Oil Prices Climb Following Colonial Pipeline Cyberattack
SECTOR COMMENTARY:
Energy stocks are poised for a higher start, backed by gains in the crude complex and the broader index futures which rose despite Friday’s worse-than-expected jobs data as investors bet the Fed will continue their easy monitory policies.
Over the weekend, Colonial Pipeline, which operates a 5,500-mile system, said it was forced to halt the transport of fuel from the Gulf Coast to the New York metro area following a cyber security threat. The company said some of its smaller lateral lines between terminals and delivery points are once again online but that its main lines are still shut down. Gasoline futures rose 1.4% to $2.156 per gallon, pulling back slightly from their highest levels of the overnight session. Heating oil futures rose 0.9% to $2.03, also off the highest levels of the session.
In deal news, Bonanza Creek Energy and Extraction Oil & Gas announced that they have entered into a definitive agreement to combine in an all-stock merger of equals. The combined company, to be named Civitas Resources, Inc. will be the largest pure-play energy producer in Colorado’s Denver-Julesburg Basin, with an aggregate enterprise value of approximately $2.6 billion.
Oil prices rose in overnight trading following Colonial Pipelines cyberattack which raised concerns about supply disruption, outweighing increased coronavirus cases in Asia. "The bullish developments in the U.S. are hiding a worrying COVID-19 trend in Asia," said Louise Dickson, analyst at Rystad Energy.
Natural gas futures are lower by 0.7% to $2.938. Demand over the coming five days is expected to be seasonally high before fading a week to two weeks out. The NOAA 6-10 day yesterday has the Southeast up into the Mid-Atlantic and the West Coast seasonal or below-seasonal while the rest of the Lower 48 is expected to experience above-seasonal temps.
No significant news.
According to Reuters, Petrobras said it had signed a contract with Keppel Shipyard Limited to build its seventh platform in the Buzios field, located in the Santos Basin, off the coast of Rio de Janeiro, to be known as P-78. Petrobras said the new platform will be delivered in 2024 and have the capacity to process 180,000 barrels of oil per day and 7.2 million cubic meters of gas a day.
No significant news.
Bonanza Creek Energy and Extraction Oil & Gas announced that they have entered into a definitive agreement to combine in an all-stock merger of equals. The combined company, to be named Civitas Resources, Inc. will be the largest pure-play energy producer in Colorado's Denver-Julesburg Basin, with an aggregate enterprise value of approximately $2.6 billion (based on the closing share prices of Bonanza Creek and Extraction on May 7, 2021).
Raymond James removed Diamondback Energy from its Analyst Current Favorites List.
EQT announced that, subject to market conditions, it intends to offer $1.0 billion in aggregate principal amount of senior notes due 2026 and senior notes due 2031 in a private placement to eligible purchasers under Rule 144A and Regulation S of the Securities Act of 1933, as amended.
Laredo Petroleum announced the signing of a purchase and sale agreement to acquire the assets of Sabalo Energy, a portfolio company of EnCap Investments and a non-operating partner for approximately $715 million, subject to customary closing price adjustments, comprised of $625 million in cash and approximately 2.5 million shares of Laredo common equity. Additionally, the Company announced the sale of 37.5% of its operated proved developed producing reserves in its legacy leasehold in Reagan and Glasscock counties to an affiliate of Sixth Street Partner for proceeds of $405 million and additional potential cash-flow based earn-out payments over the next six years. None of the PDP reserves are located in Howard or Western Glasscock counties. Both transactions are expected to close July 1, 2021.
Kosmos Energy announced its financial and operating results for the first quarter of 2021. For the quarter, the Company generated a net loss of $91 million, or $0.22 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss of $33 million, or $0.08 per diluted share for the first quarter of 2021.
Raymond James added Northern Oil and Gas to its Analyst Current Favorites List.
Athabasca Oil announced that it has executed an amending Hangingstone Transportation and Storage Services Agreement that resulted in a $44 million prepayment from restricted cash and a ~$5 million reduction to annual tolls. The amended TSSA reduces Hangingstone’s dilbit financial assurances by ~$44 million to ~$27 million. The reduction in financial assurances unlocked restricted cash on the Company’s balance sheet that was concurrently used to fund the amending prepayment. There is no change to the Company’s unrestricted cash balance that is expected to grow from $141 million at March 31, 2021 to ~$210 million at year-end (US$60 WTI & US$11 WCS differentials). The transaction is effective as of May 7, 2021 and the deal is now closed.
Black Hills announced that its Kansas natural gas utility, Black Hills / Kansas Gas Utility Company, LLC, doing business as Black Hills Energy, filed a rate review application with the Kansas Corporation Commission requesting $5.3 million in new annual revenue.
CGG has been awarded a major contract by Equinor for the seismic imaging of its Bacalhau 3D ocean bottom node survey covering 409 sq km currently being acquired in Brazil’s deepwater Santos Basin. Final products for the fully imaged dataset are expected to be delivered within ten months after the survey is scheduled to complete in May 2021.
KBR announced it has been awarded a contract to complete the Front-End Engineering Design (FEED) for BUA Group's new, modern refinery facility in Nigeria.
Petrofac secured a contract with bp to develop operational procedures for their Greater Tortue Ahmeyim (GTA) Project in Mauritania and Senegal.
No significant news.
According to Reuters, Valero Energy chartered an oil products tanker for storage in the Gulf Coast on Friday amid a cyber attack that shut the Colonial pipeline, the biggest U.S. fuel pipeline, two sources familiar with the matter said on Sunday.
No significant news.
U.S. stock futures were mixed, after the Dow and S&P 500 hit record closing highs in the previous session as a disappointing U.S. employment report eased concerns over prospects for rising interest rates. The dollar was slightly weaker, while gold strengthened. European equities pared gains after hitting record high. Japanese shares ended higher, as investors’ focus shifted towards corporate earnings. Oil prices rose, after U.S. fuel pipeline operator Colonial Pipeline had to shut fuel pipelines due to a cyberattack.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 1/8/20 – CNBC’s Squawk Alley: Oil market reaction to US-Iran tensions
- 1/8/20 – Bloomberg Day Break – Steady escalation of US-Iran tensions
- 12/5/19 – Bloomberg Balance of Power – OPEC's Limited Efficacy
- 9/17/19 – Oil's New Risk Premium Discussion on CNBC TV
- 9/16/19 – Discussion on Bloomberg TV about Impact of Abqaiq Attack
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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