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Energy & Utilities Roundup: Market Talk

6 Jan 2018 9:20 am

The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2215 GMT - Canadian stocks ended a recent rally Friday as oil-and-gas producers were broadly sold-off following a retreat in crude prices. The S&P/TSX Composite Index was down 63.50 points, or 0.4%, to 16,349.44. The blue-chip S&P/TSX 60 Index was down 3.69 points, or 0.4%, to 970.65. Trading volumes were strong, coming in at 319.8M. (david.george-cosh@wsj.com; @itsdgc)

1730 GMT - The number of active oil rigs in the US falls by five in the latest week, to 742, says Baker Hughes. Oil prices have been rising sharply in recent months, and hit a three-year-high above $62/bbl this week, so analysts say rig counts may continue their general upward trend this year. This week's decline may be simply due to work activity slowing down into the holidays. Meantime, natural gas rigs remained unchanged at 182. (dan.molinski@wsj.com)

1714 GMT - Entergy's nuclear power plant in Massachusetts was still off line Friday, a day after a strong winter storm moving across the Northeast knocked out one of three offsite power lines that feed the plant. The loss of the 345-kilovolt line on Thursday afternoon required the plant, Pilgrim, to initiate a manual reactor "scram," or sudden shutdown of the reactor, according to a notice filed with the US Nuclear Regulatory Commission. Entergy says it is working to fix the line and performing preventative maintenance it couldn't do if Pilgrim was running. The outage likely helped push up the region's wholesale power prices, which have risen during the frigid weather. (erin.ailworth@wsj.com; @ailworth)

1630 GMT - Automated drilling is coming to oil patch in 2018, according Tudor Pickering Holt. Drilling oil wells has long been more art than science, especially for directional drillers who help construct horizontal wells in shale plays, drilling through complex layers of rock. But a handful of service companies have been investing in digital drilling technology over the last year and 2018 will see it roll out. Tudor Pickering says to be on look out for National Oilwell Varco's rig operating system, Schlumberger's "rig of the future," Helmerich & Payne's recent acquisition of software-driven Motive Drilling Technologies, and others. (christopher.matthews@wsj.com; @cmatthews9)

1604 GMT - The bitter cold gripping the US has led to a string of deadly carbon monoxide poisoning incidents related to heaters, highlighting the dangers posed by natural gas and other gases like propane. A 13-year-old girl died Thursday and dozens more were sickened by carbon monoxide at a New Jersey apartment, while a family of four in Arizona were found dead in a cabin New Year's Eve, also apparently due to carbon monoxide. Meanwhile, last Saturday, in Texas, a family died in a trailer at a hunting camp, with carbon monoxide poisoning believed to be the cause. (dan.molinski@wsj.com)

1423 GMT - Average fuel economy of 25.2 miles a gallon for new cars and trucks sold in the US in 2017 is unchanged from a year ago, according to University of Michigan Transportation Research Institute, even as auto makers strive to boost mileage in their lineups. For December, the window-sticker mileage value dropped to 25 mpg from a revised November figure of 25.2 mpg, researchers found. They attribute the recent drop to a greater share of pickup trucks and SUVs driving off dealer lots as opposed to smaller and more-efficient sedans and compact cars. Consumers are choosing larger vehicles amid low gasoline prices and loan rates just as looming regulations call for auto makers to sell vehicles with ever higher mileage and lower emissions. (mike.spector@wsj.com; @MikeSpectorWSJ)

1459 GMT - The market is hoping that a trading update on Jan. 10 from Tullow Oil PLC will herald the beginning of a new era for the Africa-focused oil company. Hargreaves Lansdown says the group's $750 million rights issue in March 2017 and a $2.5 billion debt refinancing in November mean its debt position is looking much healthier. "With oil prices much improved and production from Tullow's West African oil fields rising, investors will be hoping to refocus on production and exploration expertise this year," says HL's Laith Khalaf. Shares up 0.8% at 220 pence. (philip.waller@wsj.com)

1251 GMT - Credit Suisse upgrades Centrica PLC to outperform from neutral, saying the stock reflects risks facing the owner of British Gas. The Swiss brokerage also upgrades water supplier United Utilities PLC to neutral from underperform, saying it now trades below fair value. Credit Suisse says Centrica and U.K. power station operator Drax Group PLC carry the biggest risk discounts in the sector. It forecasts a 33% cut in Centrica's 2018 dividend but notes that Centrica and Drax both generate cash flows to cover their dividends. "We think the regulated sector can avoid dividend cuts," the brokerage says. Shares in Centrica are the top FTSE 100 riser, gaining 3.3% to 146 pence. United Utilities also advances 2.2% to 818 pence. (philip.waller@wsj.com)

1226 GMT - The FTSE 100 hits all-time highs as upgrades for utility stocks help offset a downgrade for insurer Admiral Group PLC. The index last trades up 0.3% at 7719.79, having reached a high of 7727.73. Leading gainers is British Gas owner Centrica PLC, up 3%, after Credit Suisse upgraded the stock to outperform from neutral. The Swiss bank also raised United Utilities from underperform to neutral, and these shares gain 2.2%. At the other end of the scale, car insurer Admiral Group PLC drops 4.7% after a reported downgrade by J.P. Morgan and following downbeat U.K. new car sales data. Other insurers also drop. (philip.waller@wsj.com)

0957 GMT - There's a good chance German energy company Uniper will be taken over by Finnish bidder Fortum in 2018, with shareholders receiving a takeover premium, says UBS. In the bank's most likely scenario, shareholder E.ON--which owns 47% of Uniper--will accept the current Fortum offer at EUR22 a share while other shareholders won't, prompting Fortum to propose a domination agreement with a higher buyout price. UBS raises its Uniper rating to buy from neutral and its target price to EUR30.00 from EUR22.60, noting that even if the deal doesn't go through this year, the possibility of a second bid in 2019 should still support the shares. Uniper shares trade up 1.9% at EUR25.84. (alberto.delclaux@dowjones.com)

(END) Dow Jones Newswires

January 06, 2018 04:20 ET (09:20 GMT)

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