Condensate prices continue to slide as discount widens to record high

Condensate prices continue to slide as discount widens to record high

Today's energy market summary:

  • World oil prices managed to eke out another small gain today, with both Brent and WTI rising about 1%.

  • The discount on Edmonton Condensate (C5+) widened another US$1.50 to a record high of US$14.50 a barrel. C5+ prices tumbled another 2% on Thursday, ending the day at a 12-month low of just under US$53.

  • The TSX was roughly unchanged, as heavy losses in mining and gold stocks offset gains in most other sectors. The TSX energy sector rose 1.7%. Pipeline stocks were by far the worst performers for the day.

  • In US markets, bond yields, equities and the greenback all moved higher today, recouping some of yesterday's losses. The S&P 500 energy sector rose 1.1%, with most components posting gains for the day.

Today's notable market movers:

  • The US Federal Trade Commission has approved Marathon Petroleum's (MPC +2.8%) purchase of Express Mart, conditional on the sale of a handful of gas stations in New York State. MPC purchased 78 Express Mart locations last April.

  • Magellan Midstream Partners (MMP +0.4%) announced a Q3 quarterly dividend of US$0.9775 cents per share, up 2% from Q2 and 8% y/y. This is MMP's 66th increase since its IPO in 2001.

Today's notable third quarter earnings in the Canadian energy patch:

  • Husky Energy (HSE.TO +0.4%) posted a net profit of $545 million in Q3, up from $136 million for the same time last year. Production dipped 7% y/y to 297,000 boe/day due to maintenance at its Tucker and Sunrise thermal facilities. Funds from operations rose 48% to $1.3 billion. Upgrader and refinery feed rates declined 6% to 351,000 bbl/day, due to maintenance at its Lima refinery and the continued shutdown of its Superior Refinery. Husky says its heavily integrated flowsheet shields it from the widening differentials on Canadian heavy oil.

  • Third quarter revenues at Mullen Group (MTL.TO -8.7%) rose 20% y/y to $340 million, on gains in both its trucking and oilfield services divisions. Net income declined 16% to $21.9 million due to forex losses, income tax expenses and higher depreciation costs. Mullen increased its credit facility by $50 million to $125 million.

  • Crescent Point Energy (CPG.TO +17.4%) posted a net profit of $30.5 million in Q3, up from a $271 million loss for Q3/2017. Funds from operations grew 8% y/y to $475 million. Production averaged 174,275 boe/day in Q3, weighted 90% liquids. Fourth quarter output is tracking ahead of forecasted guidance of 177,000 boe/day. The company says it is looking at divesting a number of assets over the next few years in order to reduce debt loads.

  • Net losses at Vermilion Energy (VET.TO -3.5%) narrowed to $15.1 million in Q3, about half the same time last year. Funds from operations doubled to $261 million, as production grew 19% y/y to 96,222 boe/day. Production is expected to top 100,000 boe/day next year. Third quarter figures include a $37 million hedging loss.

  • Third quarter revenues at Precision Drilling (PD.TO -3.9%) increased 22% y/y to $382 million. The company posted a net loss of $31 million for the quarter, blamed on bad weather, rig reactivation costs and several one-time items. CEO Kevin Neveu remains positive on his outlook for drilling activity in the US, Canada and the Middle East. Precision is progressing on its buyout of Trinidad Drilling (TDG.TO -3.0%), after which TDG shareholders will own 29.1% of PD.

  • Calfrac Well Services (CFW.TO +14.5) posted a $14.9 million profit in Q3, up from $7.8 million for the same quarter last year. Revenues rose 41% y/y to $630 million. The company is seeing strength in all of its markets, which include Canada, the US, Russia and Argentina.

  • Western Energy Services (WRG.TO -1.5%) reported a net loss of $10.1 million in Q3, down from a loss of $11.5 million for the same quarter last year. Revenues rose 6% y/y to $54.1 million. The company says utilization rates were held back due to bad weather, lack of available crews and wide discounts on Canadian crude. WRG remains bearish on its outlook for the services sector, forecasting continued weakness due to low AECO gas prices, lack of progress on pipeline construction and tightening environmental regulations.

Today's US and international third quarter earnings releases:

  • Net income at ConocoPhillips (COP +3.6%) rose to US$1.9 billion, including a US$345 million payment from Venezuela's PDVSA. Total global output (excluding Libya) rose 2% y/y to 1.22 million boe/day, while production out of the "Big 3" US shale plays rose almost 50% to 313,000 boe/day. Forecasted 2018 capital expenditures was bumped up by US$100 million to US$6.1 billion, with 2019 expenditures expected to be about the same. The company says it plans to export more Permian crude, once the bottlenecks get resolved.

  • Net income at Valero Energy (VLO +0.8%) ticked up 1% to US$874 million in the third quarter, on revenues of US$30.85 billion, up over 30% y/y. Refinery utilization was reported at 99% in Q3, with throughput volumes averaging 3.1 million bbl/day.

  • EQT Corp (EQT -12.7%) reported a US$40 million net loss for the third quarter, on higher operating expenses, a US$259 million write-down and higher interest costs. The company reshuffled its leadership team in preparation for the pending split of its upstream and midstream businesses.

  • Norwegian oil major Equinor (EQNR +2.5%) posted Q3 revenues of US$19.1 billion, up 5% y/y, while adjusted earnings more than doubled to US$4.8 billion. Third quarter production nudged up 1% to 2.07 million boe/day. Full year capex guidance was cut to US$10 billion, thanks to "efficient project execution."

  • China's CNOOC (CEO +0.7%) reported third quarter production volumes of 1.25 million boe/day, down 2.1% y/y mainly due to "lower production efficiency" in the UK North Sea. The company made four new discoveries during the quarter and drilled 14 successful wells. Revenues rose to about US$7 billion, up 33% y/y. Production out of Canada was reported unchanged at about 66,850 boe/day, as higher natural gas output offset declines in oil production.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$76.89▲0.957.17
 
86.29
WTI$67.33▲0.851.29
 
76.41
CDN LT$39.33▲1.338.43
 
69.32
C5+$52.83▼1.852.83
 
71.40
WCS$22.33▲2.319.43
 
56.21
CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OCT 25   █ OCT 18   █ OCT 11   █ OCT 4   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
    TSX SECTORS
52-WK
    SPX SECTORS
52-WK
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
  • Crescent Point (CPG +17.4%)
  • Baytex Energy (BTE +8.2%)
  • Birchcliff Energy (BIR +7.4%)
  • Trican Well (TCW +4.8%)
  • Seven Generations (VII +4.7%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • Peyto Exploration (PEY +0.2%)
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Mullen Group (MTL -8.7%)
  • Precision Drilling (PD -3.9%)
  • Vermilion Energy (VET -3.5%)
  • Altagas (ALA -2.7%)
  • Gibson Energy (GEI -1.8%)
  • 12-MO LOWS
  • TransCanada (TRP -0.8%)
  • Mullen Group (MTL -8.7%)
  • Baytex Energy (BTE +8.2%)
  • Ensign Energy Services (ESI -1%)
  • Freehold Royalties (FRU -0.9%)
  • Paramount Resources (POU +1.6%)
  • PrairieSky (PSK +0.2%)
  • Vermilion Energy (VET -3.5%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    SuncorSU43.98▲1.240.49
     
    55.4722D   W
    Imperial OilIMO41.79▲1.733.43
     
    44.9189D   W
    Husky EnergyHSE18.82▲0.415.09
     
    22.9951D   W
    MIDSTREAM
    EnbridgeENB40.79▼-0.937.36
     
    51.0467D   W
    TransCanadaTRP50.06▼-0.849.90
     
    65.1833D   W
    Pembina PipelinePPL43.80▼-0.437.60
     
    47.8490D   W
    Inter PipelineIPL21.67▼-1.221.36
     
    27.9245D   W
    Keyera KEY33.20▼-1.131.20
     
    38.9147D   W
    Gibson EnergyGEI20.87▼-1.815.68
     
    23.0498D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ36.54▲1.336.00
     
    49.0814D   W
    EncanaECA13.81▲3.512.37
     
    18.5415D   W
    Cenovus EnergyCVE11.10▲1.99.03
     
    14.8424D   W
    TourmalineTOU19.64▲1.417.78
     
    27.2618D   W
    Seven GenerationsVII14.26▲4.713.51
     
    21.2517D   W
    SERVICES
    ShawcorSCL24.45▲4.623.10
     
    29.5056D   W
    Pason SystemsPSI19.68▲2.816.05
     
    22.1088D   W
    Mullen Group MTL14.03▼-8.713.87
     
    17.1235D   W
    EnerflexEFX16.16▲3.113.55
     
    17.8285D   W
    Secure EnergySES8.14▲1.46.98
     
    9.8274D   W
    REFINING & MARKETING
    Parkland FuelPKI42.84▼-0.124.82
     
    47.4598D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • Helmerich & Payne (HP +3.9%)
  • ConocoPhillips (COP +3.6%)
  • HollyFrontier (HFC +3.5%)
  • Phillips 66 (PSX +3.4%)
  • Marathon Petroleum (MPC +2.8%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • EQT Corp (EQT -12.5%)
  • Williams Co (WMB -1%)
  • TechnipFMC (FTI -0.8%)
  • 12-MO LOWS
  • Schlumberger (SLB +0.6%)
  • Cabot Oil & Gas (COG +1%)
  • EQT Corp (EQT -12.5%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • Anadarko Petroleum (APC +0.1%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM78.31▲0.972.16
     
    89.3056D   W
    ChevronCVX111.58▲1.2108.02
     
    133.8837↓D   W
    MIDSTREAM
    Kinder MorganKMI16.58▲0.414.69
     
    19.8357D   W
    Williams CoWMB25.02▼-1.024.00
     
    33.6740D   W
    ONEOKOKE64.61▲1.549.65
     
    71.9969D   W
    LARGE CAP E&P
    ConocoPhillipsCOP68.02▲3.648.97
     
    80.2462D   W
    EOG ResourcesEOG107.12▲0.995.67
     
    133.5328↓D   W
    Occidental PetroleumOXY68.65▲0.662.47
     
    87.6727D   W
    Anadarko PetroleumAPC59.63▲0.146.75
     
    76.7031↓D   W
    Concho ResourcesCXO136.34▲1.3123.63
     
    163.1134↓D   W
    SERVICES
    SchlumbergerSLB53.30▲0.652.77
     
    80.3510D   W
    HalliburtonHAL34.74▲1.534.19
     
    57.864D   W
    Ntl-Oilwell VarcoNOV37.01▲0.331.47
     
    49.0829↓D   W
    TechnipFMCFTI27.02▼-0.824.83
     
    35.0019D   W
    Baker HughesBHGE27.55▲0.725.53
     
    37.769D   W
    REFINERS
    Phillips 66PSX98.49▲3.489.14
     
    123.9730D   W
    Valero EnergyVLO87.38▲0.875.84
     
    126.987D   W
    Marathon PetroleumMPC69.96▲2.855.87
     
    88.4535D   W
    HollyFrontierHFC63.15▲3.535.71
     
    83.2863D   W
    NYSE ADRs
    ADRs BULLISH INDICATORS
    12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • ADRs BEARISH INDICATORS
    12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    Royal Dutch ShellRDS.A61.94▲1.060.62
     
    73.8639D   W
    TotalTOT58.17▲2.353.37
     
    65.6948D   W
    BPBP41.59▲1.536.15
     
    47.8348D   W
    EniE33.80▲1.531.58
     
    40.1536D   W
    EquinorEQNR25.65▲2.519.74
     
    28.9362D   W
    ANALYST RATINGS

    UPGRADES

    • Targa Resources (TRGP): Upgraded from Neutral to Buy at BofA.

    • YPF (YPF): Upgraded from Neutral to Outperform at Credit Suisse.

    DOWNGRADES

    • None


    UPDATED: DAILY (END-OF-DAY)

    SOURCES:
    • OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
    • EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
    • CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)

    NOTES:
    • OIL PRICES, FUTURES AND DIFFERENTIALS IN USD/BBL
    • C5+ = EDMONTON CONDENSATE
    • FUTURES CURVES SHOW PRICES FOR NEAR-MONTH CONTRACT (C1) AND NEXT 5-MONTHS (C2-C6)
    • TSX SHARE PRICES IN CAD; S&P 500 PRICES IN USD
    • ADR: AMERICAN DEPOSITORY RECEIPTS LISTED ON NYSE IN USD
    • SHARE PRICE CHANGES (INCL. NEW HIGHS & LOWS) EXCLUDE DIVIDENDS

    RANK:
    • BASED ON STOCKCHARTS TECHNICAL RANK (SCTR)
    • REFLECTS RELATIVE STRENGTH AMONG OTHER ENERGY STOCKS (PERCENTILE RANKING)
    • RISING RANK (↑) REFLECTS INCREASING RELATIVE STRENGTH
    • FALLING RANK (↓) REFLECTS DECREASING RELATIVE STRENGTH.
    TSX energy ekes out second day of gains despite weakness in broader markets

    TSX energy ekes out second day of gains despite weakness in broader markets

    Oil prices stabilize but energy stocks continue downward slide

    Oil prices stabilize but energy stocks continue downward slide

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