Commodities

Oil Falls on Rising U.S. Crude Stockpiles

SECTOR COMMENTARY

Energy stocks will open just below the flat line, as weakness in crude oil and a slew of earnings are driving performance.  Today marks the busiest earnings season for the sector, with numerous results reported across integrateds, independent upstream and downstream operators, oilfield services and drillers.

Oil prices came under pressure on Thursday from rising U.S. crude oil stocks and weak factory activity in China, with few bullish factors on the horizon.  Factory activity in China shrank for a sixth straight month in October while growth in the country’s service sector activity was its slowest since February 2016, official data showed on Thursday.

Natural gas futures are higher by more than 1% ahead of weekly inventory data.  Analysts expect a build of 85 bcf.

U.S. INTEGRATEDS

(Late Wednesday) Press Release – The Board of Directors of Chevron declared a quarterly dividend of one dollar and nineteen cents ($1.19) per share, payable December 10, 2019, to all holders of common stock as shown on the transfer records of the Corporation at the close of business November 18, 2019.

INTERNATIONAL INTEGRATEDS

Press Release – Eni has started the updating work for its new supercomputer system, HPC5, in order to strengthen the existing HPC4, tripling its computing power from 18 to 52 petaflops, equivalent to 52 million billion mathematical operations a second. Thanks to HPC5, powered by Dell Technologies, Eni’s Green Data Center, will become the world’s most powerful supercomputer infrastructure in the industrial sphere, with a total peak power of 70 petaflops.

(Late Wednesday) Reuters – Petroleo Brasileiro SA Petrobras aspires to reduce the amount of time from oil discovery to first production at its deepwater fields by almost 50% by 2029, while exploring ways to skip the exploratory drilling phased. The company wants to cut the period of time from discovery to “first oil” to just 1,000 days, down from the current time frame of around five years.

Reuters – Repsol posted an 11.2% decline in adjusted net profit for the third quarter as weak energy prices offset higher production and returns from downstream unit. The net profit nevertheless beat market expectations. Recurring net profit adjusted for one-off gains and inventory effects (CCS net profit) reached 522 million euros ($554 million) in July-September, down from 588 million euros in the same period of last year, the company said. Oil prices have been dragged down this year by rising supply from the United States and expectations that slowing economic growth and the impact of trade disputes will weigh on demand. Repsol reported a net income of 522 million euros.

Reuters – Repsol CEO Josu Jon Imaz told analysts in a conference call: that the company will become more active in terms of M&A, both investing and divesting, wants to become more active in portfolio management for E&P. In addition he said, “we have to reduce the scope of the countries where we operate.” He also stated that 2020 production will be between 720.000 and 750.000 barrels per day.

Reuters – Repsol revised EBITDA forecast down to 7.5 billion euro for 2019 versus previous 7.8 billion euro.

Reuters – Repsol said its on track to deliver 1 billion euros of additional OCF in 2019, on track to deliver 2020 strategic objectives, October refining margin indicator is at around $8/BBL, and production in October is at about 730 kboed.

Press Release – Royal Dutch Shell announced 3Q19 unaudited results. Compared with the third quarter 2018, CCS earnings attributable to shareholders excluding identified items were $4.8 billion, reflecting lower realised oil, LNG and gas prices, as well as weaker realised refining and chemicals margins. This was partly offset by significantly stronger contributions from LNG and oil products trading and optimisation as well as higher realised margins in retail and global commercial. Compared with the third quarter 2018, cash flow from operating activities excluding working capital movements was $12.1 billion, reflecting lower earnings, higher pension contributions and lower dividends received. Total dividends distributed to shareholders in the quarter were $3.8 billion. In addition, Shell launched the next tranche of the share buyback programme, with a maximum aggregate consideration of $2.75 billion in the period up to and including January 27, 2020. Since the launch of the programme, Shell has bought back $12 billion in shares for cancellation.

Reuters – Royal Dutch Shell warned that uncertain economic conditions could slow its $25 billion share buyback programme, the world’s largest, after its third-quarter profits easily beat expectations on strong oil and gas trading. The better-than-expected results in the face of oil prices that fell 17% year on year underscores Shell’s transformation in recent years, with deep cost cuts and a focus on returns after the 2014 industry downturn. Yet slowing demand for oil and gas around the world amid trade tensions between the United States and China, the world’s two largest energy consumers, could take a toll, Shell said.

Press Release – Royal Dutch Shell announced the commencement of trading in the next tranche of its share buyback programme previously announced on July 26, 2018. In the next tranche, the company has entered into an irrevocable, non-discretionary arrangement with a broker to enable the purchase of A ordinary shares and/or B ordinary shares for a period up to and including January 27, 2020. The aggregate maximum consideration for the purchase of A ordinary shares and/or B ordinary shares under the next tranche is $2.75 billion. The company’s intention remains to buy back at least $25 billion of its shares subject to further progress with debt reduction and oil price conditions. However, the prevailing weak macroeconomic conditions and challenging outlook inevitably creates uncertainty about the completion of the share buyback programme by the end of 2020.

(Late Wednesday) Reuters – Total cut production to minimum rates at its 225,500-barrel-per-day (bpd) Port Arthur, Texas, refinery after a sulfur recovery unit (SRU) shut down, said Gulf Coast market sources. Units at the refinery were operating at between 50% and 70% percent of their capacity after SRU 3 was shut due to malfunction, the sources said.

CANADIAN INTEGRATEDS

Press Release – Cenovus Energy continued to deliver on its commitments to shareholders in the third quarter of 2019. The company generated free funds flow of $622 million while maintaining its industry-leading low cost structure and meeting mandatory production curtailment levels set by the Government of Alberta. Other third-quarter highlights include: Adjusted funds flow of $916 million; cash from operating activities of $834 million; Oil sands operating costs of $6.90 per barrel (bbl), 21% lower than in the second quarter of 2019 and 24% lower than in the first quarter; Net earnings from continuing operations of $187 million versus a net loss a year prior An 11% year-over-year increase in realized crude oil sales prices to an average of $55.13/bbl driven by higher U.S. sales and narrower differentials; A further reduction in net debt to $6.8 billion with net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreasing to 1.9 times; Crude-by-rail volumes of more than 80,000 barrels per day (bbls/d) in September.

(Late Wednesday) Press Release – Suncor Energy reported third quarter 2019 results. Suncor’s third quarter 2019 operating earnings were $1.114 billion ($0.72 per common share), compared to $1.557 billion ($0.96 per common share) in the prior year quarter. Highlights of the third quarter included higher overall crude oil production and refinery crude throughput as compared to the prior year quarter. Higher production at Syncrude and the ramp up of Fort Hills and Hebron production over the last year increased crude output during the third quarter of 2019, which was partially offset by planned maintenance, the impact of the Alberta government’s mandatory production curtailments and an unplanned outage at Hibernia, which was resolved by the end of the third quarter. In addition, operating earnings were positively impacted by the realization of intersegment profit on inventory transfers, compared to the elimination of intersegment profit in the prior year quarter. The company paid $650 million in dividends, repurchased 19.2 million of its common shares, representing 1.2% of the total outstanding common shares, for $756 million, and repaid $572 million of debt in the third quarter of 2019.      

U.S. E&PS 

(Late Wednesday) Press Release – Apache announced its financial and operational results for the third quarter of 2019. Apache reported a quarterly loss of $170 million or $0.45 per diluted common share for the third quarter of 2019. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for items that impact the comparability of results, Apache reported a third-quarter loss of $108 million or $0.29 per share. Adjusted earnings were generally in line with expectations except for the impact of increased depreciation, depletion and amortization costs. This was primarily associated with a reduction in Alpine High reserves due to deteriorating natural gas liquids (NGL) and gas prices. Upstream oil and gas capital investment was $590 million in the third quarter. Net cash provided by operating activities in the quarter was $635 million and adjusted EBITDAX was $905 million.

(Late Wednesday) Press Release – Bonanza Creek Energy announced the appointment of Carrie Hudak to the Company’s Board of Directors, effective immediately.

(Late Wednesday) Press Release – Continental Resources announced third quarter 2019 operating and financial results. The Company reported net income of $158.2 million, or $0.43 per diluted share, for the quarter ended September 30, 2019. The Company’s net income includes certain items typically excluded by the investment community in published estimates, the result of which is referred to as “adjusted net income.” In third quarter 2019, these typically excluded items in aggregate represented $41.2 million, or $0.11 per diluted share, of Continental’s reported net income. Adjusted net income for third quarter 2019 was $199.4 million, or $0.54 per diluted share (non-GAAP). Net cash provided by operating activities for third quarter 2019 was $807.0 million and EBITDAX was $828.7 million (non-GAAP). The Company has executed $187 million of share repurchases for 5.5 million shares, as of October 29, 2019. As previously announced, an initial share repurchase of up to $1 billion has been authorized by the Board of Directors, which is expected to continue through 2020. Share repurchases will be made at times and levels deemed appropriate by Company management and the Company intends to purchase shares opportunistically using available funds while maintaining sufficient liquidity to fund operating needs, capital program, and dividend payments. The Company will be distributing its first quarterly dividend of $0.05 per share on the Company’s outstanding common stock to stockholders of record on November 7, 2019. This will be payable on November 21, 2019.

Press Release – EQT announced financial and operational performance results for the third quarter 2019 and preliminary financial and operational guidance for 2020. Third Quarter Highlights: Achieved sales volumes of 381 Bcfe or 4.14 Bcfe/d; Received an average realized price of $2.47 per Mcfe; Capital expenditures of $475 million; full-year 2019 guidance reduced by $115 million, while maintaining full-year production guidance; Executed an asset exchange transaction for 16,000 net mineral acres in West Virginia, solidifying core position for future large-scale development; Step change in Marcellus horizontal drilling performance, improving rate of penetration by 50% over the second quarter of 2019.

(Late Wednesday) Press Release – Marathon Oil announced that the Company’s board of directors has declared a dividend of 5 cents per share on Marathon Oil Corporation common stock. The dividend is payable on Dec. 10, 2019, to stockholders of record on Nov. 20, 2019.

Press Release – Murphy Oil reported financial and operating results for the quarter ended September 30, 2019, including net income attributable to Murphy of $1.1 billion, or $6.76 per diluted share. Adjusted net income, which excludes discontinued operations and other one-off items, was $57 million, or $0.36 per diluted share. The company continued the $500 million share repurchase program, which was completed in the fourth quarter, leading to a total share count reduction since April 2019 of 20.7 million shares, or approximately 12 percent of outstanding shares, to 152.9 million shares as of October 2019.

(Late Wednesday) Press Release – Northern Oil and Gas announced a preliminary third quarter 2019 production and operations update. Northern estimates that its third quarter 2019 production was 40,786 Boe per day, a 53% increase over the third quarter of 2018. Strong well performance has continued to meet or exceed Northern’s expectations. However, Northern estimates that curtailments, shut-ins and completion delays negatively impacted Northern’s production by a total of approximately 4,500 Boe per day in the third quarter, as follows: Northern estimates that 3,500 Boe per day was curtailed or shut-in primarily due to gas processing constraints in the Williston Basin. This impact was significantly higher than the 2,500 Boe per day that Northern estimates it experienced in the second quarter and the 1,900 Boe per day that Northern had been forecasting for the third quarter. Gas processing constraints and low NGL prices also contributed to a significant decline in Northern’s average realized natural gas prices for the third quarter. Northern estimates that production was negatively impacted by another 1,000 Boe per day in the third quarter due to heavy rains and flooding during September that led to production curtailments and delayed completions, particularly on six units where Northern holds above-average working interests.

(Late Wednesday) Press Release – Rogers announced financial results for the 2019 third quarter. The Company reported 2019 third quarter net sales of $221.8 million, an 8.7% decrease compared to 2019 second quarter net sales of $242.9 million and a 2.2% decrease compared to 2018 third quarter net sales of $226.9 million. Net sales for the 2019 third quarter were below the Company’s previously announced guidance range of $225 to $235 million. Currency exchange rates unfavorably impacted the 2019 third quarter net sales by $1.6 million compared to 2019 second quarter net sales, and by $4.0 million compared to 2018 third quarter net sales.

(Late Wednesday) Press Release – W&T Offshore reported operational and financial results for the third quarter of 2019. For the third quarter of 2019, W&T reported net income of $75.9 million, or $0.53 per share.  The Company recorded a non-cash tax benefit of $55.5 million ($0.39 per share) in the third quarter of 2019 primarily due to the reduction of a valuation allowance previously recorded against net deferred tax assets. The Company’s Adjusted Net Income was $18.5 million, or $0.13 per share.

(Late Wednesday) Press Release – WPX Energy reported third-quarter oil volumes of 108,600 barrels per day, which was 30 percent higher vs. a year ago and 11 percent higher than second-quarter 2019. WPX reported unaudited third-quarter income available to common stockholders of $121 million, or income of $0.29 per share on a diluted basis. A year ago, WPX reported a loss of $0.01 per share. Excluding derivatives and other items, WPX posted adjusted net income from continuing operations in third-quarter 2019 of $38 million, or income of $0.09 per share. A reconciliation accompanies this press release. Adjusted EBITDAX (a non-GAAP financial measure) for third-quarter 2019 was $352 million, up 22 percent vs. $288 million in the same period a year ago. A reconciliation accompanies this release. Cash flow from operations, inclusive of hedge impact, was $272 million in third-quarter 2019, which was 21 percent higher than $224 million in the same period a year ago. Free cash flow for the third quarter was $42 million. Free cash flow for the quarter represents cash flow from operations ($272 million) adjusted for the impact of net changes in assets and liabilities ($34 million) less incurred capital expenditures ($264 million).

CANADIAN E&PS

Press Release – Crescent Point Energy announced its operating and financial results for the quarter ended September 30, 2019. The company reported adjusted funds flow totaled $389.2 million or $0.71 per share diluted during the third quarter, based on a strong operating netback of $30.93 per boe. For the quarter ended September 30, 2019, Crescent Point’s capital expenditures on drilling and development, facilities and seismic totaled $362.3 million, including $337.1 million spent on drilling and development to drill 133 (126.6 net) wells. The company repurchased approximately 13.8 million shares year-to-date for total consideration of approximately $71 million and appointed Barbara Munroe as Chair following Bob Heinemann’s retirement from the Board.

Press Release – Crescent Point Energy announced its Board of Directors has declared a quarterly cash dividend of CDN $0.01 per share to be paid on January 2, 2020 for shareholders of record on December 15, 2019.

Press Release – Encana announced its third quarter 2019 financial and operating results. For the third quarter of 2019, Encana posted net earnings of $149 million, or $0.11/share. Non-GAAP operating earnings for the third quarter were $195 million, or $0.15/share. Cash from operating activities in the third quarter was $756 million. Non-GAAP cash flow increased 39 percent over the comparable period in 2018 to $817 million. The Company has completed the repurchase of 196.7 million Encana common shares at an average price of $6.35/share. Investment in the program totaled $1,250 million. At the end of the third quarter, Encana had nearly $3.4 billion of total liquidity including approximately $138 million in cash and cash equivalents. Encana’s third quarter capital investments totaled $566 million. In the quarter, the company also completed the sale of the Arkoma assets and the exit of operations in China. The Company expects proforma 2019 capital investments to total approximately $2.8 billion, unchanged from the midpoint of its previous guidance range.  

Press Release – Encana announced its intention to establish corporate domicile in the United States. The move, which requires shareholder, stock exchange and court approval, is expected to occur in early 2020. As part of this process, the new company will rebrand under the name Ovintiv Inc.

(Late Wednesday) Press Release – MEG Energy reported its third quarter 2019 operational and financial results. Highlights include: Adjusted funds flow of $192 million ($0.63 per share) and $152 million free cash flow in the quarter. For the nine months ended September 30, 2019, MEG has generated free cash flow of $443 million; Bitumen production volumes of 93,278 barrels per day (bbls/d) at a steam-oil-ratio (SOR) of 2.26; Record low net operating costs of $4.30 per barrel, supported by low non-energy operating costs of $4.22 per barrel and strong power sales which had the impact of offsetting 95% of per barrel energy operating costs resulting in a net energy operating expense of $0.08 per barrel; Average AWB blend sales price net of transportation and storage costs at Edmonton of US$41.60 which was in-line with the posted AWB index price for the quarter, notwithstanding 44% Enbridge mainline apportionment, highlighting the value of MEG’s North American marketing strategy; Total capital expenditures of $40 million, primarily consisting of sustaining and maintenance capital; and Year-to-date repayment of $481 million of outstanding long-term debt, including $88 million subsequent to the quarter. Management remains committed to applying all free cash flow after sustaining capital to further debt reduction.

Press Release – Vermilion Energy reported operating and condensed financial results for the three and nine months ended September 30, 2019. Q3 2019 production averaged 97,239 boe/d, a decrease of 6% from the prior quarter. The lower production level resulted from a number of plant turnarounds, unplanned downtime, and weather delays. Higher production in the US and France was more than offset by lower production in Canada, Netherlands, Ireland and Australia. The company has reduced its 2019 capital investment guidance by $10 million to $520 million. With nine months of results in place, it is revising its 2019 annual production guidance range to 100,000 to 101,000 boe/d to account for the unplanned downtime and lower capital investment. The company expects to deliver annual production at the mid-point of this revised guidance range, reflecting strong year-over-year production per share growth of 5%. Fund flows from operations for Q3 2019 was $216 million ($1.39/basic share), a decrease of 3% from the previous quarter, primarily due to lower production volumes and weaker commodity prices. FFO for Q3 2019 decreased 17% from the same quarter last year as increased production was more than offset by weaker global commodity pricing.

Press Release – Whitecap Resources reported its operating and unaudited financial results for the three and nine months ended September 30, 2019. For the nine months ended September 30, 2019, the company generated funds flow of $491.1 million and efficiently executed on $305.2 million of capital investments resulting in free funds flow of $185.9 million. In addition, the company paid $103.3 in dividends and repurchased 4.6 million shares, returning a total of $122.9 million to shareholders year to date.

OILFIELD SERVICES

(Late Wednesday) Press Release – Basic Energy Services announced its financial and operating results for the third quarter ended September 30, 2019. Third quarter 2019 revenue decreased 6% sequentially to $178.4 million from $189.8 million in the second quarter of 2019, mainly related to decreased demand in our Completion & Remedial Services segment. In the third quarter of 2018, Basic generated $246.3 million in revenue. For the third quarter of 2019, Basic reported a net loss of $38.9 million, or a loss of $1.52 per basic and diluted share, which included $0.28 per share of asset impairments related to our contract drilling assets and a write-down of manufacturing inventory. This result is compared to a net loss of $27.8 million, or a loss of $1.02 per basic and diluted share for the second quarter of 2019, and a net loss of $27.3 million, or a loss of $1.03 per basic and diluted share in the third quarter of 2018. As of September 30, 2019, Basic had repurchased 2,547,920 shares for a total of $4.8 million.

Press Release – Calfrac Well Services announced its financial and operating results for the three and nine months ended September 30, 2019. Revenue in the third quarter of 2019 was $399.2 million, a decrease of 37 percent from the same period in 2018. The Company’s fracturing job count decreased by 13 percent while consolidated revenue per fracturing job decreased by 28 percent due to a combination of a larger proportion of Calfrac’s customers providing their own sand, particularly in the United States, and lower pricing in North America. The number of cementing jobs increased by 30 percent due to higher cementing activity in Argentina while coiled tubing activity was 6 percent higher due to increased activity in Canada and Argentina, offset partially by lower activity in Russia.

Press Release – NexTier Oilfield Solutions announced the successful completion of the merger between C&J Energy Services and Keane Group, Inc., creating a new leading well completion and production services company. The combined company’s common stock will trade on the New York Stock Exchange under the ticker symbol “NEX” at the open of business on October 31, 2019.  

Press Release – Fluor announced financial results for its third quarter ended September 30, 2019. Third quarter results were a net loss from continuing operations attributable to Fluor of $782 million, or $5.57 per diluted share, compared to net earnings of $69 million, or $0.49 per diluted share a year ago. Earnings attributable to Fluor include a non-cash charge of $546 million related to establishing a valuation allowance against net deferred-tax assets, a non-cash impairment charge of $290 million related to the COOEC-Fluor joint venture fabrication yard, Stork, and the Sacyr-Fluor joint venture in Spain, and $44 million for restructuring activities. Consolidated segment profit from continuing operations for the quarter was $58 million compared to a profit of $173 million a year ago. Third quarter revenue was $3.9 billion compared to $3.8 billion last year.

Press Release – Fluor announced that its consortium with the Branch of KMG Engineering LLP KazNIPImunaigas was awarded a three-year engineering services agreement, plus two potential one-year extensions, by Karachaganak Petroleum Operating B.V. (KPO) for projects at its Karachaganak Field in Kazakhstan. Fluor booked the undisclosed contract value in the third quarter of 2019.

(Late Wednesday) Press Release – Fluor’s board of directors has declared a quarterly cash dividend of $0.10 per share on the company’s common stock, payable January 3, 2020, to shareholders of record on December 4, 2019.

(Late Wednesday) Press Release – Hornbeck Offshore Services announced results for the third quarter ended September 30, 2019. The Company recorded a net loss for the third quarter of 2019 of $(41.4) million, or $(1.09) per diluted share, compared to a net loss of $(31.2) million, or $(0.83) per diluted share, for the third quarter of 2018; and a net loss of $(31.9) million, or $(0.84) per diluted share, for the second quarter of 2019.  Diluted common shares for the third quarter of 2019 were 38.0 million compared to 37.6 million and 37.9 million for the third quarter of 2018 and the second quarter of 2019, respectively.  GAAP requires the use of basic shares outstanding for diluted EPS when reporting a net loss.  EBITDA for the third quarter of 2019 was $(1.9) million compared to $5.2 million for the third quarter of 2018 and $3.6 million for the second quarter of 2019. 

(Late Wednesday) Press Release – ION Geophysical reported total net revenues of $53.2 million in the third quarter 2019, a 13% increase compared to total net revenues of $47.2 million one year ago.  Both segment revenues increased during the quarter, driven by Imaging Services and Marlin projects.  ION’s net loss was $3.7 million, or a loss of $0.26 per share, compared to a net loss of $7.5 million, or a loss of $0.54 per share in the third quarter 2018.  Excluding special items in both periods, the Company reported an Adjusted net loss of $3.0 million, or a loss of $0.21 per share, compared to an Adjusted net loss of $7.3 million, or a loss of $0.52 per share in the third quarter 2018. Net cash flows from operations were $19.3 million, compared to $(7.3) million in the first nine months of 2018.  Total net cash flows, including investing and financing activities, were $(5.7) million in the first nine months of 2019, compared to $(22.0) million one year ago.

Press Release – KBR announced it has been awarded a one-year $45 million contract modification by the U.S. Army Contracting Command. Under this contract, KBR will provide Care of Supplies in Storage (COSIS) and integrated logistics support. This support will include inventory management and control, serialization, storage, tactical vehicle maintenance, marking and labeling, and distribution at U. S. Army Field Support Battalion – Charleston in Goose Creek, South Carolina.

(Late Wednesday) Press Release – On October 29, 2019, the Board of Directors of Kirby increased the size of the Board from 9 to 10 members and filled the newly created vacancy by electing Tanya S. Beder to serve as a Class I director until the Annual Meeting of Stockholders in 2020.  Ms. Beder is currently the Chairman and CEO of a firm she founded, SBCC Group, ‘Strategy Building and Crisis Control’, where she heads the global strategy, risk, fintech and asset management practices.  Ms. Beder will receive the standard compensation for directors under Kirby’s Nonemployee Director Compensation Program, prorated for her current term of office, including an automatic grant of 1,209 restricted shares of Kirby common stock and a prorated annual director fee of $37,500 payable quarterly.  The shares of restricted stock vest six months after the date of grant.

(Late Wednesday) Press Release – Newpark Resources announced results for its third quarter ended September 30, 2019. Total revenues for the third quarter of 2019 were $202.8 million compared to $216.4 million for the second quarter of 2019 and $235.3 million for the third quarter of 2018. Net loss for the third quarter of 2019 was $1.4 million, or ($0.02) per share, compared to net income of $4.3 million, or $0.05 per diluted share, for the second quarter of 2019, and $3.6 million, or $0.04 per diluted share, for the third quarter of 2018.

(Late Wednesday) Press Release – Oceaneering International reported a net loss of $25.5 million, or $(0.26) per share, on revenue of $498 million for the three months ended September 30, 2019.  Adjusted net loss was $29.7 million, or $(0.30) per share, excluding the impact of $7.0 million of certain tax adjustments and the after-tax effects of $3.5 million of foreign currency exchange losses. During the prior quarter ended June 30, 2019, Oceaneering reported a net loss of $35.2 million, or $(0.36) per share, on revenue of $496 million, and an adjusted net loss of $31.5 million, or $(0.32) per share.

(Late Wednesday) Press Release – Secure Energy Services provided an update on its corporate vision and strategy and announced a sales process relating to service lines that do not have recurring or production-related revenue streams, the development of a new feeder pipeline system and the operational and financial results of the Corporation for the three and nine months ended September 30, 2019. During the third quarter of 2019, Secure achieved Adjusted EBITDA of $43.2 million, equal to $0.27 per share, an 18% decrease from the three months ended September 30, 2018. Drilling and completion activity in the Western Canadian Sedimentary Basin did not see the usual significant increase following the second quarter spring break up due to unseasonably wet weather conditions extending throughout the summer months. During the third quarter, oil and gas producers were unwilling to incur additional costs due to weather related issues if the oil and gas activity could be delayed until weather conditions improved. This reduction in activity was compounded by the overall impact of reduced capital budgets as producers continue to make cautious spending decisions. Overall, the active rig count and wells completed were down 33% and 21% during the third quarter of 2019 from the same period of 2018.

Scotiabank upgraded Secure Energy Services to ‘Sector Perform’ from ‘Sector Underperform.’

(Late Wednesday) Press Release – Tidewater announced that Mr. Larry T. Rigdon has been elected Chairman of the Board of Tidewater Inc. effective October 28th. Mr. Rigdon replaces Dr. Thomas R. Bates, Jr., who has recently resigned from the board. Additionally, the Company announced that the size of the board has been reduced from ten to eight members effective immediately. The immediate reduction in board size is the result of the resignation of Dr. Thomas R. Bates, Jr. and Mr. Steven L. Newman. These resignations were not the result of any known disagreements between the resigning directors and management or the board of Tidewater. In connection with these changes, the board has appointed, effective immediately, Ms. Randee E. Day to be Chairwoman of the Nominating & Governance Committee, Mr. Louis A. Raspino to be Chairman of the Compensation Committee, and has confirmed Mr. Dick H. Fagerstal as Chairman of the Audit Committee. The seven directors that the Tidewater board intends to nominate for election at the 2020 annual meeting of stockholders are: Randee E. Day, Dick H. Fagerstal, Quintin V. Kneen, Louis A. Raspino, Larry T. Rigdon, Robert P. Tamburino and Kenneth H. Traub.

DRILLERS

(Late Wednesday) Press Release – Noble reported a net loss attributable to the Company for the three months ended September 30, 2019 (third quarter) of $445 million, or $1.79 per diluted share, on total revenues of $276 million. The results reflect the impact of a non-cash charge totaling $596 million ($331 million, or $1.33 per diluted share, net of noncontrolling interests) relating to the impairment of the drillship Noble Bully II. Excluding the non-cash charge, the Company would have reported a net loss attributable to the Company for the three months ended September 30, 2019 of $114 million, or $0.46 per diluted share.

(Late Wednesday) Press Release – Valaris reported a net loss attributable to the Company of $197 million, or $1.00 per share, for third quarter 2019 compared to net income of $406 million, or $2.09 per share, in second quarter 2019. The Company reported adjusted EBITDA of $35 million in third quarter 2019 compared to $59 million in second quarter 2019, and an adjusted loss of $1.27 per share in third quarter 2019 versus an adjusted loss of $1.32 per share in the prior quarter.

REFINERS

Press Release – HollyFrontier reported third quarter net income attributable to HollyFrontier stockholders of $261.8 million, or $1.58 per diluted share, for the quarter ended September 30, 2019, compared to $342.5 million, or $1.93 per diluted share, for the quarter ended September 30, 2018. The third quarter results reflect special items that collectively decreased net income by a total of $16.2 million. For the third quarter of 2019, net cash provided by operations totaled $441.9 million. During the period, the company declared and paid a dividend of $0.33 per share to shareholders totaling $54.5 million and spent $205.0 million in stock repurchases. At September 30, 2019, its cash and cash equivalents totaled $981.9 million, a $67.3 million increase over cash and cash equivalents of $914.6 million at June 30, 2019. Additionally, the company’s consolidated debt was $2,425.2 million. Its debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $993.4 million at September 30, 2019.

Press Release – Marathon Petroleum reported net income of $1.1 billion, or $1.66 per diluted share, for the third quarter 2019 compared to $737 million, or $1.62 per diluted share, for the third quarter of 2018. Excluding adjustments shown in the accompanying earnings release tables, third quarter 2019 adjusted net income was $1.1 billion, or $1.63 per diluted share, compared to $774 million, or $1.70 per diluted share, for the third quarter of 2018. MPC returned $848 million of capital to shareholders during the third quarter of 2019, including $500 million in share repurchases.

Press Release – Elliott Management Corporation released a statement supporting Marathon Petroleum’s strategic actions to enhance shareholder value. The announced measures include: Separation of Speedway into an independent, publicly traded company and initiation of a nationwide search to identify a CEO to lead independent Speedway; Formation of Special Committee of the Board of Directors to review strategic alternatives for unlocking the value of the Midstream business, and; Initiation of a nationwide search process for a successor to CEO Gary Heminger. Elliott said these actions will unlock substantial value for shareholders.

Press Release – Gary R. Heminger, Chairman and Chief Executive Officer of Marathon Petroleum, announced his plan to retire from MPC, where he has served as president and CEO since the company’s spin-off from Marathon Oil in June 2011, and as chairman and CEO since 2016. He has also served as chairman and CEO of MPLX GP LLC since 2012. The board has appointed a committee, led by Edward G. Galante, that will consider internal and external candidates to succeed Mr. Heminger. A nationwide search is currently under way.  

Press Release – Marathon Petroleum and MPLX announced that Gregory J. Goff, executive vice chairman of MPC and a member of each of the boards of directors of MPC and MPLX’s general partner, has elected to retire effective December 31, 2019. In addition, Michael J. Hennigan, current president of MPLX GP LLC, has been appointed chief executive officer of the same organization, effective November 1, 2019.

Press Release – Marathon Petroleum announced its intention to separate Speedway into an independent, publicly traded company. Independent Speedway will consist of MPC’s company-owned retail store operations with an expected 2019 EBITDA of approximately $1.5 billion. MPC will retain its direct-dealer business, with an expected 2019 EBITDA of approximately $0.4 billion, which is also included in the Retail segment as currently reported. As part of the Speedway separation process, MPC will also initiate a nationwide search for a Speedway CEO from both internal and external sources.

Press Release – PBF Energy reported third quarter 2019 income from operations of $151.9 million as compared to income from operations of $286.3 million for the third quarter of 2018. Excluding special items, third quarter 2019 income from operations was $165.8 million as compared to income from operations of $232.3 million for the third quarter of 2018. The company reported third quarter 2019 net income of $86.3 million and net income attributable to PBF Energy Inc. of $69.5 million or $0.57 per share. This compares to net income of $192.5 million, and net income attributable to PBF Energy Inc. of $179.6 million or $1.50 per share for the third quarter 2018. Special items included in the third quarter 2019 results, which decreased net income by a net, after-tax loss of $10.2 million, or $0.09 per share, consisted of a lower-of-cost-or-market (“LCM”) inventory adjustment and a gain on land sale at our Torrance refinery. Adjusted fully-converted net income for the third quarter 2019, excluding special items, was $80.1 million, or $0.66 per share on a fully-exchanged, fully-diluted basis, as described below, compared to adjusted fully-converted net income of $135.6 million or $1.13 per share, for the third quarter 2018. In addition, the company announced that it will pay a quarterly dividend of $0.30 per share of Class A common stock on November 26, 2019, to holders of record at the close of business on November 14, 2019.

(Late Wednesday) Press Release – The Board of Directors of Valero Energy has declared a regular quarterly cash dividend on common stock of $0.90 per share. The dividend is payable on December 11, 2019, to holders of record at the close of business on November 20, 2019. 

MLPS & PIPELINES

CIBC Capital Markets upgraded AltaGas to ‘Outperformer’ from ‘Neutral.’

Press Release – Magellan Midstream Partners reported net income of $273.0 million for third quarter 2019 compared to $594.5 million for third quarter 2018, or $240.7 million excluding the $353.8 million gain related to the sale of a portion of the partnership’s ownership interest in BridgeTex Pipeline Company, LLC in the year-ago period. Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $306.8 million for third quarter 2019 compared to $281.8 million for third quarter 2018. As a result of continued strong financial performance so far this year, management is increasing its annual DCF guidance by $40 million to $1.26 billion for 2019, or 1.35 times the amount needed to pay projected cash distributions for 2019.

Press Release – MPLX reported third quarter 2019 net income attributable to MPLX of $629 million compared with $510 million for the third quarter of 2018. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $1.2 billion compared with $937 million in the third quarter of 2018. During the quarter, MPLX generated $1.0 billion in net cash provided by operating activities and distributable cash flow, including a full-quarter of results from ANDX, of $1.0 billion, which provided adjusted distribution coverage of 1.42x. MPLX also announced its 27th consecutive distribution increase to $0.6775 per common unit, a $0.01 increase over the prior quarter and a 6.3 percent increase over the prior year third quarter.

Press Release – Marathon Petroleum and MPLX announced that Gregory J. Goff, executive vice chairman of MPC and a member of each of the boards of directors of MPC and MPLX’s general partner, has elected to retire effective December 31, 2019. In addition, Michael J. Hennigan, current president of MPLX GP LLC, has been appointed chief executive officer of the same organization, effective November 1, 2019.

Press Release – PBF Logistics announced third quarter 2019 net income attributable to the limited partners of $31.0 million, or $0.50 per common unit. During the quarter, the Partnership generated cash from operations of approximately $39.8 million, earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) of $53.5 million, Adjusted EBITDA of $55.5 million and distributable cash flow of $39.5 million. Included in reported results for the third quarter are $2.0 million, or $0.03 per common unit, of expenses related to the Torrance Valley Pipeline Company acquisition, non-cash unit-based compensation and environmental remediation costs associated with the East Coast Terminals. The board of directors of PBF Logistics GP LLC, the Partnership’s general partner, declared a regular quarterly cash distribution of $0.52 per common unit. The distribution is payable on November 26, 2019, to unitholders of record at the close of business on November 14, 2019.

(Late Wednesday) Reuters – TC Energy said that a response team contained an oil spill in Walsh County, North Dakota from its Keystone crude pipeline. Oil has not migrated beyond an immediately affected area of about 2,500 square yards (2,090 square metres), the company said is a statement. The company detected a drop in pressure on Tuesday night on its 590,000-barrel-per-day (bpd) Keystone oil pipeline system from Canada and it was shut, TC Energy said in a statement, without specifying the exact impact on operations. It did not say if the entire route of the line was closed, or just a section of the pipe.

MARKET COMMENTARY 

Futures for Wall Street’s main stock indexes were in the red and European shares reversed course to trade lower after a report said Chinese officials continue to harbor doubts about whether they could strike a comprehensive long-term trade deal with the U.S. In Asia, China stocks ended lower on weak manufacturing data, while Japan’s Nikkei closed higher after the U.S. Federal Reserve’s rate cut buoyed the market mood. Gold prices climbed as the dollar weakened.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source

neallesh@yahoo.co.uk

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