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.

OIL PRICES - DAILY % CHANGE

WTI DIFFERENTIALS

STREAM	CLOSE	%CHG	L	52WK	H
BRENT	$62.75	▲1.4	50.47		86.29
WTI	$55.26	▲2.7	42.53		76.41
CDN LT	$51.39	▲3.2	20.83		69.32
C5+	$53.01	▲5.4	37.04		71.40
WCS	$45.86	▲3.7	12.59		56.21

CRUDE OIL FUTURES CURVES
BRENT	WTI
█ FEB 1   █ JAN 25   █ JAN 18   █ JAN 11   (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	Seven Generations (VII +4.5%) Paramount Res (POU +3.4%) Tamarack Valley (TVE +2.8%) Altagas (ALA +2.6%) Whitecap Res (WCP +2.5%)
12-MO HIGHS	Enbridge (ENB +0.8%)
10-YR HIGHS	None
GOLDEN CROSSES	None

TSX BEARISH INDICATORS
BOTTOM 5	Imperial Oil (IMO -4.7%) ARC Resources (ARX -2.4%) CES Energy (CEU -2.4%) MEG Energy (MEG -2.2%) Cenovus Energy (CVE -2%)
12-MO LOWS	None
10-YR LOWS	None
DEATH CROSSES	None

COMPANY	TICKER	CLOSE	%CHG	L	52WK	H	CHART
INTEGRATED
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
MIDSTREAM
Enbridge	ENB	48.39	▲0.8	37.36		48.64	D   W
TransCanada	TRP	55.33	▼-1.0	47.90		59.51	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
Keyera	KEY	28.28	▲1.3	24.05		38.91	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
Encana	ECA	8.97	▼-0.6	6.90		18.54	D   W
Tourmaline	TOU	17.76	▼-0.9	15.84		26.19	D   W
Vermilion Energy	VET	31.96	▼-0.8	26.67		49.67	D   W
SERVICES
Pason Systems	PSI	20.48	▼-0.9	16.05		24.57	D   W
Enerflex	EFX	17.42	▲0.4	13.55		18.72	D   W
Mullen Group	MTL	12.09	▲0.4	11.39		16.93	D   W
Shawcor	SCL	19.98	▼-1.4	15.11		28.89	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

S&P 500 ENERGY STOCKS

SPX BULLISH INDICATORS
TOP 5	Baker Hughes (BHGE +4.1%) Exxon Mobil (XOM +3.6%) Chevron (CVX +3.1%) Hess Corp (HES +3.1%) Halliburton (HAL +2.4%)
12-MO HIGHS	None
10-YR HIGHS	None
GOLDEN CROSSES	None

SPX BEARISH INDICATORS
BOTTOM 5	Valero Energy (VLO -2.9%) HollyFrontier (HFC -2%) Phillips 66 (PSX -1.3%) Marathon Petro (MPC -1.2%) Apache (APA -0.5%)
12-MO LOWS	None
10-YR LOWS	None
DEATH CROSSES	None

COMPANY	TICKER	CLOSE	%CHG	L	52WK	H	CHART
INTEGRATED
Exxon Mobil	XOM	75.92	▲3.6	64.65		89.25	D   W
Chevron	CVX	118.37	▲3.1	100.22		131.08	D   W
MIDSTREAM
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
ONEOK	OKE	65.16	▲1.5	50.26		71.99	D   W
LARGE CAP E&P
ConocoPhillips	COP	68.68	▲1.5	50.18		80.24	D   W
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
SERVICES
Schlumberger	SLB	44.56	▲0.8	34.99		75.56	D   W
Halliburton	HAL	32.12	▲2.4	24.70		54.91	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
TechnipFMC	FTI	23.17	▲0.9	18.20		34.39	D   W
REFINERS
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
HollyFrontier	HFC	55.20	▼-2.0	42.42		83.28	D   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	CHART
Royal Dutch Shell	RDS.A	62.84	▲1.8	55.04		73.86	D   W
Total	TOT	55.31	▲1.1	49.70		65.69	D   W
BP	BP	41.34	▲0.5	36.15		47.83	D   W
Eni	E	33.91	▲0.3	29.75		40.15	D   W
Equinor	EQNR	23.02	▲1.1	19.95		28.93	D   W

ANALYST RATINGS

UPGRADES

• Encana (ECA.TO): Upgraded from Underperform to Neutral at CIBC.

• Mullen Group (MTL.TO): Upgraded from Market Perform to Outperform at Raymond James.

• Pason Systems (PSI.TO): Upgraded from Neutral to Ouperform at CIBC.

DOWNGRADES

• 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.

LATEST ENERGY NEWS

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