The energy sector is set for a lower start, pressured by weakness in the crude complex and despite gains in major equity indices as futures reversed and investors continued to assess the risks stemming from Russia’s invasion of Ukraine. A slew of earnings across E&Ps, services and pipelines will add further inputs for investors to weigh.
WTI and Brent crude oil futures are down in early trading on concerns over potential global supply disruptions from sanctions on major crude exporter Russia. President Joe Biden said the United States is working with other countries on a combined release of additional oil from global strategic crude reserves. The plan would be in addition to a coordinated release of oil stockpiles with China and other Asian consumer countries organized by Washington last November to combat energy inflation. So far, the United States has released about 50 million barrels of oil from its Strategic Petroleum Reserve through sales and exchanges, while China has mostly held off from releasing its oil. Britain, Japan, Canada, Australia and the European Union also unveiled sanctions, including a move by Germany to halt certification of an $11 billion Russian gas pipeline. However, Russia will not have its oil and gas flows specifically targeted by sanctions as the country is the world's second-largest crude producer and a major natural gas provider to Europe.
Natural gas futures are lower in early trading as the NOAA 6-10 day and 8-14 day forecast show near normal temps for northern mid-west and above normal temps for eastern portion of US.
BY SECTOR:
US INTEGRATEDS
Chevron said it is monitoring markets after Russia invaded Ukraine and can adjust crude supply through its trading organization to meet market demand.
Chevron U.S.A., a subsidiary of Chevron, announced it has made a new investment in Carbon Clean. As part of the new investment, Chevron and Carbon Clean are seeking to develop a carbon capture pilot for Carbon Clean’s CycloneCC technology on a gas turbine in San Joaquin Valley, California.
ExxonMobil has reached an agreement to sell its equity interest in Mobil Producing Nigeria Unlimited to Seplat Energy, a Nigerian independent oil and gas company, through its wholly-owned subsidiary Seplat Energy Offshore Limited.
INTERNATIONAL INTEGRATEDS
RBC Capital Markets upgraded BP to Outperform from Sector Perform.
Eni started production from Ndungu Early Production (EP) development project, in Block 15/06 of the Angolan deep offshore, via the Ngoma Floating Production Storage and Offloading (FPSO) vessel.
Hyundai Motor and Shell plc are embarking on a new strategic collaboration to explore ways to offer lower carbon emissions products and services and to reduce emissions across their operations.
RBC Capital Markets downgraded TotalEnergies to Sector Perform from Outperform.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
EOG Resources reported fourth quarter 2021 results. Record quarterly adjusted net income was $1.8 billion, or $3.09 per share, and $2.0 billion of free cash flow. Capital expenditures is in-line with guidance while oil production is above guidance mid-point. The Company also declared a regular dividend of $0.75 per share and special dividend of $1.00 per share.
Enerplus reported fourth quarter 2021 net income of $176.9 million, or $0.71 per share, compared to a net loss of $161.6 million, or ($0.73) per share, in the fourth quarter of 2020. Excluding certain non-cash or non-recurring items, fourth quarter 2021 adjusted net income was $130.0 million, or $0.52 per share, compared to $15.3 million, or $0.07 per share, during the same period in 2020. Based on current market conditions, Enerplus plans to execute its remaining Normal Course Issuer Bid authorization by the end of July 2022. This represents an increase to the Company's current CDN$200 million repurchase program by approximately $100 million, assuming Enerplus' current share price. Upon completion, this is expected to result in over $300 million in total cash returns to shareholders over the preceding 12-month period through dividends and share repurchases.
Enerplus declared a quarterly cash dividend of US$0.033 per share. The dividend is effective with the March 15, 2022 dividend payment and applies to all shareholders of record at the close of business on March 4, 2022. The ex-dividend date for this payment is March 3, 2022. The US$0.033 per share dividend is equivalent to approximately CDN$0.042 per share if converted using the current US/Canadian dollar exchange rate of 1.2830.
Enerplus reported year-end 2021 reserves under U.S. Standards and Canadian NI 51-101 Standards: Net proved developed producing reserves were 200 MMBOE, an increase of 77% year-over-year; Net total proved reserves were 339 MMBOE, an increase of 163% year-over-year; Enerplus added 244 MMBOE of net proved reserves in 2021 (including acquisitions, divestments, extensions, technical revisions and economic factors), replacing its 2021 production by over seven times; Net proved finding, development and acquisition costs were $9.33 per BOE, including future development costs.
Occidental announced net income attributable to common stockholders for the fourth quarter of 2021 of $1.3 billion, or $1.37 per diluted share, and adjusted income attributable to common stockholders of $1.4 billion, or $1.48 per diluted share. Fourth quarter after-tax items affecting comparability of $111 million included net derivative losses of $107 million and $130 million of charges for non-core expiring domestic onshore undeveloped oil and gas leases and inventory impairments, partially offset by a positive state tax rate revaluation of $88 million and gains on sale of $68 million.
Occidental announced that its Board of Directors has declared a regular quarterly dividend of $0.13 per share on common stock, payable on April 15, 2022, to stockholders of record as of the close of business on March 10, 2022. On an annual basis, the dividend is $0.52 per share at the new rate, compared to the previous annual rate of $0.04 per share.
Ovintiv announced its fourth quarter 2021 financial results. Fourth quarter net earnings totaled $1.4 billion, or $5.21 per diluted share of common stock. On February 24, 2022, Ovintiv's Board declared a quarterly dividend of $0.20 per share of common stock payable on March 31, 2022, to shareholders of record as of March 15, 2022. This represents an increase of 43% from the previous level and an increase of 113% versus 1-year ago and also marks the second dividend raise in the last six months.
SM Energy announced certain fourth quarter 2021 financial results. Fourth quarter 2021 net income was $424.9 million, or $3.43 per diluted common share, compared with a net loss of $(165.2) million, or $(1.44) per diluted common share, for the same period in 2020. The current year period included a 167% increase in operating revenues and other income as well as a $22.5 million net derivative gain versus the prior year period that had a $152.7 million net derivative loss. Fourth quarter 2021 adjusted net income was $141.5 million, or $1.14 per diluted common share, which compares with adjusted net income of $2.7 million, or $0.02 per diluted common share, for the same period in 2020.
For the quarter ended December 31, 2021, Southwestern Energy recorded net income of $2.4 billion, or $2.31 per diluted share, including a positive $2.0 billion non-cash change in unsettled mark to market derivatives. This compares to a net loss of $92 million, or ($0.14) per diluted share in the fourth quarter of 2020. Adjusted net income (non-GAAP), which excludes non-cash items noted above and other one-time charges, was $318 million or $0.31 per diluted share in 2021 and $119 million or $0.18 per share for the same period in 2020. The increase was primarily related to increased production volumes and increased commodity prices.
Talos Energy announced its financial results for the fourth quarter 2021. Net Income was $81.0 million, or $0.98 Net Income per diluted share, and Adjusted Net Income was $37.4 million, or $0.45 Adjusted Net Income per diluted share.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
The board of directors of Compass Minerals has declared a quarterly cash dividend of $0.15 per share. This dividend is payable March 21, 2022, to shareholders of record as of the close of business on March 10, 2022.
Granite Construction announced results for the fourth quarter ended December 31, 2021. Results for the fourth quarter of 2021 were a net loss of ($13.2) million, or ($0.28) per diluted share compared to a net income of $8.0 million, or $0.17 per diluted share, in the same period last year. Adjusted net income for the fourth quarter of 2021, which excludes other costs, non-cash impairments of goodwill, transaction costs, a gain on sale of property and amortization of debt discount related to our 2.75% convertible notes, totaled $1.9 million, or $0.05 per diluted share compared to an adjusted net income of $19.5 million, or $0.42 per diluted share, in the same period last year. Revenue from continuing operations decreased 17.7% in the fourth quarter of 2021 to $683.2 million compared to $830.4 million in the same period last year.
Granite announced the award of three contracts totaling approximately $23.8 million by Ellis-Prairie Soil and Water Conservation District. Located in Ellis County, Texas, the first contract was included in Granite’s fourth quarter 2021 CAP and the remaining two contracts are anticipated to be included in Granite’s first quarter 2022 CAP.
Solaris Oilfield Infrastructure announced that its Board of Directors has declared a quarterly cash dividend of $0.105 per share of Class A common stock, to be paid on March 17, 2022 to holders of record as of March 7, 2022. A distribution of $0.105 per unit has also been approved for holders of units in Solaris Oilfield Infrastructure, LLC, which is subject to the same payment and record dates.
U.S. Silica Holdings announced a net loss of $19.0 million, or $0.25 per basic and diluted share, for the fourth quarter ended December 31, 2021. The fourth quarter results were negatively impacted by $3.5 million pre-tax, or $0.03 per diluted share after-tax, of charges primarily related to merger and acquisition related expense and other adjustments, resulting in an adjusted loss of $0.22 per basic and diluted share.
U.S. Silica Holdings said that a portion of its Industrial and Specialty Products business will increase prices for most of its non-contracted whole grain and ground cristobalite products. These products are produced in its Millen, GA, Berkeley Springs, WV and Columbia, SC facilities and used primarily in building products, foundry, plastics, and paints and coatings. Price increases will range up to 25 percent, depending on the product and grade. The price increases are effective for shipments starting April 1, 2022.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Nordic American Tankers reported that for the fourth quarter 2021 the net loss was -$21.0 million or -$0.12 per share. Adjusted EBITDA was $1.9 million. For the third quarter the net loss was -$44.6 million or -$0.27 per share and an adjusted EBITDA of -$12.3 million.
Summit Midstream Partners, LP announced its financial and operating results for the three months ended December 31, 2021, including net loss of $16.2 million, adjusted EBITDA of $54.7 million and DCF of $29.9 million.
MARKET COMMENTARY
U.S. stock index futures slipped after Wall Street's dramatic late rally in the previous session, with developments around a raging war in Ukraine keeping investors on edge. Europe's stock indexes rebounded to trade higher on bargain hunting. Asian shares also ended higher. In currencies, the euro steadied following a sharp decline in previous day and Russia's rouble also recovered. The safe-haven dollar firmed against a basket of currencies. In commodities, oil prices were little changed, following sharp rises in the session and gold prices lost ground. Markets will work through another spate of economic figures that include consumer spending, personal consumption expenditures price index, consumer sentiment and pending home sales.
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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