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SECTOR COMMENTARY:
Energy stocks are set to open higher, with a slew of earnings reports across operators, drillers, services and pipelines offering new datapoints and guidance for 2023. More broadly, index futures are set to rebound, while oil prices are also gaining. Trading should remain in a narrow range as investors weigh higher for longer rates and bargain prices on equities.
Oil prices firmed on Thursday after Brent crude posted its biggest one-day loss for seven weeks in the previous session, with gains on Russian supply curbs capped by an expected rise in U.S. inventories. Lending some support to prices, Russia plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced production cuts of 500,000 barrels per day. Both oil benchmarks lost more than $2 in the previous session on expectations of further increases to interest rates.
Natural gas futures are higher by more than 4% ahead of weekly inventory data.
BY SECTOR:
US INTEGRATEDS
Exxon Mobil said its global workforce fell by 1,000 people last year to 63,000 employees as part of cost-cutting designed to lower costs and boost shareholder returns.
INTERNATIONAL INTEGRATEDS
Berenberg downgraded BP to Hold from Buy.
Texas Pacific Land announced a long-term agreement with bpx energy (“bpx”), a subsidiary of BP, to provide water services and surface access across approximately 270,000 acres in Culberson, Loving, and Reeves Counties, Texas.
Eni said it would simplify and improve the remuneration policy for its investors in its 2023-2026 strategy plan. The group said it would raise its dividend by 7% and buy back shares worth 2.2 billion euros in 2023 and pledged to return to investors between 25% and 30% of its cash flow for operations. Oil and gas production will grow between 3% and 4% on average every year. Emission reduction targets indicated last year were confirmed.
Eni said its adjusted net profit rose to 13.3 billion euros in 2022, more than doubling compared with the previous year on the back of strong oil and gas prices. In the fourth quarter the adjusted net profit came in at 2.5 billion euros, just above an analyst consensus of 2.49 billion euros published on the group’s website.
Shell Chief Executive Officer Wael Sawan has created a senior role of chief of staff as part of a management overhaul to improve performance after technical problems and other disruption, three company sources said.
TotalEnergies has signed Corporate Power Purchase Agreements (CPPA) with Sasol South Africa and Air Liquide Large Industries South Africa for the supply of 260 MW capacity of renewable electricity over 20 years.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
APA Corporation announced its financial and operational results for the fourth-quarter and full-year 2022. During the fourth-quarter 2022, APA reported net income attributable to common stock of $443 million, or $1.38 per share on a fully diluted basis. When adjusted for certain items that impact the comparability of results, APA’s fourth-quarter earnings totaled $476 million or $1.48 on a diluted share basis. Reported fourth-quarter production was 414,000 BOE per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 334,000 BOE per day. Net cash provided by operating activities in the fourth quarter was $1.4 billion, and adjusted EBITDAX was $1.5 billion.
Callon Petroleum reported fourth quarter and full year 2022 financial and operating results. Generated $372.6 million of net cash provided by operating activities and adjusted free cash flow of $165.4 million. Net income of $272.5 million, or $4.41 per diluted share, adjusted EBITDA of $412.2 million, and adjusted income of $207.7 million or $3.36 per diluted share.
Coterra Energy reported fourth-quarter and full-year 2022 financial and operating results. On October 1, 2021, Coterra announced that the merger involving the Company, which was formerly named Cabot Oil & Gas Corporation, and Cimarex Energy Co. was completed. Fourth-quarter 2021 results discussed within this release represent Coterra. Full-year 2021 results include nine months of legacy Cabot results from January 1 to September 30, plus three months of Coterra beginning October 1, unless noted otherwise. Net income for fourth quarter 2022 totaled $1,032 million, or $1.32 per share. Adjusted net income (non-GAAP) for fourth-quarter 2022, excluding non-recurring items, was $905 million, or $1.16 per share.
Denbury announced several new agreements related to its carbon capture, utilization and storage (“CCUS”) business and provided its 2023 goals, which are intended to further the Company’s leadership position in CCUS.
Aqualung Carbon Capture announced the strategic carbon capture and sequestration partnership with Denbury. In conjunction with the partnership, Denbury will make an equity investment in Aqualung, expanding on our strong shareholder base.
Denbury announced its 2023 capital budget range for oil and natural gas development of $350 million to $370 million, and for carbon capture, utilization, and storage (“CCUS”) capital expenditures of $140 million to $160 million. At the combined midpoint of $510 million (excluding capitalized interest and equity investments), planned capital expenditures are up 19% from 2022, with the increase driven entirely by the CCUS business as the Company plans to enhance its spending on the development of dedicated CO2 storage sites and prepare for expansion of its CO2 pipeline infrastructure.
Denbury provided its fourth quarter and full-year 2022 results. Generated $521 million in cash flow from operations and $136 million of free cash flow (a non-GAAP measure). Repurchased $100 million of the Company’s outstanding shares (1.6 million shares or 3.2% of shares outstanding) at an average price of $61.92 per share.
Occidental announced that Ken Robinson, who currently serves on the Boards of Directors for Abercrombie & Fitch, Paylocity and Morgan Stanley U.S. Banks, and formerly served as Senior Vice President of Audit and Controls at Exelon Corporation, has been elected to its Board of Directors, effective as of February 16, 2023.
PDC Energy announced its full year and fourth quarter 2022 financial and operating results and provided 2023 guidance. Net income for the fourth quarter of 2022 was $350 million, or $3.79 per diluted share, compared to $798 million, or $8.30 per diluted share in the third quarter of 2022. The quarter-over-quarter change was primarily due to a $225 million decrease in sales and a $100 million commodity risk management loss in the fourth quarter compared to a $307 million commodity risk management gain in the third quarter of 2022, partially offset by (i) a $134 million decrease in income tax expense, (ii) a $35 million decrease in production costs and (iii) an $11 million decrease in exploration expense between periods. Adjusted net income, a non-U.S. GAAP financial measure defined below, was $297 million in the fourth quarter of 2022 compared to $363 million in the third quarter of 2022. With the exception of the tax-affected net change in fair value of unsettled derivatives, the same factors impacted adjusted net income. Net income for the full year of 2022 was $1,778 million, or $18.49 per diluted share, compared to $522 million, or $5.22 per diluted share in 2021. The year-over-year change was primarily due (i) an increase in crude oil, natural gas and NGLs sales of $1,744 million, (ii) a $238 million decrease in net commodity risk management loss and (iii) a gain on bargain purchase in the Great Western acquisition of $90 million. These positive factors were partially offset by (i) a $428 million increase in income tax expense, (ii) a $253 million increase in production costs and (iii) a $114 million increase in depreciation, depletion and amortization expense between periods. Adjusted net income, a non-U.S. GAAP financial measure defined below, was $1,450 million in 2022 compared to $800 million in 2021. With the exception of the tax-affected net change in fair value of unsettled derivatives, the same factors impacted adjusted net income.
Pioneer Natural Resources reported financial and operating results for the quarter and year ended December 31, 2022. Pioneer reported fourth quarter net income attributable to common stockholders of $1.5 billion, or $5.98 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, non-GAAP adjusted income for the fourth quarter was $1.5 billion, or $5.91 per diluted share. Cash flow from operating activities for the fourth quarter was $2.6 billion. For the year ended December 31, 2022, the Company reported net income attributable to common stockholders of $7.8 billion, or $31.13 per diluted share. Cash flow from operating activities for the year was $11.3 billion.
Pioneer Natural Resources announced that its Board of Directors declared a quarterly base-plus-variable cash dividend of $5.58 per common share. The dividend is payable March 17, 2023, to stockholders of record at the close of business on March 6, 2023.
SM Energy announced certain fourth quarter and full year 2022 operating and financial results, year-end 2022 estimated proved reserves and its 2023 operating plan. Fourth quarter 2022 net income was $258.5 million, or $2.09 per diluted common share, compared with net income of $424.9 million, or $3.43 per diluted common share, for the same period in 2021. The current year period included a 21% decrease in operating revenues and other income, compared with the same period in 2021, due to lower production partially offset by higher realized prices for oil and NGLs after the effect of derivative settlements, as well as increased production costs. For the full year 2022, net income was $1.11 billion, or $8.96 per diluted common share, compared with net income of $36.2 million, or $0.29 per diluted common share, for the full year 2021. Full year net income reflects a 28% increase in operating revenues and other income, a 22% decrease in DD&A expense, and lower net derivative loss, which was partially offset by higher production expenses per Boe and higher income tax expense. Fourth quarter 2022 adjusted net income was $159.2 million, or $1.29 per diluted common share, which compares with adjusted net income of $141.5 million, or $1.14 per diluted common share, for the same period in 2021. For the full year 2022, adjusted net income was $904.0 million, or $7.29 per diluted common share, compared with adjusted net income of $228.3 million, or $1.85 per diluted common share, in 2021.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Cactus announced financial and operating results for the fourth quarter and full year 2022. Revenue of $187.8 million and income from operations of $48.2 million; Adjusted net income of $43.5 million and diluted earnings per share, as adjusted of $0.57; Adjusted EBITDA and Adjusted EBITDA margin of $66.4 million and 35.4%, respectively.
Solaris Oilfield Infrastructure reported financial results for the fourth quarter and full year 2022. Net income of $8.0 million, or $0.15 per diluted Class A share, for the quarter ended December 31, 2022; Adjusted pro forma net income of $10.2 million, or $0.22 per fully diluted share for the quarter ended December 31, 2022. Adjusted EBITDA of $23.0 million for the quarter ended December 31, 2022.
DRILLERS
TechnipFMC plc reported fourth quarter 2022 results. Total Company revenue in the fourth quarter was $1,694.4 million. Loss from continuing operations attributable to TechnipFMC was $26.7 million, or $0.06 per diluted share. These results included after-tax restructuring and other charges of $6 million, or $0.01 per share. Adjusted EBITDA, which excludes pre-tax charges and credits, was $120.9 million; adjusted EBITDA margin was 7.1 percent. Total Company revenue in the full year was $6,700.4 million. Loss from continuing operations attributable to TechnipFMC was $61.9 million, or $0.14 per diluted share. These results included a loss on early extinguishment of debt of $29.8 million.
REFINERS
Par Pacific Holdings reported its financial results for the fourth quarter and twelve months ended December 31, 2022. Par Pacific reported net income of $364.2 million, or $6.08 per diluted share, for the twelve months ended December 31, 2022, compared to a net loss of $(81.3) million, or $(1.40) per diluted share, for the twelve months ended December 31, 2021. Adjusted Net Income for 2022 was $474.7 million, compared to an Adjusted Net Loss of $(36.1) million for 2021. 2022 Adjusted EBITDA was $643.4 million, compared to $125.6 million for 2021.
MLPS & PIPELINES
Cheniere Energy announced its financial results for the fourth quarter and full year 2022. During the three and twelve months ended December 31, 2022, Cheniere generated revenues of approximately $9.1 billion and $33.4 billion, respectively, net income1 of approximately $3.9 billion and $1.4 billion, respectively, Consolidated Adjusted EBITDA2 of approximately $3.1 billion and $11.6 billion, respectively, and Distributable Cash Flow2 of approximately $2.3 billion and $8.7 billion, respectively. Both Consolidated Adjusted EBITDA and Distributable Cash Flow totals for the twelve months ended December 31, 2022 are above the most recent guidance ranges for those metrics. Introducing full year 2023 Consolidated Adjusted EBITDA guidance of $8.0 – $8.5 billion and full year 2023 Distributable Cash Flow guidance of $5.5 – $6.0 billion.
Cheniere Energy Partners, L.P., a subsidiary of Cheniere Energy, announced that certain of its subsidiaries have initiated the pre-filing review process under the National Environmental Policy Act with the Federal Energy Regulatory Commission for the proposed Sabine Pass Stage 5 Expansion Project adjacent to the existing Sabine Pass Liquefaction Project. The SPL Expansion Project is being designed for total production capacity of approximately 20 million tonnes per annum of liquefied natural gas.
Teekay Tankers reported the Company’s results for the quarter and year ended December 31, 2022. Reported GAAP net income of $146.4 million, or $4.30 per share; and adjusted net income of $147.5 million, or $4.33 per share, in the fourth quarter of 2022. Fiscal year 2022 GAAP net income of $229.1 million, or $6.74 per share; and fiscal year 2022 adjusted net income of $217.1 million, or $6.39 per share.
MARKET COMMENTARY
U.S. stock futures rallied after a four-day losing streak and European shares rose, as U.S. semiconductor designer Nvidia’s positive sales forecast sparked a rally in chip stocks. Gold prices were a little changed while the dollar was flat.
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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