Login ID:
Partner Login
Contact Us : 7066511911

Energy & Utilities Roundup: Market Talk

14 Feb 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.

0225 GMT - Woodside's buyout of Exxon's stake in the Scarborough gas field off Western Australia looks to be win-win, says Wood Mackenzie's Saul Kavonic. He notes the price tag, which could reach US$744 million, suggests Exxon received very-good value--particularly given market sentiment isn't as strong as in 2016 when Woodside bought BHP Billiton's stake. For Woodside, Kavonic believes Scarborough now looks to be the most do-able of the 3 big projects the company is sitting on. With the Aussie energy company now having a 75% stake, Woodside can develop the field and deliver gas to its Pluto LNG operation while also sending some to bolster the North West Shelf LNG venture. Using existing infrastructure will make Scarborough among the lowest-cost preinvestment-decision LNG projects in the world, says Kavonic. (robb.stewart@wsj.com; @RobbMStewart)

0055 GMT - Woodside's A$2.5 billion equity raising should cover the acquisition of an additional stake in the Scarborough gas field off Australia and the SNE development off Senegal, but will be no where enough for the development of the Scarborough and Browse projects, Macquarie estimates. With the raising priced at about 10% below its A$29.50 target on the stock, it reckons it's attractive, but it also cautions the energy company's dividend yield is likely to change given capex needs are set to rise substantially. Shares halted; last at A$31.08. (robb.stewart@wsj.com; @RobbMStewart)

0044 GMT - Woodside's slight miss on 2017 net profit due to higher interest expenses and tax was overshadowed by a A$2.5 billion equity raising and the acquisition of Exxon's interest in the Scarborough gas field. RBC says the Australian oil and gas developer is in no way overpaying for Scarborough gas, but it does have questions over why it is deepening a portfolio of longer-dated undeveloped resources when moves like a recent buy into an oil project off Senegal would better balance its portfolio. It remains bearish on the stock. Shares are halted for the raising. (robb.stewart@wsj.com; @RobbMStewart)

2352 GMT - Perhaps because of its 2017 underperformance, Australia's stock benchmark hasn't fallen back as much as others during this month's slide. The 5% drop has put the S&P/ASX 200's P/E at 15.25, about 5% below Deutsche Bank's fair-value estimate and the biggest such discount in 2 years. Most sectors have fallen 3-6% in this pullback, with energy and utilities the biggest underperformers but mining holding up well. With Deutsche Bank strategists expecting a further rise in bond yields, typically not good for higher-yielding stocks, the firm advises investors stay away from Aussie infrastructure and utilities stocks. (robb.stewart@wsj.com; @RobbMStewart)16:54 EST [Dow Jones] -- American Petroleum Institute reports inventories of crude oil in the U.S. increased by 3.9M bbls in the latest week, a source citing the report says, while gasoline supplies climbed by 4.6M bbls. The bearish results were released ahead of official inventories data from the Department of Energy scheduled to be published Wednesday morning. Average forecasts in a WSJ survey indicate the DOE report will show crude supplies increased by 2.6M bbls and that gasoline supplies increased by 1.4M from the previous week. In late trading, U.S. benchmark oil prices extend earlier losses after the API report and are now 0.7% lower on the day at $58.87/bbl. ( dan.molinski@wsj. com )

2008 GMT -- Schlumberger says concerns over U.S. frackers ramping up production are overblown. That is because producers outside of the U.S. decreased their investment over the past three years so substantially that increased U.S. production will be needed to maintain the overall balance of the global oil market, according to Executive Vice President Patrick Schorn. North American producers will spend 15%-20% more in 2018, but international producers decreased their investment by 2% in 2017 and are increasing their spend by 5% in 2018, he said. (christopher.matthews@wsj.com, @cmatthews9)

2000 GMT - Schlumberger expects oil producers outside the US to increase investment by 5% in 2018 after three years of "unprecedented under-investment." In a presentation Monday at a Credit Suisse conference, Executive Vice President Patrick Schorn said the growth in international spending is good news for Schlumberger because it generates four to five times higher earning for each dollar spent by international customers compared to a dollar spent by North American customers. Schlumberger predicts additional investment in exploration and production in the Middle East, Russia, Asia and the North Sea. (christopher.matthews@wsj.com; @cmatthews9)

1705 GMT - Nordic markets close mixed with Sweden's OMXS30 index ending the day down 0.5%, the pan-Nordic OMXN40 index off by 0.7% while Oslo's oil-heavy OBX index rose 0.1%. Stocks had a choppy session as investors remain on edge following last week's sharp selloff. In Asia overnight Monday the global stocks rebound continued as most equity indices advanced. Investors spent the European session looking ahead to Wednesday's US inflation release for January. "A stronger outcome than expected could spook markets, the logic being that higher inflation means higher interest rates," SEB said in a note. (dominic.chopping@wsj.com)

1554 GMT - Dirt-cheap crude oil from western Canada is finally catching bids, but it may not last. Western Canadian Select has been $30/bbl cheaper than the US's WTI in recent months because pipelines can't handle growing production and railways don't want to be the short-term fix. And while the past couple days have seen the discount narrow below $20/bbl, Tudor Pickering says this may be partly due to nominations due this week for Enbridge's Mainline, which is rationing space. It cites previous examples where differentials " tightened materially ahead of nominations and subsequently widened." Talk of rail commitments is also helping WCS, but it views that "as a late-Q2 timeline based on commentary from locomotives operators." (dan.molinski@wsj.com)

1447 GMT - Although the International Energy Agency sounded the alarm on breakneck production growth among US crude producers, the IEA also reported that oil held in storage by OECD countries fell faster than expected, according to Tudor Pickering Holt. Inventories were down about 56M barrels, ending about 71M barrels above normal levels, according to Tudor Pickering. The report may give support to oil prices, the analysts said, even as concerns linger over US production.(bradley.olson@wsj.com; @bradnews)

1537 GMT - Investors in Mayan Energy Ltd. should keep an eye on production numbers after the U.S. oiler announced the start of output at two wells in Texas, says S.P. Angel. Mayan said the Gilbreath 19 well at the Forest Hill Field produced 55 barrels of oil in its first 24 hours, while its Morris 1 well at the Stockdale Field has been put on a production rate of 24-26 barrels of oil a day. The broker notes that the news is a positive as it shows the company is capable of focusing on creating shareholder value. "However, what we urge investors and management alike to quantify is what these numbers mean in the context of creating value. Headline instantaneous production numbers don't mean anything until they are accompanied by a duration, decline and recoverability statistic." Shares rise 6.8% to 0.63 pence. (philip.waller@wsj.com)

1533 GMT - Shares in Mosman Oil & Gas PLC rise 53% to 1.38 pence after the U.S.-focused producer and explorer said it has established crude production at the Welch Permian Basin project in Texas. Mosman also said it has achieved oil and gas production from four stacked pay zones at its Arkoma Stacked Pay project in Oklahoma. "The preliminary data from the Welch, Arkoma and Strawn fields suggests that there is sufficient excitement in the underlying asset base to warrant further investment, which will ultimately add significantly to the company's asset base," say analysts at natural resource specialist broker S.P. Angel. (philip.waller@wsj.com)

(END) Dow Jones Newswires

February 14, 2018 04:20 ET (09:20 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
Top 5 Special Reports
Canada's 2020-21 Pea Production May Rise Rise Marginall...
USD/INR (Jan. 20) Testing Short-term Resistance near...
USD/INR (Jan. 20) Testing a Resistance Zone Near 71....
Urad Spot(Chennai INR): Bullish Breakout from a Base/ P...
Urad Spot(Burma USD): Appears Poised for More Strength/...