Canadian energy stocks end Friday in the red, despite rising oil prices
Today's energy market summary:
- Oil prices began February on a high note, with all major benchmarks posting gains for the day.
- WTI rose 2.7%, returning to the highs of mid-November. Brent also gained 1.4% for the day.
- Canada's light and heavy benchmarks rose over 3%, as the discounts to WTI narrowed slightly.
- Edmonton condensate (C5+) was the big winner in energy markets, as the discount to WTI narrowed by US$1.25, sending C5+ prices higher by over 5%.
- According to Baker Hughes, the number of oil rigs in service in the US declined by 15 this week, falling to 847, the lowest since last May. Canada added another 13 oil rigs, bringing the total to 159.
- US natural gas prices sank 2.4% as milder winter temperatures return to the US Midwest and East Coast.
- Heating oil rose almost 2%, while gasoline declined 1.4%.
Today's equity market action:
- A relatively quiet Friday in equity markets, with most global indices ending the day roughly unchanged.
- The S&P 500 rose 0.1%, dragged lower by discretionary stocks. Energy was the best performing sector south of the border, gaining almost 2%.
- In Toronto, the TSX fell 0.2%, dragged lower by the heavy-weighted financials, materials and energy sectors. Energy posted a 0.7% decline, led lower by Imperial Oil (-4.7%). Larger-cap producers were the worst performers, despite higher prices for Canadian benchmarks.
Today's notable energy news:
- Dominion Energy warns the cost of its Atlantic Coast pipeline will rise by about US$1 billion, to as much as US$7.5 billion. The in-service date for the line has also been delayed to early 2021, due to numerous "judicial, legislative and administrative" issues surrounding the line's permits. Atlantic Coast is designed to carry 1.5 Bcf/day of natural gas, 600-miles from West Virginia to North Carolina.
- According to Reuters, ExxonMobil and Qatar Petroleum have agreed on a US$10 billion expansion of their Golden Pass LNG export terminal in Sabine Pass, Texas. ConocoPhillips, who holds a 12.4% stake in the project, will not participate in the expansion, and will instead be looking to exit the partnership.
- Royal Dutch Shell announced the start of production at the Lula North deepwater project in Brazil's Santos Basin. Lula North is operated by Petrobras, and is the largest producing field in Brazil, accounting for 30% percent of the country's oil and gas production.
- Anadarko Petroleum announced a long-term agreement with CNOOC's trading division to supply LNG from its proposed Mozambique export terminal. The deal is for 1.5 million t/y over 13 years. If constructed, Mozambique LNG will be the country's first onshore LNG development, initially consisting of two trains with total capacity of 12.88 t/y. Anadarko is expected to announce a final investment decision in the first half of this year.
- Chesapeake Energy has completed its acquisition of WildHorse Resource Development. The merger was approved by the shareholders of both companies. WildHorse stock (WRD) will be delisted from the NYSE.
Today's Q4/2018 earnings results:
- Imperial Oil posted a profit of $853 million in Q4, up from a $137 million loss for the same time last year. Quarterly production averaged 413,000 boe/day, including a record 407,000 bbl/day of liquids. Full-year profits jumped almost five-fold to $2.3 billion, thanks to a very good showing from Imperial's refining operations. Full year production averaged 383,000 boe/day, up 2% y/y, including a record 206,000 bbl/day from the Kearl Mine. Last year's capital expenditures totalled $1.4 billion, more than double the previous year.
- ExxonMobil reported a US$6 billion profit in the fourth quarter, down 28% from the same time last year, which included a US$1.3 billion impairment charge. Production ticked up 0.5% to 4.0 million boe/day in Q4, despite a 90% increase in output from the Permian region. For the full year 2018, earnings rose 6% to US$20.8 billion, while capital expenditures rose 12% to US$25.9 billion. Cash flow from operations were reported at US$36 billion last year, the highest since 2014. Full year production dipped 152,000 boe/day to 3.8 million boe/day, due to lower gas production, divestitures and higher downtime.
- Chevron reported a Q4 profit of US$3.7 billion, up from US$3.1 billion for the same quarter last year. For the full-year 2018, the company posted a US$14.8 billion profit, up over 60% from the previous year. Production rose 7% y/y in 2018 to a record 2.93 million boe/day. The company says is targeting a 4 to 7% growth rate this year.
- Swiss oilfield services firm Weatherford International reported a net loss of US$2.1 billion in the fourth quarter, including a US$1.9 billion write-off of the company's goodwill balance. Q4 revenues dipped 4% to US$1.4 billion.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.37||▼0.0||35.53||55.47||D W|
|Imperial Oil||IMO||35.54||▼-4.7||33.43||44.91||D W|
|Husky Energy||HSE||15.64||▲0.3||13.33||22.99||D W|
|Pembina Pipeline||PPL||46.89||▲0.2||37.60||47.84||D W|
|Inter Pipeline||IPL||20.88||▼-1.1||18.60||25.66||D W|
|Gibson Energy||GEI||20.24||▲1.7||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.00||▼-0.8||30.11||49.08||D W|
|Cenovus Energy||CVE||10.06||▼-2.0||8.74||14.84||D W|
|Vermilion Energy||VET||31.96||▼-0.8||26.67||49.67||D W|
|Pason Systems||PSI||20.48||▼-0.9||16.05||24.57||D W|
|Mullen Group||MTL||12.09||▲0.4||11.39||16.93||D W|
|Secure Energy||SES||8.05||▼-0.9||6.25||9.02||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.29||▼-0.8||27.36||47.45||D W|
|Exxon Mobil||XOM||75.92||▲3.6||64.65||89.25||D W|
|Kinder Morgan||KMI||18.35||▲1.4||14.62||18.67||D W|
|Williams Co||WMB||27.43||▲1.9||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||98.85||▼-0.4||82.04||133.53||D W|
|Occidental Petro||OXY||68.04||▲1.9||56.83||87.67||D W|
|Anadarko Petro||APC||48.45||▲2.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||143.01||▲0.5||119.08||213.40||D W|
|Baker Hughes||BHGE||24.35||▲4.1||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||29.91||▲1.5||24.27||49.08||D W|
|Marathon Petro||MPC||65.47||▼-1.2||54.29||88.45||D W|
|Phillips 66||PSX||94.21||▼-1.3||78.44||123.97||D W|
|Valero Energy||VLO||85.26||▼-2.9||68.81||126.98||D W|
Advantage Oil & Gas (AAV.TO): Downgraded from Outperform to Neutral at CIBC.
Antero Midstream Partners (AM): Downgraded from Overweight to Equal Weight at Capital One.
Cenovus Energy (CVE.TO): Downgraded from Outperform to Neutral at CIBC.
CNX Resources (CNX): Downgraded from Buy to Hold at Tudor Pickering.
Magellan Midstream Partners (MMP): Downgraded from Peerperform to Underperform at Wolfe Research.
TC Pipelines (TRP.TO): Downgraded from Neutral to Underperform at JPMorgan.
UPDATED: DAILY (END-OF-DAY)
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