Oil prices retreat as investors weigh on demand concerns and supply disruptions


The energy sector is pointing to a lower start, pulling back from its recent run of gains amid volatility in underlying commodities and major equity futures. Markets fell this morning and Treasury yields hit new highs on expectations of aggressive interest rate hikes, as investors waited for more earnings reports to gauge the impact of the surge. inflation and war in Ukraine.

Earnings season kicked off this morning with Halliburton announcing better than expected first quarter 2022 results. The company reported an 85% increase in adjusted profit as higher crude prices boosted demand for its services and equipment and said margins in its Drilling and Appraisal division exceeded 15% for the first time since 2010, despite weather and supply chain disruptions. The company also noted that it anticipates the supply chain issues that have plagued the industry since demand rebounded from coronavirus-related lockdowns will continue.

After four straight days of strong gains, crude futures came under pressure this morning as the dollar hit a new two-year high and investors weighed demand concerns against global supply tight after Libya halted some exports and Shanghai factories prepared to reopen after a COVID-19 shutdown. Concerns about demand growth were also front and center ahead of today’s release of the IMF’s World Economic Outlook. Underlining supply concerns, the OPEC+ supply shortfall widened in March as sanctions hit Russian production.

Natural gas futures reversed course after five straight days of gains, falling from 13-year highs on the back of moderating weather forecasts in major consuming regions that could dampen demand.

BY SECTOR:

INTEGRATED IN THE UNITED STATES

Chevron and the United Steelworkers (USW) union have rejected each other’s proposals to end a month-long strike at the company’s refinery in Richmond, Calif., a union official said.

INTERNATIONAL INTEGRATED

Novis Renewables Holdings, LLC, the U.S. solar, onshore wind and storage development partnership between Falck Renewables North America and Eni New Energy United Statesa wholly-owned subsidiary of Plénitude, adds 22.5MW of new solar capacity with its North Eagle Village (Manlius, NY), Green Lakes (Manlius, NY) and Judd Rd (Whitestown, NY) plants reaching operating date commercial.

Petrobras announced that it had entered into the binding phase concerning the sale of the entire 20% stake held by its subsidiary Petrobras America in the company MP Gulf of Mexico, LLC., located in Texas, in the United States, which owns offshore fields in the Gulf of Mexico.

TotalEnergies said variable cost margin in Q1 2022, European refining was $46.3/t compared to $16.7/t in Q4 2021.

CANADIAN INTEGRATED

Canada favors low-carbon-per-barrel oil projects to help meet its climate goals, a strategy that could stall Suncor Energy plans to expand bitumen mining to supply its main oil sands operations.

E&PS United States

According to the SEC filing on April 14, 2022, Range Resources has entered into an amended and restated revolving credit agreement with JPMorgan Chase Bank, NA, as administrative agent, and other lenders and agents parties thereto. The Credit Agreement is initially a reserve-based senior secured revolving credit facility with an aggregate maximum principal amount of $4.0 billion, a borrowing base of $3.0 billion and aggregate commitments $1.5 billion lenders. The new agreement has an expiry date of April 14, 2027.

Majority action requested western oil shareholders to vote against Independent Chairman Stephen Chazen.

CANADIAN E&PS

Vermilion Energy provided a financial and operational update for the first quarter of 2022. Production was approximately 86,200 boe/d, beating the upper bound of its original 2022 guidance of 83,000 to 85,000 boe/d. Strong commodity prices during the quarter, including European premium gas, resulted in estimated net operating income of $59.72/boe, including the impact of hedging. Cash flow from operations is estimated at $380-390 million (cash flow from operating activities is estimated at $330-340 million), including the impact of hedging transactions. Estimated exploration and development capital expenditures were $85 million (cash flows used in investing activities totaled $110 million), which generated approximately $295-305 million of cash flow. available cash. Net debt decreased by $280 million from year-end 2021 to $1.365 billion (long-term debt of $1.381 billion) at the end of the first quarter of 2022, reflecting a net debt/FFO ratio of around 1.2 times. On March 28, 2022, it announced the acquisition of Leucrotta Exploration and revised its annual production forecast for 2022 upwards to 86,000 – 88,000 boe/d while increasing the E&D capital budget to $500 million ( both figures exclude the impact of the Corrib acquisition which is expected to close the second half of 2022). The revised guidance incorporates the acquisition of Leucrotta and strong production in the first quarter of 2022.

Vermilion Energy announced its intention to issue up to US$400 million in aggregate principal amount of 8-year senior unsecured notes in a private offering to qualified institutional buyers, subject to conditions market and other conditions. The Company intends to use the net proceeds of the new notes to reduce the amount outstanding on our credit facility. Subject to the completion of the offering, it intends to reduce the size of its credit facility from $2.1 billion to $1.6 billion. The completion of the Offer is not subject to the reduction in the size of the credit facility.

OIL SERVICES

Societe Generale revalued TechnipFMC buy pending

Halliburton reported net income of $263 million, or $0.29 per diluted share, for the first quarter of 2022. This compares to net income for the first quarter of 2021 of $170 million, or $0.19 per diluted share. diluted stock. Adjusted net income for the first quarter of 2022, excluding impairment and other charges and loss on early extinguishment of debt, was $314 million, or $0.35 per diluted share. Halliburton’s total revenue for the first quarter of 2022 was $4.3 billion, compared to revenue of $3.5 billion in the first quarter of 2021. Reported operating profit was 511 million in the first quarter of 2022, compared to reported operating income of $370 million in the first quarter of 2021. 2021. Excluding impairment and other charges, adjusted operating income was $533 million in the first quarter 2022.

DRILLERS

Benchmark began coverage on Patterson-UTI Energy with a buy rating.

REFINERS

No significant news.

MLPS & PIPELINES

Energy Cheniere announced collaboration with leading natural gas midstream companies, methane detection technology providers and academic institutions to implement greenhouse gas emissions quantification, monitoring, reporting and verification in natural gas gathering, processing, transmission and storage systems specific to Cheniere’s supply chain. The program aims to improve the global understanding of GHG emissions and foster the deployment of advanced monitoring technologies and protocols. This collaboration builds on Cheniere’s ongoing QMRV collaboration with natural gas producers and liquefied natural gas transportation providers, both of which began in 2021. These QMRV programs support Cheniere’s climate strategy initiatives, including the company’s plan to provide cargo emissions tags to customers starting this year.

MARKET COMMENTARY

U.S. stock index futures fell slightly as investors awaited further earnings news. European stocks fell on concerns over the war in Ukraine and the aggressive tightening of monetary policy by the US Federal Reserve. Chinese stocks ended lower as traders watched whether tight pandemic controls could be eased, while Japan’s Nikkei rose but failed to close above the psychological 27,000 mark as concerns about the upcoming earnings season, a weaker yen and the outlook for US monetary policy limited gains. Against a basket of major currencies, the dollar rose slightly, supported by high yields on US Treasuries. Oil prices slipped in volatile trading on demand concerns. Gold prices have been falling for over a month. Housing data and results from IBM and Netflix will be closely watched later today.


The Nasdaq Advisory Services Energy Team is part of the Nasdaq Advisory Services, the most experienced team in the industry. The team provides unparalleled shareholder analysis, a comprehensive view of trading and investor activity, and insights on how best to manage investor relations outreach efforts. If you have any questions, please contact Tamar Essner.


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