Oil market analysts say Pres. Trump hoodwinked Saudi Arabia into raising crude production earlier this year, thus pushing the oil market into oversupply and sparking a ~25% drop in crude prices, but now the angry Saudis are considering cutting output with OPEC and its allies by 1.4M bbl/day.
Saudi Arabia reportedly did not receive advance warning when Trump made a U-turn by offering generous waivers that are keeping more Iranian crude in the market instead of driving down Iran's exports to zero.
"The Saudis feel they were completely snookered by Trump," a source tells Reuters. "They did everything to raise supplies assuming Washington would push for very harsh Iranian sanctions. And they didn’t get any heads up from the U.S. that Iran will get softer sanctions."
"In early October there was this expectation that a lot of Iran's barrels were going to come off the market, and so essentially Saudi Arabia was duped into increasing production," says Matt Smith, head of commodities research at ClipperData.
In a little more than a month, oil prices have fallen far below the $88/bbl that the International Monetary Fund says Saudi Arabia needs to balance its budget.
"Canadian crude has become the most discounted oil on the planet," and the country now finds itself in the position of being the high cost producer in a world awash in oil, The Globe and Mail's Barrie McKenna writes.
Western Canadian heavy crude collapsed to as low as ~$12/bbl this morning, with the spread vs. the WTI North American benchmark climbing to $40/bbl in recent months, up from a typical spread of $15, costing Canada's economy tens of billions of dollars.
Producers including Canadian Natural Resources (NYSE:CNQ) and Cenovus Energy (NYSE:CVE) have responded by curtailing as much as 140K bbl/day or more in production, according to company statements, and are begging Alberta’s government to order production cuts across the province to boost prices.
Canada produced a record 4.2M bbl/day of oil in 2017 and is forecast to rise to 6.2M bbl/day by 2035, but "today's rock-bottom prices are a warning that the industry may never get there, and that the oil sands' best days are already in the rear-view mirror," McKenna says.
NextEra Energy Partners (NEP +7.4%) racks up strong gains after reaffirming long-term growth expectations for limited partner distributions without the need to sell common equity until 2020 at the earliest, regardless of expected contributions from projects that are contracted with Pacific Gas and Electric.
NEP forecasts EPS of $7.45-$7.95 for 2018, $8.00-$8.50 for 2019, and $8.70-$9.20 for 2020; it expects growth in distributions per share of 12%-14% per year through at least 2020 off a 2017 base of $3.93/share.
Helmerich & Payne (HP +4.5%) is sharply higher after reporting better than expected FQ4 earnings and a 31% Y/Y revenue increase to $696M.
Q4 operating revenue in HP's U.S. Land segment jumped 33% Y/Y to $587M, with average rig revenue per operating day up 11% to $24,449, and average rig margin per day climbing 28% to $10,340; 65% utilization in Q4 vs. 55% in the year-ago quarter helped segment operating income swing to a $64.5M profit from a year-ago loss of $4.2M.
HP says it expects to see additional demand for its super-spec FlexRigs heading into the new fiscal year as customers continue to push increased lateral lengths and their use of pad drilling; it upgraded 54 FlexRigs to super-spec capacity during FY 2018, including 16 during Q4.
"The super-spec rig market in the U.S. is effectively fully utilized, and we continue to see indications that additional demand is forthcoming, even as oil prices have recently moved lower," says President and CEO John Lindsay.
Williams Cos. (WMB +0.6%) and Brazos Midstream say they will form a joint venture in the Delaware Basin, with WMB agreeing to contribute its existing Delaware Basin assets in exchange for a 15% minority position in the JV.
Brazos will own an 85% stake in the JV and operate pro-forma 725 miles of gas gathering pipelines, 260M cf/day of natural gas processing, 75 miles of crude oil gathering pipelines and 75K barrels of oil storage; it is also building the 200M cf/day Comanche III natural gas processing plant to be fully operational by Q1 2019, bringing the JV's total operated processing capacity in the Delaware Basin to 460M cf/day.
The JV will be supported by more than 500K acres of long-term dedications currently under full-field horizontal development from oil and gas producers.
Anadarko Petroleum (APC +1.6%) says it has allocated $200M for a planned Mozambique liquefied natural gas export project and plans to make a final investment decision in H1 2019.
The $200M figure represents the portion of the costs associated with ongoing site preparation for the shared onshore facilities, the company says.
APC says it expects to upgrade current non-binding offtake agreements into sales and purchase agreements by the end of this year and sign more deals with new customers in Asia.
Construction is expected to start by the end of 2019, with the first LNG exports by 2023, according to the FID time frame announced earlier this year.
FMC Corp. (FMC -0.2%) is "overly punished" by the market due to concerns on lithium supply, even after the company sold off its health and nutrition unit, spun out its lithium portfolio and soon will become an ag-chem pure play stock, Fermium Research says, initiated shares with a Buy rating and $95 price target.
Fermium's Frank Mitsch thinks the transformed FMC is a "force to be reckoned with" as it will benefit from top line growth bolstered by new market opportunities and cost synergies with the integration of the former DuPont’s CPC business.
Mitsch notes FMC’s agriculture portfolio has been outpacing the underlying industry growth, which he expects to continue; he also believes FMC’s Dec. 3 investor day will be focused entirely on the ag-chem portfolio.
"Crude tanker rates have continued to strengthen, driven primarily by very low fleet growth as a result of high scrapping activity and higher oil production from OPEC, Russia and the U.S.," Teekay says.
LYB is discussing an extension of a long-term naphtha supply contract with Petrobras (PBR +2.3%) seen as pivotal to valuing BAK, and talks between the companies are expected to finish over the next few days, according to the report.
PBR reportedly is still discussing whether to sell its full stake in BAK or hold onto shares in the combined company, which would be the world's largest petrochemical company.
NiSource (NI -0.3%) failed to adequately draft and oversee natural gas pipeline work orders that led to the deadly explosions in three Massachusetts towns in September, according to a National Transportation Safety Board review.
The regulator said a field engineer who developed the work orders told investigators that he did not recognize the critical role of pressure sensors in the work and did not document the location of the regulator-sensing lines that flooded the system with high-pressure gas when disconnected.
NI says it is including the fail-safe measures called for by the NTSB, and has committed to a $150M program to install over-pressurization protection devices on all its low-pressure systems.
PG&E (PCG +39.6%) soars at the open after California Public Utilities Commission chief Michael Picker reportedly said last night he would not want the company to go bankrupt in the face of billions of dollars in potential liability from the latest California wildfires.
But the ~40% surge only recoups yesterday's losses that took the stock as low as $17.26 intraday.
Citigroup upgrades PCG shares to Buy from Neutral with a $40 price target, saying the CPUC is "stepping up now because it is easier for them to come out quickly to support the utility vs. something from the political spectrum."
"Why is the CPUC stepping up now vs. mostly looking for legislative initiatives earlier? Given the reaction in the stock market, we think there was an appropriate level of urgency that something needed to be done," Citi writes.
At last count, the death toll from the Camp Fire has climbed to 63 people with 631 reported missing.
Edison International (EIX +13.9%), which provides an update of the fires in southern California, also is sharply higher.
The Total-led (NYSE:TOT) Papua LNG project has signed a memorandum of understanding with Papua New Guinea's government for the expansion of the ~8M metric tons/year liquefied natural gas export plant.
The expansion, which analysts estimate will cost $13B, is crucial to the island nation’s economy as liquefied natural gas is its biggest export earner.
Papua LNG will supply gas from the Elk-Antelope fields for two new trains at Exxon Mobil’s (NYSE:XOM) PNG LNG plant, while XOM plans to develop gas at the P’nyang field to help fill a third new train at the plant; the combined projects will double the plant’s export capacity to ~16M metric tons/year.
XOM and Oil Search (OTCPK:OISHF) also hold stakes in the Papua LNG project, and the two companies are the major partners in the PNG LNG plant.
GLOG will reduce its IDRs on quarterly distributions above $0.5625/unit to 23% from 48% and will waive IDR payments resulting from any asset or business acquired by GLOP from a third party; in exchange, GLOP will pay $25M to GLOG which will be sourced from available cash.
GLOP reiterates its distribution growth guidance of 5%-7% for 2018 and 2%-4% for 2019.
The president of the California Public Utilities Commission pledges to expand an investigation of PG&E's (NYSE:PCG) safety practices to include corporate governance, structure and operations, including whether to break up the company into smaller utilities, WSJ reports.
Also late today, Moody’s downgraded the ratings of PGE Corp.'s debt as well as the long-term ratings of the main utility subsidiary, Pacific Gas & Electric Co., and said all ratings for both are on review, although many of the company's bonds earlier in the day already were trading at non-investment grade levels.
Shares fell 30% in regular trading today as investors began to consider the possibility of bankruptcy from huge liability costs from the current wildfires in northern California as well as 2017 fires, then soared as much as 44% after-hours in reaction to a report that a CPUC official told an investor call hosted by Bank of America that the agency does not want the utility to go into bankruptcy.
"The CPUC is mindful that in order for a utility to operate safely, it must have the financial means to function and implement new safety measures," the regulator said in a statement.
Moody's says to keep PG&E from going bankrupt, California policymakers will face pressure to extend help provided in recent legislation allowing utilities to pass on to customers some of the costs related to wildfires; the bill mitigates liability from fires in 2017 and others starting in 2019, but made no provision for fires this year.
Nymex natural gas futures tumbled 17% today to settle at $4.038/MMBtu - just a day after surging 18% to a four-year high $4.837/MMBtu - in a bout of volatility suggesting technical forces outweighed fundamental factors such as supply and demand.
Cold weather forecasts and low stockpiles had driven prices higher, then was exacerbated by a short squeeze as bearish traders were forced to close positions, but prices retreated today as some bet the surge was overdone, traders told WSJ.
"With storage certain to be low throughout winter, expect volatility to remain elevated relative to normal," says Robbie Fraser, a global commodity analyst at Schneider Electric Global Research.
Drillinginfo analysts say the nat gas shake-up likely was linked to the recent plunge in oil, which has fallen more than 20% since early October.
December WTI posted its second straight modest gain today after 12 straight losses, settling at $56.46/bbl after hitting $55.69/bbl earlier this week for the lowest front-month contract finish since November 2017.
Advanced Emissions Solutions (NASDAQ:ADES) agrees to acquire ADA Carbon Solutions, a low-cost provider in the mercury control activated carbon market positions emissions control platform, for $75M; trading is halted.
ADES says ADA Carbon Solutions is projected to deliver $73M in adjusted pro-forma revenue for FY 2018, and expects the deal will be immediately accretive to earnings.
In an update of its refined coal business, ADES forecasts future net cash flows of $225M-$250M through the end of 2021.
PG&E (NYSE:PCG) +33.7% after-hours with no obvious catalyst.
Shares closed -30.9% in regular trading and have plunged by nearly two-thirds over the past week due to liability concerns over the wildfires in California.
Edison International (NYSE:EIX) +7% after-hours after shares closed at their lowest since early 2014.
Update: Bloomberg reports a California Public Utilities Commission official told investors on a conference call that the agency does not want PG&E to go into bankruptcy.
The call was hosted by Bank of America analysts and included the CPUC president and other commission officials, according to the report.
Earlier: PG&E -30% as California lawmakers stay silent on wildfire liability concerns (Nov. 15)
Anadarko Petroleum (NYSE:APC) +1.4% after-hours as it releases guidance for a FY 2019 capital budget of $4.3B-$4.7B while also delivering 10% Y/Y growth in oil sales volume.
The company forecasts 2019 sales of volume of 260M-270M boe vs. 240M-245M boe in 2018, including 410K-435K bbl/day of oil vs. 380K-389K bbl/day in 2018.
APC also says its board authorizes a $1B increase to its stock repurchase program, a 20% increase to its quarterly dividend and an additional $500M in its debt reduction program.
Separately, APC names Executive VP of Finance and CFO Bob Gwin as its new President; Benjamin Fink, President and CEO of the general partners of Western Gas Partners (NYSE:WES) and Western Gas Equity Partners (NYSE:WGP) will take over Gwin's old position.
Contango Oil & Gas (NYSEMKT:MCF) -12.9% after-hours as it announces the launch of an underwritten public offering of its common stock but does not specify a size.
MCF it plans to use the proceeds to reduce borrowings under its revolving credit facility and for general corporate purposes, including funding future potential acquisitions.
MCF also posts an updated management presentation for investors.
Shareholders of Tidewater (TDW +4.9%) and Gulfmark Offshore (GLF +5.9%) seal their merger with an overwhelming vote in favor of the proposed $1.25B tie-up of the oilfield services firms.
TDW says more than 99% of the shareholders approved the deal, setting the stage for the transaction to close following today's market close.
The combined company will have the industry's largest fleet and the broadest global operating footprint in the offshore support vessel sector.
Pioneer Natural Resources (PXD +2.9%) says it will shutter its sand mine located in Brady, Tex., and transition proppant supply to West Texas sand mines with lower mining costs and proximity to its Permian Basin acreage position.
PXD says it expects to recognize a related non-cash after-tax charge of $350M-$400M in Q4.
The news comes just a day after Covia (CVIA +1.8%) said it would close two mining facilities near Brady.
The boom in the construction in new sand mines in the Permian is causing the closing or mothballing of mines in other parts and in states such as Wisconsin.
Kinder Morgan’s (KMI +1.4%) proposed Gulf LNG export terminal in Mississippi moves toward receiving federal approval for construction after Federal Energy Regulatory Commission staff issues a draft environmental report.
FERC staff concludes construction and operation of the project would result in some adverse environmental impacts which would be reduced to less-than-significant levels if KMI follows the recommendations in the draft report.
Gulf LNG includes the Gulf LNG pipeline and two liquefaction trains each with the capacity to produce 5.75M metric tons/year of liquefied natural gas, equal to ~770M cf/day.
KMI has not said when it likely would make a final investment decision to build Gulf LNG; project partners include units of Blackstone Group, Warburg Pincus and Lightfoot Capital Partners.
PG&E (PCG -30.4%) suffers its second straight day of 20%-plus losses, as California’s governor and lawmakers show no signs of stepping in to protect the utility from wildfire liability concerns.
There is an "urgent need for new legislation to better protect utilities from the risk of financial distress and utility shareholders from potentially unlimited fire liabilities. However there is no clear path to new legislation in the near-term," Morgan Stanley analysts say in downgrading PG&E shares to Equal Weight from Overweight with a $31 price target, slashed from $67.
The office of outgoing California Gov. Brown has declined to comment on the risk of bankruptcy for PG&E, and incoming governor Gavin Newsom has not said what he would do to address the concerns.
PG&E shares currently reflect $25B of liabilities on top of a 30% discount to the group on underlying earnings power, Stanley says, estimating the total damages from the 2017 and 2018 wildfires at ~$9B after legal settlements, taxes and insurance proceeds.
Analysts at Mizuho maintain their Neutral rating while cutting its price target to $27 from $48, estimating a potential after-tax liability exposure from the Camp Fire of as much as $13B with the "bigger question [relating] to PG&E’s ability to pay its contractual spending obligations related to the company’s $6B annual construction program."
Meanwhile, the company’s bonds are doing better after falling sharply the previous two days, WSJ reports: A 6.05% note due 2034 changed hands in the morning at $0.9275 on the dollar, up from $0.895 late Wednesday, but the yield premium of the bond relative to U.S. Treasurys remains elevated at 3.47 percentage points, up from just over 2 percentage points at the end of last week.
The weakness (down nearly 50% over two sessions) in PG&E (PCG -27%) is overdone, says analyst Julien Dumoulin-Smith. With $2.8B in wildfire claims vs. $3B in cash on the balance sheet, bankruptcy concerns seem out of place.
She reminds of the company's sizable capex program - this could be trimmed to free up even more cash. There's also her expectation of at least "modest" interest in the government to keep PG&E solvent.
She trims her price target to $50 from $63 (current price is $18.69).
Pierre Andurand earlier this year said oil was soon going to $100 per barrel. That prediction didn't age well, and his $1B Andurand Commodities Fund last month lost 20.9%, reports the WSJ.
That news has some wondering when Andurand may have been the big fish who was forced to liquidate long positions this week, helping to cause what may or may not have been a panicky final flush in crude. "It has nothing to do with us," Andurand tells the paper. “I do not think the move is related to large funds in trouble.”
Oil today continues a modest bounce, up 1.15% to $56.83 per barrel despite news of a sizable inventory build. USO +1.4%
Green Plains (GPRE -2.2%) says it will permanently close its Hopewell, Va. ethanol facility, and transfer most of the equipment from the 60M gallons per year capacity plant to other company facilities.
For Green Plains Partners (GPP -0.6%), GPRE says the plant closure does not change its agreement regarding the quarterly minimum volume commitment associated with ethanol storage and throughput.
The move comes as ethanol prices have hit their lowest in a decade due to flat domestic demand and the trade war with China that has left a major buyer of excess production on the sidelines.
Prices were little changed by today's EIA data showing U.S. supplies rising by 39B cf for the week ended Nov. 9.
Futures traders say the cold weather will force utilities to start withdrawing gas from storage caverns that already are well below normal for this time of year, prompting concerns of possible gas shortages in some parts of the U.S. later this winter.
Meanwhile, next-day prices rose to their highest since January at the Henry Hub benchmark in Louisiana, Dominion South in Pennsylvania and Chicago citygate.
Gas-focused equities are mixed: CHK +1.1%, AR +0.7%, EQT +0.1%, GPOR -0.2%, COG -1.3%, RRC -1.8%, SWN -2%.
McDermott (NYSE:MDR) says it was awarded a contract for concept and engineering services for Talos Energy for the Zama field development project, in the first offshore Mexico block awarded to a private operator; financial details are not disclosed.
MDR will execute the contract via Io Oil & Gas Consulting, the company's joint venture with Baker Hughes (NYSE:BHGE), providing the follow-on pre-FEED services for the Zama development.
Talos estimates the Zama field, located in Block 7 of the Sureste Basin in the Gulf of Mexico, has 400M-800M boe, with an estimated peak production of 150K boe/day; appraisal activities are planned for late 2018 with two additional wells and first oil is expected by 2022.
Canadian Solar (NASDAQ:CSIQ) +2.8% pre-market after beating Q3 earnings expectations but missing on revenues and saying Q3 shipments came in toward the high end of guidance.
CSIQ says Q3 revenues fell 16% Y/Y to $768M and total solar module shipments slipped 6% from Q2 to 1,590 MW from 1,700 MW but at the high end of guidance of 1,500-1,600 MW.
But Q3 operating profit was $95.9M vs. $53.9M in Q2 and $57.8M in the year-ago quarter; Q3 gross margin was 26.1% vs. 24.5% in Q2 and above guidance of 20%-23%.
For Q4, CSIQ forecasts shipments of 1.67-1.72 GW and revenues of $690M-$800M, including 170 MW of shipments to its utility-scale solar power projects that may not be recognized as revenue in the quarter.
CSIQ says its portfolio of utility-scale solar power plants in operation totaled 1.1 GW as of Oct. 31, and its late-stage, utility-scale solar project pipeline including those in construction totaled 2.9 GW.
Equinor (NYSE:EQNR) says it has purchased a 9.7% stake in renewable energy producer Scatec Solar for ~NOK700M ($82.4M), raising its ownership to 10%, as part of its strategy to develop into a more broad-based energy company.
EQNR entered its first solar development project in 2017 in a Brazilian partnership with Scatec, followed by a second joint project in Argentina in June 2018.
Oslo-based Scatec operates solar power plants with a total installed capacity of 357 MW.
Ashland (NYSE:ASH) agrees to sell its Composites business and its butanediol manufacturing facility in Marl, Germany, to INEOS Enterprises for ~$1.1B.
ASH says the Composites unit and Marl BDO facility have combined sales of more than $1.1B/year; the company will retain its BDO plant in Lima, Ohio, to ensure consistent supply for its internal needs.
Privately owned INEOS is one of the world's largest manufacturers of chemicals and oil products, with $60B in annual sales.
Whiting Petroleum (NYSE:WLL) selects former Noble Energy executive Charles Rimer as its new COO effective Nov. 15.
Rimer spent 16 years at NBL, mostly recently as Senior VP of Global Services, and has 30 years of oilfield experience as an engineer and manager in operations services.
Sunoco LP (NYSE:SUN) agrees to acquire American Midstream Partners' (NYSE:AMID) refined products terminalling business for $125M.
The business consists of terminals located in Caddo Mills, Tex., and North Little Rock, Ark., with a combined 21 tanks, 1.3 M barrels of storage capacity and 77.5K bbl/day of total throughput capacity.
SUN says the purchase builds on its strategy of adding fee-based refined product terminals into the overall portfolio; for AMID, the deal helps reduce leverage and simplifies its business profile.
Prominent hedge funds including Seth Klarman's Baupost Group may be bearing the brunt of PG&E’s (NYSE:PCG) plunging stock price after raising bets on the utility in the months ahead of the massive Camp Fire, Reuters reports.
Shares in California’s largest public utility plunged nearly 22% in today's trade and have lost nearly half their value since the fire began last week.
Baupost quadrupled its exposure during Q3 to own 18.9M shares in PCG at the end of September, Viking Global Investors added a new position in purchasing 5.7M shares during Q3, BlueMountain Capital bought 4.1M shares to own 4.3M at the end of the quarter, and Appaloosa Management more than doubled its exposure to own 3.9M shares at the end of quarter.
The moves were made even though PG&E already was facing ~200 lawsuits on behalf of 2,700 plaintiffs from last year’s fires in California.
ConocoPhillips (NYSE:COP) plans to invite bids by the end of the year for its remaining North Sea assets, which could be valued at as much as $3B in a sale, Bloomberg reports.
The assets, which would include the remainder of COP's holding in the Clair Field, likely would draw interest from private equity-backed companies investing in the North Sea and from rival energy firms, according to the report.
The prospective sale comes amid efforts by Chevron (NYSE:CVX) to also exit the aging North Sea basin in its pursuit of higher returns from U.S. shale or liquefied natural gas ventures. which could leave the two companies competing for the same buyers.
A request from TransCanada's (NYSE:TRP) Columbia Gas Transmission unit to place into service the eastern facilities of its WB XPress natural gas pipeline in West Virginia and Virginia is approved by the Federal Energy Regulatory Commission.
The 1.3B cf/day WB XPress project includes construction of three miles of new pipeline, two compressor stations and replacement of 26 miles of existing pipeline.
WB XPress is one of several pipelines designed to connect growing production from the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the U.S. and Canada.
Suncor Energy (NYSE:SU) says CEO Steve Williams will retire effective next May 2 after leading the company for seven years.
COO Mark Little is appointed President effective immediately and will assume the role of CEO upon Williams’ retirement next May.
Little joined SU in 2008 and went on to serve in a variety of leadership roles in the company’s oil sands and international and offshore operations before becoming COO late last year.
Williams joined SU in 2002 as Executive VP for corporate development and CFO following more than 40 years in the international energy industry, including 18 years at Esso and Exxon.
National Fuel Gas (NYSE:NFG) tells S&P Global Platts it remains committed to building the Northern Access natural gas pipeline despite a negative legal ruling, but "it is too early to determine" whether the ruling will affect the project's planned 2022 in-service date.
A New York state appeals court denied eminent domain authority for the project, citing the state's denial of a water quality certification, even though the U.S. Federal Energy Regulatory Commission in August ruled New York's water quality certification should be waived because the state took more than a year to act.
NFG is considering an appeal of the case to the New York State Court of Appeals because two judges on the lower appeals court dissented in the opinion.
The property at issue is one of five along the route for which the company has been in litigation.
The American Petroleum Institute reportedly shows a build of 8.79M barrels of oil for the week ending Nov. 9, vs. a build of 7.83M barrels in the previous week.
The crude build would be eighth straight increase if confirmed tomorrow by U.S. government data from the EIA.
Gasoline inventories reportedly show a build of 190K barrels and distillate inventories show a draw of 3.22M barrels; the Cushing, Okla., hub reportedly shows a build of 720K barrels.
Nymex December crude recently was at $55.85/bbl in electronic trading, below today's $56.25 settlement price.
Petrobras (NYSE:PBR) could receive ~30B reais ($7.9B) from Brazil's government in a renegotiation of the "transfer of rights" oil contract, Reuters reports, citing a person following the process.
The money to pay the company would come from a potential auction of excess oil from the transfer of rights area off the Brazilian coast, which could raise 120B-130B reais next year if the necessary legislation clears Congress, according to the report.
Brazil’s Senate has fast-tracked a bill that would open the way for the auction and possibly for the payment to PBR; the bill also includes a provision allowing the company to cede up to a 70% stake in the area to other oil firms.
