, a former director of exploration and production, requested the blocking of 32.1 billion reais ($6.6 billion) in dividends that would be paid in advance to the federal government, as approved in July.

Aker Solutions has been awarded a frame agreement from Petrobras and Partners (Consortiums) to provide subsea production systems (SPS) and subsea lifecycle services (SLS) for Petrobras-operated oil and gas fields offshore Brazil.

China’s privately-owned refinery Zhejiang Petroleum & Chemical Co (ZPC) signed a purchase deal with Saudi Aramco for supply of 1.08 million tonnes, or 7.88 million barrels, of crude oil, Chinese government-backed newspaper Zhoushan Daily reported.

Raizen said it has agreed to sell second-generation ethanol (E2G) produced from sugarcane biomass to Shell until 2037, under a program that includes building five new E2G plants.

CANADIAN INTEGRATEDS

Cenovus Energy announced the Toronto Stock Exchange has approved the renewal of the company’s normal course issuer bid (“NCIB”) to purchase up to 136,717,741 common shares during the 12-month period commencing November 9, 2022 and ending November 8, 2023.

U.S. E&PS

Kosmos Energy announced its financial and operating results for the third quarter of 2022. For the quarter, the Company generated a net income of $222 million, or $0.47 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income of $90 million, or $0.19 per diluted share for the third quarter of 2022.

Warren Buffett’s Berkshire Hathaway could soon see a boost to its bottom line after changing its accounting for its big stake in Occidental Petroleum. In its quarterly report on Saturday, Berkshire said it adopted the equity method of accounting for its 20.9% stake in Occidental, which is worth more than $14 billion.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Cactus announced financial and operating results for the third quarter of 2022. Revenue was $184.5 million and income from operations of $51.3 million. Net income was $41.5 million and diluted earnings per Class A share was $0.51. Adjusted net income was $39.3 million and diluted earnings per share, as adjusted was $0.52.

Core Laboratories N.V. announced its decision to proceed with the voluntary delisting of its shares from Euronext Amsterdam. The Company has been dual listed on the New York Stock Exchange since 1998 and Euronext Amsterdam since 2012.

D.A. Davidson upgraded Fluor to Buy from Neutral.

KBR announced that it has been awarded a contract by Deepak Fertilizers and Petrochemicals Corporation Ltd. (DFPCL) to help three DFPCL plants achieve lower emissions and simultaneously increase production capacity.

Wells Fargo Securities upgraded NOV Inc to Equal Weight from Underweight.

Solus Alternative Asset Management LP announced that one or more funds and accounts managed by it and/or subsidiaries thereof disposed of ownership of, and Solus ceased to have control and direction over, an aggregate of 105,398 common shares of SECURE Energy Services in a series of transactions through the facilities of the Toronto Stock Exchange at prices ranging from CAD$7.50 to CAD$7.51 per Common Share, for total consideration of CAD$790,558.78.

As per SEC filing, Select Energy Services filed for a potential shelf of 8.7 mln shares of Class A common stock.

As per SEC filing, on November 3, 2022, David Baldwin resigned from the Board of Directors of Select Energy Services, effective immediately.  On November 4, 2022, at the recommendation of the Nominating, Governance and Sustainability Committee of the Board, the Board appointed Robin Fielder as an independent director to fill the vacancy created by Mr. Baldwin’s resignation. Concurrently with her appointment to the Board, Ms. Fielder was appointed to both the Audit Committee and the Nominating, Governance and Sustainability Committee of the Board.

DRILLERS

No significant news.

REFINERS

Delek US Holdings announced financial results for its third quarter ended September 30, 2022, with net income of $7.4 million, or $0.10 per share, versus net income of $11.8 million, or $0.16 per share, for the quarter ended September 30, 2021. The Company reported Adjusted net income of $1.1 million, or $0.02 per share, for the third quarter 2022. This compares to Adjusted net income of $3.6 million, or $0.05 per share, in the prior year period. Adjusted earnings before interest, taxes, depreciation and amortization was $135.8 million for the third quarter compared to Adjusted EBITDA of $101.9 million in the same period in 2021. Third quarter 2022 results include $225.1 million of unfavorable inventory valuation impacts.

MLPS & PIPELINES

Brooge Energy announced that it has received a staff determination letter from The Nasdaq Stock Market dated October 31, 2022. The Company intends to request a hearing  before a Nasdaq Hearings Panel at which it will request a further extension of time.  The hearing request will automatically stay any suspension or delisting action through November 22, 2022; however, in connection with the hearing request, the Company will request that the Nasdaq stay remain in effect through the completion of the hearings process and the expiration of any additional extension period granted by the Panel following the hearing.  In the event the extended stay is not granted, the Company will continue to trade on the OTC Markets Expert Market under the same symbol “BROG.” 

Delek Logistics Partners, LP announced its financial results for the third quarter 2022, with reported net income attributable to all partners of $44.7 million, or $1.03 per diluted common limited partner unit. This compares to net income attributable to all partners of $43.6 million, or $1.00 per diluted common limited partner unit, in the third quarter 2021. Net cash from operating activities was $164.4 million in the third quarter 2022 compared to $74.8 million in the third quarter 2021. Distributable cash flow, as adjusted was $69.9 million in the third quarter 2022, compared to $55.5 million in the third quarter 2021.

Enbridge had a pipeline shut down on Nov. 5 after a spill in Livingston County, Illinois.

Holly Energy Partners, L.P. reported financial results for the third quarter of 2022. Net income attributable to HEP for the third quarter of 2022 was $42.0 million ($0.33 per basic and diluted limited partner unit), compared to $49.2 million ($0.46 per basic and diluted limited partner unit) for the third quarter of 2021.

MARKET COMMENTARY

U.S. stock index futures edged higher and world equity markets rose, as investors remained optimistic about China to ease its COVID restrictions, despite officials saying they do not plan an imminent reopening. Focus on Wall Street also shifted to Tuesday’s U.S. midterm elections that will determine control of Congress. Rally in riskier assets dented appeal for the dollar, capping losses for oil prices. Spot gold fell on profit booking.

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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