Crude Climbs as Supply Concerns Outweigh Global Recession Fears

The energy sector is set for a higher start supported by strength in the underlying commodities and U.S. equity futures. The major averages are expected to start Monday’s session slightly higher as investors brace themselves for the U.S. CPI data which will be released on Tuesday, followed by the Federal Reserve’s two-day policy meeting, with the consensus expecting another 50-basis point rate hike to be announced Wednesday at 2 PM ET.

WTI and Brent crude oil are trading near the flatline, but in positive territory, following last week’s sell-off as supply concerns outweigh fears of a looming global recession. Oil futures are gaining support from the closure of the Keystone pipeline and the threat of Russian production cuts. Yesterday, Canada’s TC Energy said it had not yet determined the cause of the oil pipeline leak and gave no indication to when the pipeline would resume operation. Traffic at Istanbul’s Bosphorus Strait fell Monday as the number of tankers waiting to pass decreased.

Natural gas futures surged this morning on forecasts for below-normal temperatures across most of the U.S. The upper Midwest, North and Central High Plains are expected to see the coldest temperatures.  

BY SECTOR:

US INTEGRATEDS

Exxon Mobil closed a $407 million sale of its operations in Central Africa’s Chad and Cameroon to London-listed firm Savannah Energy PLC.

INTERNATIONAL INTEGRATEDS

Eni announced the beginning of production at the photovoltaic plant under its operation in Tataouine, southern Tunisia, following connection to the national grid.

Equinor announced that phase 1 of Askeladd will bring 18 billion cubic metres of gas and two million cubic metres of condensate to the market via the Hammerfest LNG plant on Melkøya.

Reuters reported that Saudi Aramco has told at least two customers in North Asia they will receive full contract volumes of crude oil in January, sources with knowledge of the matter said.

Saudi Aramco’s base oil subsidiary Luberef has set the final offer price for its upcoming initial public offering (IPO) at 99 riyals ($26.33) a share, at the top end of the price range amid strong demand.

Saudi Aramco Gulf Operations Company signed a Memorandum of Understanding on Sunday with Kuwait Gulf Oil Company (KGOC) to develop the joint Durra gas field, Saudi state news agency (SPA) reported.

Bloomberg reported that Saudi Aramco has started talks with potential backers for its $110 billion Jafurah gas development, according to people familiar with the matter, as the oil producer plans to exploit one of the world’s largest unconventional gas fields.

Russia’s Novatek received notices from representatives of TotalEnergies Arnaud Le Foll and Dominique Marion of their resignation from Novatek’s board of directors.

TotalEnergies said it was working towards exploiting its new Lebanon Block 9 offshore gas project from next year, adding that it would likely select the vendor for a new drilling rig in the first quarter of 2023.

CANADIAN INTEGRATEDS

Imperial Oil announced the preliminary results of its substantial issuer bid, pursuant to which Imperial offered to purchase for cancellation up to $1.5 billion of its common shares. The Offer proceeded by way of a modified Dutch auction, which had a tender price range from $72.50 per Share to $87.00 per Share, and included the option for shareholders to participate via a proportionate tender. The Offer expired at 5:00 p.m. (Calgary time) on December 9, 2022. Exxon Mobil, Imperial’s majority shareholder, made a proportionate tender under the Offer and will maintain its proportionate Share ownership at approximately 69.6 percent following completion of the Offer.

U.S. E&PS

Nasdaq announced the results of the annual reconstitution of the Nasdaq-100 Index, which will become effective prior to market open on Monday, December 19, 2022. The following six companies will be added to the Index: CoStar Group, Rivian Automotive, Warner Bros. Discovery, GlobalFoundries, Baker Hughes, and Diamondback Energy.

Chesapeake Energy announced the closing of a new senior secured reserve-based revolving credit facility, which replaces the Company’s previous credit facility. Highlights of the new agreement include: Reserve-based credit facility maturity date of five years (to December 9, 2027); Initial borrowing base of $3.5 billion, with semi-annual redetermination; Chesapeake voluntarily maintains aggregate commitments of $2.0 billion; Initial facility obligations are guaranteed by certain Chesapeake subsidiaries (the Guarantors) and secured by substantially all of the Company’s and the Guarantors’ oil and gas assets excluding the Eagle Ford and Brazos Valley assets; Initial facility highlights include a more favorable interest rate grid as well as loosened financial and administrative covenants and administrative burdens.

CNX Resources launched “Appalachia First,” its vision for the future which draws on the company’s regional leadership, core operational strengths, and innovative business model.

Truist Securities downgraded Coterra Energy to Hold from Buy.

Truist Securities downgraded Murphy Oil to Hold from Buy.

Truist Securities downgraded PDC Energy to Hold from Buy.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Baker Hughes announced it has been added to the Nasdaq-100 Index, the top 100 largest domestic and international non-financial companies on The Nasdaq based on market capitalization. Nasdaq announced the inclusion on Friday, Dec. 9, which will become effective prior to market open on Monday, Dec. 19.

Granite Construction announced that its Board of Directors has declared a quarterly cash dividend of $0.13 per common share. The dividend is payable on January 13, 2022, to all shareholders of record at the close of business on December 30, 2022.

Helmerich and Payne Inc increased 2023 repurchase limit to up to a maximum of 5M shares. The board previously only allowed buyback of up to 4M shares any calendar year.

NOV has been awarded contracts for the equipment and design of Cadeler’s second F-class jack-up vessel. The F-class is a bespoke version of the GustoMSC NG-20000X model specially designed as a hybrid wind turbine and foundation installation jack-up vessel.

VettaFi announced that USA Compression Partners, LP will be added to its Alerian MLP Index (AMZ) and Alerian MLP Equal Weight Index (AMZE) following the close of trading on Friday, December 16.

DRILLERS

As per SEC filing, as previously disclosed, Helmerich & Payne has had an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. On December 9, 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares. The repurchases may be made using cash and cash equivalents or other available sources. On December 9, 2022, the Board of Directors of the Company declared a quarterly base cash dividend of $0.25 per share on its common stock and a quarterly supplemental cash dividend of $0.235 per share on its common stock. Both dividends are payable February 28, 2023, to stockholders of record at the close of business February 14, 2023.

REFINERS

Delek US Holdings and Delek Logistics Partners, LP announced that Rosy Zuklic has joined as Vice President of Investor Relations and Market Intelligence. In her position, Zuklic will focus on articulating Delek’s investment story and managing its strategic relationships with key stakeholders among institutional investors and research analysts. She will be transitioning into the role through the end of the year and assume full engagement with stakeholders at the beginning of 2023. Blake Fernandez, SVP of Investor Relations and Market Intelligence, has decided to pursue another opportunity and will assist in the transition through year-end.

MLPS & PIPELINES

Cheniere Energy announced the expiration of its cash tender offer to purchase any and all of the $1.25 billion aggregate principal amount of the outstanding 7.000% Senior Secured Notes due 2024 issued by Cheniere Corpus Christi Holdings, LLC.

Golar LNG Limited announced the result of the offer announced on 5 December 2022 to buy back parts of its USD 300 million senior unsecured bonds. The “Reverse Dutch Auction” closed on 9 December 2022 at 16:00 CET, and Golar has accepted offers up to and including a price of 100% of par value plus accrued and unpaid interest, equaling a total nominal amount of approximately USD 140 million. Cash settlement for the repurchase is expected to occur on 15 December 2022.

As per SEC filing, Magellan Midstream Partners, L.P. announced that on December 8, 2022, Melanie Little, Executive Vice President and Chief Operating Officer, announced her resignation effective January 1, 2023 to pursue another opportunity. Ms. Little’s decision to resign was not due to any disagreement with Magellan on any matter relating to Magellan’s operations, policies or practices.

TC Energy said it has not yet determined the cause of the Keystone oil pipeline leak last week in the United States, while also not giving a timeline as to when the pipeline will resume operation. TC shut the pipeline after more than 14,000 barrels of crude oil spilled into a creek in Kansas on Wednesday, making it one of the largest U.S. crude spills in nearly a decade. The pipeline operator said that it has more than 250 people working on the leak, including third-party environmental specialists, adding that it is continuously monitoring air quality and presently there are no indications of adverse health or public concerns.

An outage on the largest oil pipeline to the United States from Canada could affect inventories at a key U.S. storage hub and cut crude supplies to two oil refining centers, analysts and traders said on Friday. TC Energy’s Keystone pipeline ferries about 600,000 barrels of Canadian crude per day (bpd) to the United States. It was shut late Wednesday after a breach spewed more than 14,000 barrels of oil into a Kansas creek, making it the largest crude spill in the United States in nearly a decade.

MARKET COMMENTARY

U.S. stock index futures edged higher with focus turning to monthly consumer inflation data and the Federal Reserve meeting later this week. Global stocks fell as investors braced for interest rate decisions from the U.S. and European central banks later this week, while rising COVID-19 infections in China after restrictions were eased also weighed on sentiment. The dollar edged lower and gold prices slipped. Oil prices were down, deepening a multi-week decline, as a weakening global economy offset supply woes stemming from the closure of a key pipeline supplying the United States and Russian threats of a production cut.

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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