TSX energy stocks sink lower despite major improvement in Canadian crude discounts
Today's energy market summary:
Gasoline declined another 2% on Friday, also down about 20% for the month.
The discount on Canadian Light narrowed by over US$2, while the WCS discount narrowed by US$1.50. The shrinking differentials helped Canada's light and heavy benchmarks rise about 7% and 5%, respectively. WCS ended November up 0.5% m/m, as the differential to WTI narrowed by US$14.50/bbl.
OPEC's advisory committee is poised to recommend a 1.3 million bbl/day output cut in 2019, as measured from October 2018 production volumes. That's more than the initial call of a 1 million barrel cut, but less than the previous forecast for a 1.4 million barrel reduction.
After falling by three last week, Baker Hughes says the US put two of those oil rigs back into service this week, rising to a total of 887. Canada lost 5 oil rigs, falling to 119.
Today's equity market action:
Stock markets in the US and China posted small gains on Friday, while European markets were flat to lower overnight. In Toronto, the TSX also ended the day unchanged.
Declines were broadly based in Canada, with many more producers hitting new multi-year lows. Losses in US markets were focused among producers and service firms. Independent refiners were the best performers in energy markets on Friday.
Despite a decline in US bond yields, the US dollar gained another 0.5%, inching closer to its most recent highs.
Today's notable energy news:
Inter Pipeline (IPL.TO -1.1%) has closed on its acquisition of NuStar Energy's (NS -0.1%) European bulk liquid storage business for US$270 million in cash. The acquisition adds 9.1 million barrels of storage, bringing IPL's total capacity to about 37 million barrels. The deal was funded through the issuance of $200 million in shares and the company's revolving credit facility.
Vermilion Energy (VET.TO -1.9%) says it has now taken ownership of the Corrib Natural Gas Project in Ireland. Royal Dutch Shell (RDS.A -0.3%), who was the previous operator, sold its 45% stake to a subsidiary of the Canada Pension Plan Investment Board (CPPIB). The CPPIB agreed to transfer the asset, along with a 1.5% working interest, to Vermilion, after which Vermilion will hold a 20% operated interest. The deal adds 700 boe/day of net natural gas production to VET.
Bellatrix Exploration (BXE.TO -4.8%) also closed on its recent acquisition of assets from Daewoo, located in the Ferrier area of west central Alberta, which produce about 1,250 boe/day (weighted 35% liquids). The deal was funded through $1.75 million in cash and the issuance of 6.75 million BXE shares. The company also renewed and extended its $100 million revolving credit facility.
Husky Energy (HSE.TO +3.1%) announced the appointment of Jeff Hart as its new CFO. Hart has been with Husky since 2010, previously serving as VP, Controller.
Denver-based Crimson Midstream and MPLX (MPLX +0.3%) have extended binding Open Season on their Swordfish Pipeline, which connects existing terminal facilities in Louisiana to the Louisiana Offshore Oil Port (LOOP) vessel loading terminal. The pipeline has a capacity of up to 600,000 bbl/day. The line is expected to be in-service in the first half of 2020. MPLX is the MLP arm of Marathon Petroleum Corp (MPC +0.4%).
Equitrans Midstream (ETRN -3.0%) announced the purchase EQGP Holdings (EQGP +17.6%) for US$20 per share in cash, a 17.5% premium to EQGP's previous day's closing price. After the deal closes, ETRN will own more than 95% of EQGP’s common shares.
Total (TOT +0.5%) restarted its 253,000 bbl/day Normandy refinery after workers suspended a week-long strike. More talks between the company and the union are scheduled for December 11.
Royal Dutch Shell (RDS.A -0.3%) closed on its previously-announced divestiture of upstream operations in Ireland for up to US$1.3 billion. Shell also completed the sale of several fields in Norway for US$526 million. The sales are all part of the company's US$30 billion divestment plan, aimed at high-grading and simplifying its portfolio.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.84||▼-0.8||40.49||55.47||24||D W|
|Imperial Oil||IMO||39.57||▼-2.0||33.43||44.91||40||D W|
|Husky Energy||HSE||16.50||▲3.1||15.29||22.99||24||D W|
|Pembina Pipeline||PPL||44.80||▲1.1||37.60||47.84||82||D W|
|Inter Pipeline||IPL||21.36||▼-1.1||20.68||27.92||34||D W|
|Gibson Energy||GEI||21.35||0.0||15.68||23.32||97||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||33.39||▼-0.2||32.08||49.08||14||D W|
|Cenovus Energy||CVE||9.82||▲0.7||9.03||14.84||16||D W|
|Seven Generations||VII||10.13||▼-0.6||9.69||19.40||4||D W|
|Pason Systems||PSI||19.93||▲0.4||16.05||24.57||58||D W|
|Mullen Group||MTL||12.30||▲0.7||12.04||16.93||19||D W|
|Secure Energy||SES||7.20||▼-1.2||6.98||9.82||25↓||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||39.14||▲0.4||25.11||47.45||94||D W|
|Exxon Mobil||XOM||79.50||▲0.6||72.16||89.30||53||D W|
|Kinder Morgan||KMI||17.07||▲1.1||14.69||19.83||54||D W|
|Williams Co||WMB||25.32||▼-0.9||23.54||33.67||38||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||103.31||▼-2.1||96.54||133.53||22||D W|
|Occidental Petro||OXY||70.27||▼-0.9||62.47||87.67||23||D W|
|Anadarko Petro||APC||52.90||▼-1.5||46.80||76.70||9||D W|
|Concho Res||CXO||130.34||▼-0.9||123.63||163.11||36||D W|
|Ntl-Oilwell Varco||NOV||32.11||▼-1.9||31.30||49.08||5||D W|
|Baker Hughes||BHGE||22.82||▼-1.3||21.67||37.76||3||D W|
|Phillips 66||PSX||93.52||▲0.9||88.99||123.97||12||D W|
|Valero Energy||VLO||79.90||▲0.5||76.25||126.98||3||D W|
|Marathon Petro||MPC||65.16||▲0.4||60.64||88.45||14||D W|
Delek US (DK): Downgraded from Buy to Hold at Tudor Pickering.
Denbury Resources (DNR): Downgraded from Outperform to Hold at Oppenheimer.
UPDATED: DAILY (END-OF-DAY)
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