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Energy & Utilities Roundup: Market Talk

1 Jun 2018 8:20 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.

0617 GMT - Australia's main stock index logged its first 3-week losing streak since late March as the market today was once again irritated by recent sore spots. The S&P/ASX 200 fell 0.4% to 5990.4, putting the week's drop at 0.7%. It's struggled after nearly breaking early 2018's 10-year high, with commodities and financials being key pressure points. Energy fell 0.8% today while financials lost 0.9%, hitting another 19-month low. But materials climbed 0.5%. Notable individuals included ear-implant firm Cochlear jumping 3.7% to fresh record highs. (kevin.kingsbury@wsj.com; @kevinkingsbury)

0145 GMT - Citi doesn't think private-equity firm Lone Star will get a clear run at Sino Gas & Energy despite yesterday's A$530 million($401 million) deal. The investment bank thinks a A$4.5 million breakup fee isn't likely to deter Chinese firms already familiar with Sino Gas' assets or able to better navigate operating risks there. "We think it makes sense for JV partner [China New Energy Mining] or an integrated gas firm such as ENN to counteroffer," says Citi, whose stock target has been A$0.27. The Lone Start deal would pay A$0.25. Shares are up 3.2% at A$0.24. (david.winning@wsj.com; @dwinningWSJ)

2307 GMT -- Canaccord thinks private-equity firm Lone Star has low-balled its offer Sino Gas & Energy. The broker lifts its price target by 25% to A$0.30/share, well above Lone Star's A$0.25/share bid that has been accepted by the Sino Gas board. "Given the growth outlook for Chinese gas demand and other relevant transactions in the space, more value could be extracted," Canaccord says. It views a A$4.5 million break free agreed between Lone Star and Sino Gas as a very small barrier to any rival offer. (david.winning@wsj.com; @dwinningWSJ)

2200 GMT - The offshore oil sector was kicked to the curb during the oil downturn as investors faced with pricing uncertainty shunned pricey deepwater projects with long lead times in favor of quick-turnaround, terra firma, sure-things in places like west Texas. But this tact may be flipping onto its head as onshore pipeline shortages, port constraints and other bottlenecks start making onshore less attractive. "The onshore vs offshore debate is heating up," say oilfield services analysts at Wells Fargo, noting "offshore fundamentals slowly improving, lower-48 growth hamstrung by takeaway capacity and self-imposed capital discipline, and huge price differentials between Brent and Permian prices skewing risk for these respective markets in opposite directions." (dan.molinski@wsj.com)

1949 GMT - Facebook investors came armed with fiery questions at the social-media company's annual meeting Thursday. "If privacy is a human right, than we contend that FB's poor stewardship of user data is tantamount to a human rights violation," a representative of Northstar Asset Management said, pointing to the fact that more than 80 million users had their data compromised by Cambridge Analytica, the political firm that bought Facebook user data and aided the Trump campaign. "Scandal is not good for the company's bottom line," another investor said. Executives responded by reiterating that Facebook is taking a broader view of its responsibilities. (deepa.seetharaman@wsj.com)

1658 GMT - The possibility of energy supply shortages during hurricane season is nerve-wracking, analysts at Societe Generale say. Last year's hurricane season led to price spikes in gasoline after storms disrupted refineries' operations along the Gulf Coast. This year, the impact may be more sharply felt with less crude sloshing around in storage. Natural gas, in which stockpiles have fallen well below historical averages for this time of year, could also see some price spikes if power generation demands surge, according to analysts. "The memories of last year's hurricane season still haunt traders, and the market will be quick to respond to any looming hurricane," Societe Generale wrote in a note. (stephanie.yang@wsj.com)

1624 GMT - The EIA's monthly "914" report on oil production--deemed more reliable than weekly data--shows oil output hit 10.5M bpd in March. That's way above March 2017's 9.1M bpd, and also tops February's 10.3M as well as the 10.4M the weekly data had pointed to for March. The data is bearish as it highlights a rush to pump oil by US producers in places like Texas, even as bottlenecks with pipelines and shipping ports persist. Oil prices extend their losses and are now 1.8% lower at $66.98/bbl. (dan.molinski@wsj.com)

1553 GMT - Oil prices begin to decline again after initially rising on EIA weekly data whose headline number on crude oil supplies saw a bullish 3.6M-bbl decline. Despite that drop in crude supplies, fuel supplies increased virtually across the board, leading to an overall bearish increase of 1.8M bbls in "total stocks" of petroleum and petroleum products to 1.19B, the most since early March. Also, US oil production shot up to another record 10.8M bpd. The Nymex oil contract for June delivery is 1.4% lower at $67.27/bbl. (dan.molinski@wsj.com)

1526 GMT - Two refiners win tens of millions of dollars in biofuels credits from the EPA for harm in years past, an unprecedented move likely to keep fueling a fight over how the federal government manages the renewable-fuels program, according to a person familiar with the matter. HollyFrontier and Sinclair Oil argue that the EPA wrongly denied them waivers as far back as 2014 and receive credits they can use this year, according to the person. Refiner shares rise broadly, with HollyFrontier up 2% to $79.21. Sinclair is not publicly traded. HollyFrontier share prices triple in the past year--with many of its peers doubling--as the Trump administration has issued a slew of waivers citing economic hardship for small refiners dealing with prices for the credits that had been skyrocketing. (tim.puko@wsj.com)

1420 GMT - Shell says it's starting deepwater production one year ahead of time at a development called Kaikias in the Gulf of Mexico of Louisiana's coast, with an estimated peak daily output of 40k bbls of oil-equivalent. "Shell has reduced costs by around 30% at this deep-water project since taking the investment decision in early 2017, lowering the forward-looking, break-even price to less than $30 per barrel of oil," the company says. While the news could suggest deepwater projects are revving up as US oil prices hit multi-year highs around $70/bbl, analysts say the offshore deepwater sub-sector in general will remain subdued until 2019 or 2020. (dan.molinski@wsj.com)

0920 GMT - There's optimism around Oil and Natural Gas after its 36% jump in F4Q earnings. Some analysts are boosting new-year profit targets some 10%, with Jefferies saying the Indian firm's overseas unit should rebound with oil prices and as currency-related impacts fade. Meanwhile, Prabhudas Lilladher says earnings should also get a lift from increased natural-gas volume. Shares are up 1.2%, among the better performers in India today and as many energy stocks in Asia have rebounded strongly today following Wednesday's oil-price bounce. ONGC is now down 9.5% this year. (debiprasad.nayak@wsj.com)

0827 GMT - While Hong Kong stocks snapped a 2-day losing streak with a strong rebound, they failed to avoid a 3rd monthly drop in the past 4. The Hang Seng rose 1.4% today to 30468.56, reversing most of yesterday's decline. But it still fell 1.1% for May. Financials, which made up more than half of yesterday's drop, was the source of nearly half of today's gain. Energy also helped following the overnight jump in oil prices, with Sinopec jumping 6.1% and PetroChina 3.3%. The China Enterprises Index rebounded 1.8% today, cutting its May decline to 2.9%. (chester.yung@wsj.com; @chester_yung)

(END) Dow Jones Newswires

June 01, 2018 04:20 ET (08:20 GMT)

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