A quiet start to the trading week as investors digest M&A news and more Q1 earnings

A quiet start to the trading week as investors digest M&A news and more Q1 earnings

Today's energy market action:

  • Oil prices sank in the morning, but recovered their losses by the end of the day. Brent ended Monday 0.2% lower, while WTI managed a 0.3% gain.

  • Canadian benchmarks rose in-line with WTI, as their respective discounts to the US benchmark were unchanged.

Today's treasury, currency and equity market action:

  • US consumer spending rose to a 9½-year high in March, although inflation remains below expectations. Bond yields moved slightly higher for the day, but the US dollar dipped 0.2%

  • The S&P 500 and NASDAQ eked out another record high on Monday, rising 0.1% and 0.2%, respectively. The NYSE was up 0.1% while the TSX dipped 0.1%.

  • The TSX energy sector was little changed, while SPX energy components declined 0.3%.

Today's M&A news:

  • After accepting a US$33 billion buyout offer from Chevron, Anadarko Petroleum has resumed negotiations with Occidental Petroleum, who has offered US$38 billion. Chevron says its offer is in the best interest of APC shareholders, and has yet to make a better offer. If Anadarko agrees to be purchased by Occidental, Chevron will have four days to make a counter-offer, or be subject to a US$1 billion breakup fee. Any sale to Occidental would be contingent to shareholder approval.

  • Israel’s Delek Group confirmed it has made an offer for Chevron’s oil and gas fields in the UK North Sea. Delek says the move is part of its strategy to expand its international operations. The properties are estimated to be worth US$2 billion.

  • Pioneer Natural Resources is in advanced talks to sell its Eagle Ford assets to private-equity backed Ensign Natural Resources. The move is part of Pioneer's plan to exclusively focus in the Permian region. Ensign is expected to pay less than US$1 billion for the stake, about half what Pioneer had hoped to earn when it first put the properties up for sale in February 2018.

  • Saudi energy services firm Taqa has agreed to pay US$415 million for Schlumberger’s Middle Eastern drilling-rig business. Taqa will make the acquisition through its Arabian Drilling Co. joint-venture with Schlumberger.

Today's other notable energy news:

  • After being shut-in last week due to high chloride levels, Russian pipeline operator Transneft says it has identified the source of the contamination, blaming poor quality control by the storage terminal operator. A full restart of the 730,000 bbl/day Druzhba export pipeline is expected to take several weeks. Druzhba is the world's longest oil pipeline, running about 4,000 km from Russia to refineries in eastern Europe and Germany.

  • Marathon Pipe Line announced a one-week extension of open season on its planned Capline Reversal. Once reversed, Capline will run southbound from Patoka, Illinois, to St. James, Louisiana. Service is expected to begin in September 2020. Marathon Pipe Line is a subsidiary of Marathon Petroleum. The line is jointly owned with Plains All American and BP Oil Pipeline Company.

  • Petrobras' board of directors has approved a plan to sell eight refineries in Brazil and its chain of retail gas stations in Uruguay. The move is all part of a massive divestiture program, aimed at reducing debt and diverting funds to its oil and gas exploration business.

Today's notable first quarter earnings results:

  • Echoing a similar sentiment from CP Rail last week, CN Rail says first quarter results were dented by cold weather and Alberta's curtailment program. The rail operator says crude shipments fell sharply in February, but is expected to recover in the second half of this year. Despite the pullback, revenues from petroleum products and chemicals rose 30% y/y to $735 million. Overall Q1 revenues declined 11% y/y to $3.5 billion, while net profits rose 14% to $848 million.

  • Diamond Offshore Drilling posted a net loss of US$73 million in the first quarter. Revenues were little changed from the previous quarter at US$233 million. CEO Marc Edwards says the company had "a solid start to the year" with fleet-wide operational efficiency reported at 97%. As of April 1, the company's backlog was US$1.8 billion.

  • Continental Resources reported a net profit of US$187 million, down 20% from the same time last year. First quarter production rose 16% y/y to 332,236 boe/day.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$72.04▼0.250.47
 
86.29
WTI$63.50▲0.342.53
 
76.41
CDN LT$58.45▲0.320.83
 
69.32
C5+$59.15▲0.337.04
 
71.40
WCS$51.05▲0.412.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ APR 29   █ APR 22   █ APR 15   █ APR 8   (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
Husky Energy (HSE +2.6%)
Baytex Energy (BTE +2.6%)
Gran Tierra (GTE +2.2%)
Seven Generations (VII +2%)
Whitecap Res (WCP +1.8%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
Precision Drilling (PD -1.7%)
Shawcor (SCL -1.7%)
Pembina Pipeline (PPL -1.2%)
Secure Energy (SES -1%)
Encana (ECA -0.9%)
12-MO
LOWS
Mullen Group (MTL -0.6%)
Peyto Exploration (PEY -0.3%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU44.48▲0.335.53
 
55.47D   W
Imperial OilIMO39.00▼-0.533.52
 
44.91D   W
Husky EnergyHSE14.78▲2.613.21
 
22.99D   W
MIDSTREAM
EnbridgeENB50.12▼-0.337.78
 
51.20D   W
TransCanadaTRP64.15▼-0.347.90
 
64.46D   W
Pembina PipelinePPL48.59▼-1.239.15
 
50.65D   W
Inter PipelineIPL22.15▼-0.118.60
 
25.66D   W
Keyera KEY31.46▲0.324.05
 
38.91D   W
Gibson EnergyGEI22.17▼-0.516.39
 
23.75D   W
LARGE CAP E&P
Cdn Natural ResCNQ40.67▲0.430.11
 
49.08D   W
Cenovus EnergyCVE13.39▼-0.68.74
 
14.84D   W
EncanaECA9.55▼-0.96.90
 
18.54D   W
TourmalineTOU20.46▼-0.515.84
 
26.19D   W
Vermilion EnergyVET34.60▼-0.926.67
 
49.67D   W
SERVICES
Pason SystemsPSI19.92▲0.817.18
 
24.57D   W
EnerflexEFX18.54▼-0.513.55
 
20.38D   W
Mullen Group MTL10.44▼-0.610.23
 
16.93D   W
ShawcorSCL19.76▼-1.715.11
 
28.89D   W
Secure EnergySES8.09▼-1.06.25
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI40.98▼-0.229.55
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
Baker Hughes (BHGE +1.5%)
Noble Energy (NBL +1.3%)
Ntl-Oilwell Varco (NOV +1.3%)
Marathon Petro (MPC +1%)
TechnipFMC (FTI +0.6%)
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
Cabot O&G (COG -2.6%)
Occidental Petro (OXY -1.9%)
Concho Res (CXO -1.8%)
Marathon Oil (MRO -1.3%)
EOG Resources (EOG -0.9%)
12-MO
LOWS
None
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM79.97▼-0.764.65
 
87.36D   W
ChevronCVX117.72▲0.5100.22
 
131.08D   W
MIDSTREAM
Kinder MorganKMI19.86▼-0.614.62
 
20.44D   W
Williams CoWMB28.29▼-0.720.36
 
32.22D   W
ONEOKOKE68.62▼-0.250.26
 
71.99D   W
LARGE CAP E&P
ConocoPhillipsCOP62.65▼-0.256.75
 
80.24D   W
EOG ResourcesEOG97.00▼-0.982.04
 
133.53D   W
Occidental PetroOXY60.13▼-1.956.83
 
87.67D   W
Anadarko PetroAPC72.93▲0.240.40
 
76.70D   W
Pioneer Natural ResPXD165.75▲0.5119.08
 
213.40D   W
SERVICES
SchlumbergerSLB43.43▲0.334.99
 
75.43D   W
HalliburtonHAL28.77▼-0.324.70
 
54.91D   W
Baker HughesBHGE25.97▲1.520.09
 
37.76D   W
Ntl-Oilwell VarcoNOV27.75▲1.324.27
 
49.08D   W
TechnipFMCFTI25.13▲0.618.20
 
34.39D   W
REFINERS
Marathon PetroMPC60.99▲1.054.29
 
88.45D   W
Phillips 66PSX95.36▲0.578.44
 
123.97D   W
Valero EnergyVLO89.60▼-0.568.81
 
126.98D   W
HollyFrontierHFC48.55▼0.046.75
 
83.28D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A63.13▲0.155.04
 
73.86D   W
TotalTOT54.70▼-0.949.70
 
65.69D   W
BPBP43.02▼-0.736.28
 
47.83D   W
EniE33.78▼-1.229.75
 
40.15D   W
EquinorEQNR22.26▼-0.619.95
 
28.93D   W
ANALYST RATINGS

UPGRADES

  • HollyFrontier (HFC): Upgraded from Underperform to Neutral at BofA.

  • Noble Energy (NBL): Upgraded from Neutral to Overweight at JPMorgan Chase.

  • PBF Energy (PBF): Upgraded from Underperform to Neutral at BofA.

  • Phillips 66 (PSX): Upgraded from Neutral to Buy at BofA.

DOWNGRADES

  • Anadarko Petroleum (APC): Downgraded from Overweight to Neutral at JPMorgan Chase.

  • Occidental Petroleum (OXY): Downgraded from Buy to Hold at Jefferies.

  • Summit Midstream Partners (SMLP): Downgraded from Outperform to Sector Perform at RBC.

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
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