Canadian Light sinks to 15-month low as discount widens to US$28
Today's energy market summary:
Canadian Light sank almost 7%, returning to the lows of June 2017. The discount has now widened to US$28 a barrel, up from just over US$5 in early August. WCS gained ground for the first time in four days, ending Monday above US$25/bbl.
US natural gas prices sank 3.5% on Monday, reversing gains from last Friday. Gasoline prices were roughly unchanged.
Despite a rebound in Chinese markets overnight, North American markets ended the day flat to lower, as concerns linger over Q3 results due from many large caps names this week. Traders dipped their toes back into technology and discretionary stocks, two beaten down sectors on both sides of the border.
The TSX energy sector was roughly unchanged, while SPX energy declined over 1%. Energy services was the best performing subsector on the TSX, while many smaller producers hit new 52-week lows for the day. Most SPX energy components declined on Monday, except for refining stocks, which rebounded slightly from last week's meltdown.
European ADRs also declined as the US dollar posted a gain of 0.3%.
Today's notable market movers:
After being offline for almost two years, Imperial Oil (IMO +0.1%) announced the restart of operations at Norman Wells. The facility was shutdown at the end of 2016 after a product pipeline was taken out of service due to a slope stability issue. Imperial says output will gradually increase to about 10,000 bbl/day, on par with production levels before the shutdown.
Enbridge (ENB -1.6%) has asked US federal regulators (FERC) for permission to put more of its NEXUS natural gas pipeline into service, after another section in Ohio was reported mechanically complete last week. The US$2.6 billion pipeline is jointly held with DTE Energy (DTE -0.6%).
Total (TOT -1.7%) has revised an existing LNG supply agreement with China's CNOOC (CEO +1.2%), boosting volumes by 50% to 1.5 million t/y, and extending the term by an extra five years to 20 years.
UK regulators have approved BP's (BP -2.0%) Alligin development, located west of Shetland. The field, which is jointly owned with Royal Dutch Shell (RDS.A -1.0%), is expected to produce 12,000 barrels boe/day when it comes online in 2020.
Today's M&A activity:
EnLink Midstream (ENLC -1.8%) announced an all-stock buyout of its MLP, EnLink Midstream Partners (ENLK -0.9%). ENLK shareholders will receive 1.15 units of ENLC for each share they own. The company says the move will simplify its corporate structure. The transaction is expected to close in Q1/2019.
Jacobs Engineering (JEC +6.8%) has agreed to sell its entire energy, chemicals and resources business to Australia's WorleyParsons for US$3.3 billion. The deal is structured US$2.6 billion in cash and US$700 million in shares, giving Jacobs an 11% stake in WorleyParsons. The deal has been approved by both boards and is expected to close in the first half of 2019.
Private-equity firm Blackstone Group (BX -0.9%) has agreed to acquire Ulterra Drilling Technologies for US$700 million. The Texas-based company is the fifth-largest manufacturer of drill bits and downhole tools for the oil and gas sector.
Weatherford International (WFT -1.6%) has agreed to sell its laboratory services business to CSL Capital Management for US$205 million in cash. The sale also includes Weatherford's geological analysis business along will all of the division's staff and contracts.
Today's notable third quarter earnings:
Halliburton (HAL -3.1%) posted a net profit of US$434 million in Q3, up 20% from the same quarter last year. As also noted by Schlumberger (SLB -2.9%) last week, the company says limited pipeline capacity out of the Permian led to fewer well completions this past quarter, but calls the bottlenecks "temporary." Total revenues rose 13% y/y to US$6.2 billion. The company also warned Q4 earnings will likely be below consensus estimates.
|CURRENCIES & YIELDS|
|Imperial Oil||IMO||43.83||▲0.1||33.43||44.91||94||D W|
|Husky Energy||HSE||20.04||▼-0.2||15.09||22.99||73||D W|
|Pembina Pipeline||PPL||44.87||▲0.1||37.60||47.84||90||D W|
|Inter Pipeline||IPL||22.46||▼-0.1||21.36||27.92||52||D W|
|Gibson Energy||GEI||22.30||▼-1.8||15.68||23.04||98||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.46||▲0.8||36.47||49.08||13||D W|
|Cenovus Energy||CVE||11.27||▲1.1||9.03||14.84||23||D W|
|Seven Generations||VII||14.40||▼-0.3||13.62||21.25||15||D W|
|Pason Systems||PSI||19.98||▼-0.8||16.05||22.10||87||D W|
|Mullen Group||MTL||15.36||▲1.0||14.10||17.12||81||D W|
|Secure Energy||SES||8.02||▲0.5||6.98||9.82||61||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||45.06||▼-1.8||23.41||47.45||99||D W|
|Exxon Mobil||XOM||81.15||▼-1.0||72.16||89.30||61||D W|
|Kinder Morgan||KMI||17.44||▼-3.0||14.69||19.83||67||D W|
|Williams Co||WMB||26.28||▼-1.7||24.00||33.67||49||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||116.25||▼-1.2||95.42||133.53||51↓||D W|
|Occidental Petroleum||OXY||72.29||▲0.2||62.47||87.67||35||D W|
|Anadarko Petroleum||APC||63.93||▼-3.1||46.75||76.70||47||D W|
|Concho Resources||CXO||146.84||▼-0.5||123.63||163.11||57||D W|
|National-Oilwell Varco||NOV||40.27||▼-0.3||31.47||49.08||50↓||D W|
|Baker Hughes||BHGE||29.99||▲0.2||25.53||37.76||23||D W|
|Phillips 66||PSX||103.15||▲0.4||89.14||123.97||35||D W|
|Valero Energy||VLO||92.85||▲0.1||75.84||126.98||11||D W|
|Marathon Petroleum||MPC||74.13||▲0.3||55.87||88.45||34||D W|
Crescent Point Energy (CPG.TO): Downgraded from Outperform to Market Perform at BMO.
UPDATED: DAILY (END-OF-DAY)
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• REFLECTS RELATIVE STRENGTH AMONG OTHER ENERGY STOCKS (PERCENTILE RANKING)
• RISING RANK (↑) REFLECTS INCREASING RELATIVE STRENGTH
• FALLING RANK (↓) REFLECTS DECREASING RELATIVE STRENGTH.