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The energy sector is poised for a mixed to lower start, supported by mild strength in the crude complex and despite weakness in the major equity indices. U.S. stock index futures tumbled as Snap Inc’s forecast of no revenue growth in the lucrative holiday quarter sparked a selloff in social media companies, with galloping U.S. Treasury yields adding to the losses.
In earnings news, oilfield services provider Schlumberger reported a 64.9% jump in third-quarter profit that topped Wall Street expectations as a surge in oil and gas prices led to more drilling activity. Net income was $907 million, or 63 cents a share, in the three months ended Sept. 30, compared with $550 million, or 39 cents per share, a year ago. The company said its adjusted earnings and pre-tax segment operating margin of 18.7% were the highest since 2015. Schlumberger’s total revenue rose 28% to $7.48 billion, with international operations bringing in $5.88 billion. International revenue was up 13% sequentially and 26% from a year ago, while in North America revenue was flat compared to the prior quarter but up 37% from last year.
WTI and Brent crude oil futures are swinging in and out of positive territory as investors weighed the impact of sharp interest rate rises on energy consumption, hopes of higher Chinese demand and output cuts by OPEC and its allies. Saudi Arabia’s energy minister Prince Abdulaziz bin Salman and the director of China’s National Energy Administration Zhang Jianhua said they would strengthen their ties in the energy sector following a teleconference call that stressed the importance of stable long-term supplies to crude oil markets.
Natural gas futures are trading sharply down to lows last seen in March as forecasts continue to expect seasonally mild weather in the East.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Neither Eni nor its retail and renewables subsidiary Plenitude have applied or used guarantees provided by Italy’s state exports credit agency SACE, a spokesperson for the Italian energy group said.
Mozambique expects to ship its first liquefied natural gas (LNG) exports to Europe from the Eni-operated Coral Sul floating plant later this month or early November, petroleum regulator INP said in a supply boost for the energy-starved region. BP’sLNG tanker, British Sponsor, has already arrived offshore northern Mozambique, said Welligence Energy Analytics in a note, with all of Coral Sul’s annual gas output of 3.4 million tonnes contracted to BP for 20 years on a free-on-board basis.
Exports of Nigeria’s Forcados crude oil resumed on Thursday following the completion of repairs at the terminal, said operator SPDC, a subsidiary of Shell.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
3D Oil announced that ConocoPhillips Australia SH2 Pty Ltd and TDO have executed a Joint Operating Agreement in relation to the offshore Victorian Permit VIC/P79 which satisfies a key condition of the Farmout Agreement announced on 1st July 2022. Completion of the farmout will occur following government approval.
EQT declared a quarterly cash dividend of $0.15 per share, payable on December 1, 2022, to shareholders of record at the close of business on November 9, 2022.
Talos Energy announced that Talos Production, a wholly owned subsidiary of the Company, has commenced a consent solicitation to solicit the consent of holders of its outstanding 12.00% Second-Priority Senior Secured Notes due 2026 for amendments to the indenture governing the Notes.
RBC downgraded Ovintiv to Sector Perform from Outperform.
As per SEC filing, on October 18, 2022, the Board of Directors of Pioneer Natural Resources approved the appointment of Christopher L. Washburn as Vice President and Chief Accounting Officer of the Company, effective immediately. Mr. Washburn has served as the Company’s interim Chief Accounting Officer since July 2022 and previously served as the Company’s Controller since March of 2018.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Newpark Resources announced that it has entered into a definitive agreement to sell substantially all the long-lived assets, inventory and operations of its Excalibar mineral grinding business to Cimbar Resources, a mineral-based additive solutions company based in Chatsworth, GA. As of September 30, 2022, Excalibar had approximately $65 million of net capital employed. Under the terms of the agreement, Newpark expects to generate net cash of approximately $66 million through a combination of net cash proceeds at closing and net collections of certain retained assets and liabilities, including accounts receivable and accounts payable. In connection with the sale transaction, Cimbar and Newpark have also agreed to enter into a long-term barite supply agreement for Newpark’s U.S. drilling fluids business, with an initial term of four years following the closing of the transaction.
Schlumberger announced results for the third-quarter 2022. Revenue of $7.5 billion increased 10% sequentially and 28% year on year. GAAP EPS of $0.63 decreased 6% sequentially and increased 62% year on year. EPS, excluding charges and credits, of $0.63 increased 26% sequentially and 75% year on year.
DRILLERS
Seadrill announced that it has entered into binding Share Purchase Agreements under which it will sell its entire 35% shareholding in Paratus Energy Services Limited (formerly Seadrill New Finance Limited) and certain other interests. Paratus Energy Services Limited is the entity through which investments in SeaMex Group, Seabras Sapura and Archer Ltd are held.
REFINERS
No significant news.
MLPS & PIPELINES
Crestwood Equity Partners LP announced that the board of directors of its general partner has declared the partnership’s quarterly cash distribution of $0.655 per limited partner unit ($2.620 annually) for the quarter ended September 30, 2022, which is flat quarter-over-quarter. In addition, Crestwood announced a quarterly cash distribution of $0.2111 per Class A preferred equity unit ($0.8444 annually). Both common and preferred distributions will be made on November 14, 2022, to unitholders of record as of November 7, 2022.
The Board of Directors of Holly Energy Partners, L.P. has declared a cash distribution of $0.35 per unit for the third quarter of 2022. The distribution will be paid on November 11, 2022 to unitholders of record on October 31, 2022.
Scorpio Tankers announced that it has exercised the purchase options on eight ships and the repayment of a credit facility. The Company has given notice to exercise its purchase options on one LR2 product tanker (STI Alexis) and five MR product tankers (STI Duchessa, STI San Antonio, STI Mayfair, STI St. Charles, and STI Yorkville). These vessels were sold and leased back by the Company in the fourth quarter of 2018. The leases bear interest at LIBOR plus a margin of 3.00% per annum. The purchases, which are expected to occur in the fourth quarter of 2022, are expected to result in a debt reduction of $85.8 million for the Company. In addition, the Company has given notice to exercise its purchase options on two LR2 product tankers (STI Steadfast and STI Supreme). These vessels were acquired as part of the acquisition of Navig8 Product Tankers Inc. in 2017. The leases bear interest at LIBOR plus a margin of 5.40% per annum. The purchases, which are expected to occur in 2023, are expected to result in a debt reduction of $55.6 million for the Company. The Company has given notice to repay a bilateral credit facility, which finances one LR2 product tanker (STI Madison) and has $17.5 million of outstanding debt. This credit facility is expected to be repaid in full within October 2022.
MARKET COMMENTARY
U.S. stock futures tumbled, dragged down by elevated U.S. Treasury yields and Snap’s revenue warning for the busy holiday quarter that rattled shares of other social media companies. European shares dropped as concerns grew that major global central banks would retain their aggressive stance on inflation, with investors also fretting about higher borrowing costs potentially squeezing profits of consumer goods makers. British stocks fell, as weaker-than-expected retail sales figures and a jump in bond yields added to worries about political uncertainty following the resignation of British Prime Minister Liz Truss. Japan’s Nikkei closed sharply below the key 27,000 mark, taking cues from overnight Wall Street declines amid worries that U.S. Federal Reserve’s aggressive rate hikes could trigger recession. The U.S. dollar rose, while gold prices fell. Oil steadied as investors weighed the impact of sharp interest rate rises on energy consumption, offsetting hopes of higher Chinese demand and output cuts by OPEC and its allies.
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.
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