Energy stocks post second day of gains despite lower oil prices

Energy stocks post second day of gains despite lower oil prices

Today's energy market summary:

  • The US Energy Information Administration posted another bearish inventory report on Wednesday morning, warning that total US production returned to record highs last week, while crude stockpiles swelled for the sixth week in a row.

  • Brent and WTI declined 0.6% and 1.3%, respectively. Gasoline fell almost 3%, while Henry Hub rose over 2%.

  • In Canada, Canadian Light sank another 3.6%, ending the day at US$30/bbl, while Western Canadian Select (WCS) declined almost 8% as the discount to WTI widened by US$1.

  • Global equity markets rallied again on Wednesday, with both the TSX and S&P 500 rising about 1%. Offensive stocks led to the upside on both sides of the border, particularly discretionary and technology.

  • The US dollar squeezed out another 0.1% gain on Wednesday, now up almost 4% from the lows of late September.

  • The TSX energy sector rose 0.8%, with gains seen across all subsectors. The SPX energy sector rose 0.6%, as declines in the services subsector offset gains in refining, midstream and integrated names.

Today's notable energy news:

  • TransCanada (TRP -0.1%) has approved another $1.5 billion expansion of its NOVA Gas Transmission (NGTL) network, adding 1.1 Bcf/day of additional capacity by 2022. This latest expansion consists of almost 200 km of pipe and three compression stations. The company expects to file its paperwork with the National Energy Board next year, with construction slated to start in the fall of 2020. TransCanada has now invested more than $9 billion to expand its 24,000 km NGTL System.

  • ExxonMobil (XOM +1.1%) announced the start of a new 50,000 bbl/day expansion at its Antwerp refinery in Belgium. A new delayed coker will increase the facility's capacity to convert heavy, sour feedstock into low-sulphur fuels, compliant with new marine shipping standards required by 2020.

  • BP (BP +2.8%) has closed on its US$10.5 billion purchase of various US shale assets from Australia's BHP Billiton, adding 190,000 boe/day and 4.6 billion boe of reserves. The assets are located in the Permian, Eagle Ford and Haynesville basins, scattered throughout Texas and Louisiana. BP’s Lower 48 business as been renamed BPX Energy.

Today's M&A activity:

  • Pioneer Natural Resources (PXD +1.0%) has agreed to sell its Sinor Nest field in Texas to an unnamed buyer for US$132 million. The 2,900 net acres of land produced about of 3,100 boe/day during the second quarter.

  • Halcón Resources (HK +1.5%) has agreed to sell its water infrastructure in the Delaware Basin for up to US$325 million in cash. The assets do not include any of Halcón's oil and gas infrastructure. The buyer was also not disclosed.

Today's notable third quarter earnings results on the TSX:

  • Suncor Energy (SU +1.5%) posted net earnings of $1.8 billion in the third quarter, up 40% y/y thanks to higher oil prices, record production and improved refinery margins. Funds from operations rose to a record $3.1 billion, while production from the oil sands also rose to a record 476,100 bbl/day. Total output dipped to 743,800 boe/day, down 0.5% y/y.

  • Cenovus Energy (CVE.TO +0.5%) reported a net loss of $242 million, versus a profit of $275 million for the same quarter last year. Production rose 4% to 495,592 boe/day while cash flow from operations more than doubled to $1.3 billion. Operating costs in the oil sands are now down 13% for the year, falling to an average of $6.59/bbl in Q3. CEO Alex Pourbaix says the company is limiting output at its SAGD facilities in Alberta due to the severe discount for Canadian heavy crude, which is not expected to improve until the middle of next year.

  • Seven Generations Energy (VII.TO +6.3%) posted a profit of $196 million in Q3, more than double the same time last year. Production rose 20% y/y to 220,000 boe/day. The company says it expects output to average 205,000 boe/day for the full year, and also announced plans to begin a share buyback program.

Today's US energy earnings:

  • Apache Corp (APA +1.0%) posted adjusted Q3 earnings of US$244 million, up from US$14 million for the same quarter last year. Cash flow from operations almost doubled to US$1 billion. Production rose 13% annually to 410,000 boe/day, excluding Egypt. The company says it expects to average between 410,000 and 440,000 boe/day next year, while capital spend is expected at about US$3 billion.

  • Revenues at Concho Resources (CXO +2.5%) almost doubled to US$1.2 billion in the third quarter. Q3 net losses widened to US$199 million, including a US$625 million derivatives loss. Total production averaged 287,000 boe/day in Q3, exceeding the high end of guidance. The company also says it plans to start paying a dividend of US$0.125 per share starting in Q1/2019. 

  • Enterprise Products Partners (EPD +1.2%) says it had a record third quarter, as operating income almost doubled to US$1.6 billion. Pipeline volumes also rose from 5.3 to 6.2 million bbl/day. Dividend payouts will also rise 2.4% y/y in Q3. The company announced a 150,000 bbl/day expansion of its NGL fractionation facilities in Mont Belvieu, and the start of construction of its seventh natural gas processing plant in the Delaware Basin.

  • Antero Resources (AR +2.1%) posted a net loss of US$135 million, slightly less than a US$154 million loss reported in Q3/2017. Production rose to a record 2.72 Bcfe/day, weighted 29% liquids, up 17% from the same time last year. The company says it was forced to cut production during the quarter due to "oil hauling constraints" which have since been resolved.  

  • Noble Corp (NE +2.2%) posted a net loss of US$78.3 million, narrower than a US$99.5 million loss reported in Q3/2017. Drilling services revenues rose 8% y/y to US$267 million. The company says it is seeing strength in the offshore drilling business, particularly in the North Sea and Middle East.

  • Hess (HES +0.6%) reported a US$52 million profit for Q3, versus a US$624 million loss for the same time last year. Total net production averaged 279,000 boe/day (excluding Libya), which exceeded guidance.

  • Newfield Exploration (NFX +4.0) reported Q3 revenues of US$711 million, up 62% y/y. Total production averaged 202,000 boe/day, while net profits more than doubled to US$224 million.

  • Williams Co (WMB +0.5%) reported a net income of US$129 million in Q3, up from US$33 million for the same quarter last year, as funds from operations improved 17% to US$746 million.

  • Camp operator Civeo (CVEO +5.2%) reported third quarter revenues of US$120.5 million, up 24% y/y, while net losses narrowed to US$14.3 million. Civeo's Sitka Lodge, in Kitimat, BC, was awarded a new accommodations contract, in addition to four other previously announced contracts related to the LNG Canada project. Sitka will be expanded from 646 to 1,100 rooms at a cost of US$15 million, while US$10 million has been earmarked for bookings on TransCanada's (TRP.TO -0.1%) Coastal GasLink Project.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$75.47▼0.657.23
 
86.29
WTI$65.31▼1.351.29
 
76.41
CDN LT$30.06▼3.630.06
 
69.32
C5+$51.86▼1.651.86
 
71.40
WCS$22.31▼7.719.43
 
56.21
CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OCT 31   █ OCT 24   █ OCT 17   █ OCT 10   (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
  • Trican Well (TCW +7.8%)
  • Seven Generations (VII +6.3%)
  • Secure Energy (SES +5.4%)
  • TORC Oil & Gas (TOG +4.8%)
  • MEG Energy (MEG +4.6%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Crescent Point (CPG -2.8%)
  • PrairieSky (PSK -1.1%)
  • Nuvista Energy (NVA -0.9%)
  • Paramount Resources (POU -0.8%)
  • Cdn Natural Res (CNQ -0.7%)
  • 12-MO LOWS
  • Advantage Oil & Gas (AAV +0.3%)
  • Altagas Ltd (ALA -0.7%)
  • Paramount Resources (POU -0.8%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • ARC Resources (ARX +2%)
  • Enerplus (ERF +2.1%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    SuncorSU44.16▲1.540.49
     
    55.4723D   W
    Imperial OilIMO41.12▼-0.333.43
     
    44.9176D   W
    Husky EnergyHSE18.61▲0.815.09
     
    22.9947D   W
    MIDSTREAM
    EnbridgeENB41.02▲2.537.36
     
    51.0463D   W
    TransCanadaTRP49.64▼-0.148.92
     
    65.1827D   W
    Pembina PipelinePPL42.58▲0.137.60
     
    47.8469↓D   W
    Inter PipelineIPL21.35▲2.320.68
     
    27.9233D   W
    Keyera KEY32.80▲0.731.20
     
    38.9139D   W
    Gibson EnergyGEI20.84▲2.115.68
     
    23.0497D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ36.12▼-0.735.31
     
    49.0813D   W
    EncanaECA13.44▲1.712.37
     
    18.5412D   W
    Cenovus EnergyCVE11.14▲0.59.03
     
    14.8420D   W
    TourmalineTOU19.200.017.78
     
    27.2613D   W
    Seven GenerationsVII14.11▲6.312.82
     
    21.2515D   W
    SERVICES
    ShawcorSCL23.88▲2.823.04
     
    29.5038D   W
    Pason SystemsPSI19.87▲1.716.05
     
    22.1089D   W
    Mullen Group MTL13.70▲0.713.43
     
    17.1224D   W
    EnerflexEFX15.88▲0.413.55
     
    17.8274D   W
    Secure EnergySES8.58▲5.46.98
     
    9.8294D   W
    REFINING & MARKETING
    Parkland FuelPKI44.21▲2.124.97
     
    47.4598D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • HollyFrontier (HFC +6.6%)
  • Newfield Exploration (NFX +3.9%)
  • ONEOK (OKE +3.7%)
  • EQT Corp (EQT +3.4%)
  • Concho Resources (CXO +2.5%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • Anadarko Petroleum (APC -5.9%)
  • Baker Hughes (BHGE -2.1%)
  • Schlumberger (SLB -2%)
  • Halliburton (HAL -1.1%)
  • Ntl-Oilwell Varco (NOV -0.9%)
  • 12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM79.68▲1.172.16
     
    89.3062D   W
    ChevronCVX111.65▲0.7107.54
     
    133.8832D   W
    MIDSTREAM
    Kinder MorganKMI17.02▲1.614.69
     
    19.8366D   W
    Williams CoWMB24.33▲0.523.54
     
    33.6723↓D   W
    ONEOKOKE65.60▲3.749.65
     
    71.9965D   W
    LARGE CAP E&P
    ConocoPhillipsCOP69.90▲0.648.97
     
    80.2467D   W
    EOG ResourcesEOG105.34▼-0.296.54
     
    133.5322D   W
    Occidental PetroleumOXY67.07▼-0.762.47
     
    87.6717D   W
    Anadarko PetroleumAPC53.20▼-5.946.80
     
    76.706D   W
    Concho ResourcesCXO139.09▲2.5123.63
     
    163.1140D   W
    SERVICES
    SchlumbergerSLB51.31▼-2.050.80
     
    80.355D   W
    HalliburtonHAL34.68▼-1.133.73
     
    57.863D   W
    Ntl-Oilwell VarcoNOV36.80▼-0.931.47
     
    49.0825D   W
    TechnipFMCFTI26.30▲0.525.36
     
    35.0012D   W
    Baker HughesBHGE26.69▼-2.125.53
     
    37.767D   W
    REFINERS
    Phillips 66PSX102.82▲0.789.14
     
    123.9735D   W
    Valero EnergyVLO91.09▲1.177.78
     
    126.9812D   W
    Marathon PetroleumMPC70.45▲2.458.83
     
    88.4531D   W
    HollyFrontierHFC67.44▲6.636.41
     
    83.2873D   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.A63.19▲1.060.53
     
    73.8644D   W
    TotalTOT58.60▲1.253.37
     
    65.6949D   W
    BPBP43.37▲2.836.15
     
    47.8359D   W
    EniE35.34▲0.832.13
     
    40.1551D   W
    EquinorEQNR25.70▲0.519.76
     
    28.9360D   W
    ANALYST RATINGS

    UPGRADES

    • Altagas (ALA.TO): Upgraded from Hold to Buy at Desjardins.

    • Baker Hughes (BHGE): Upgraded from Neutral to Buy at Guggenheim.

    • Chesapeake Energy (CHK): Upgraded from Neutral to Positive at UBS Group.

    • Horizon North Logistics (HNL): Upgraded from Underperform to Market Perform at Raymond James.

    • Valero Energy (VLO): Upgraded from Neutral to Outperform at Credit Suisse.

    DOWNGRADES

    • Baker Hughes (BHGE): Downgraded from Buy to Hold at Jefferies.

    • CVR Refining (CVRR): Downgraded from Neutral to Sell at Citigroup.

    • Weatherford International (WFT): Downgraded from Buy to Neutral at UBS Group.


    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.
    Discounts on Canadian Light and condensate widen to record levels, sending prices to new lows

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