It was a week where both oil and gas prices finished lower.

On the news front, Chevron Corp. (CVX Quick QuoteCVX - Free Report) -led consortium approved a $36.7 billion expansion for the giant Tengiz oilfield in Kazakhstan, while National Oilwell Varco Inc. (NOV Quick QuoteNOV - Free Report) joined forces with General Electric to offer a standardized FPSO package.

Overall, it was a dismal week for the sector. West Texas Intermediate (WTI) crude futures dived 7.3% to close at $45.41 per barrel, while natural gas prices plunged 6.2% to $2.801 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Energy Transfer Quits Williams Deal, Kinder Morgan Sells 50% Ohio Pipeline Stake.)

Oil prices booked a weekly loss after the U.S. Energy Department's latest inventory release showed a lower-than-expected inventory drop. A stronger dollar, which made the greenback-priced crude dearer for investors holding foreign currency, also played spoilsport. Things further worsened with the Baker Hughes report revealing a rise in the U.S. oil rig count – indicating resurgence in shale drilling activities.

Natural gas also fared badly despite another lower-than-average build. The downward movement could be attributed to predictions of tepid cooling demand with forecasts of milder temperature across the country over the next few days.

Recap of the Week’s Most Important Stories

1.    Leading U.S. oil giants Chevron Corp. and Exxon Mobil Corp. (XOM Quick QuoteXOM - Free Report) , along with their partners, announced plans to invest around $36.8 billion to boost oil output in a Kazakhstan oil field.

Under the plan, Tengizchevroil, which is 50% owned by Chevron and 25% owned by Exxon Mobil, will go ahead with the development of its Future Growth and Wellhead Pressure Management Project. This, in turn, is expected to bolster production in the Tengiz oil field by 260,000 barrels per day. Upon completion, the field is likely to generate 1 million barrels of oil per day, with the first production planned for 2022.

Tengizchevroil, which is also 20% owned by Kazakhstan's KazMunayGas and 5% owned by Russia's Lukoil, will spend  $27.1 billion in facilities, $3.5 billion in wells and $6.2 billion for contingency and escalation. In 1993, Chevron was awarded the rights to develop Tengiz. According to the company, the Tengiz oil field's reservoir is located 12,000 feet below ground, making it the world's deepest operating super-giant oil field. (See More: Chevron, Exxon Mobil to Invest in Tengiz Expansion Project.)

2.    Energy equipment maker National Oilwell Varco Inc. has teamed up with General Electric Co. to offer solutions for Floating Production Storage and Offloading (FPSO) vessels. This collaboration will likely lower the expenses of deepwater oilfield developments significantly.

Both companies believe that the collaboration will likely provide industry-leading topside systems with repeatable deliveries, economies of scale and standardized interfaces. This is expected to considerably trim risks related to delay in construction and hazards related to the overrun of cost for clients working with deepwater oil and gas projects.

It is anticipated that the firms will offer services together by the first half of 2017. Both players look forward to providing top class services to overcome challenges that their clients face in the offshore oil and gas industry. (See More: National Oilwell and GE to Offer Improved FPSO Solutions.)

3.    Houston, TX-based energy infrastructure provider Kinder Morgan Inc. (KMI Quick QuoteKMI - Free Report) and electric utility Southern Co. entered into a natural gas pipeline venture intended to enhance leadership in the development of energy infrastructure of both the firms.

Per the deal, Southern Company will acquire a 50% interest in the SNG pipeline system for $1.5 billion. Kinder Morgan, the operator of the pipeline system will continue with its operatorship.

Having a total length of 7,600 mile, SNG links natural gas supply basins in in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina and Tennessee. SNG is a leading natural gas transporter to Alabama, Georgia and South Carolina. These regions represent U.S’s fastest-growing natural gas demand localities. (See More: Kinder Morgan-Southern Company Natural Gas Pipeline Deal.)

4.    Brazil's state-run energy giant Petrobras (PBR Quick QuotePBR - Free Report) is reportedly planning to divest nine shallow water oil fields in the northeastern states of Ceará and Sergipe. These fields produce a total of 13,000 barrels of oil and equivalent natural gas a day from multiple wells.

The aforesaid sale is in line with the company’s $15 billion divestment program to shed non-core properties. Petrobras remains the most debt-laden company in the oil industry with a total debt of about $126 billion. Also, it has been hard for the company to raise money in the debt as well as the equity markets after its involvement in a money laundering scam. Hence, the company is focusing on massive asset divestitures to reduce debt and strengthen its balance sheet.

The proposed divestment, however, is not expected to result in a significant reduction in the company’s debt. This is because the nine fields contribute even less than 1% of the total production of the company. (See More: Petrobras to Divest Nine Shallow Water Oil Fields.)

5.    Independent energy explorer Pioneer Natural Resources Co. (PXD Quick QuotePXD - Free Report) has received the second and final installment payment of $500 million from pipeline operator Enterprise Products Partners L.P. The payment pertains to the sale of Pioneer Natural Resources’ interests in EFS Midstream LL (Eagle Ford Shale midstream business).

In Jun 2015, Pioneer Natural Resources agreed to sell its 50.1% interest in EFS Midstream to Enterprise Products Partners for $1,030 million after debt repayment.

Enterprise Products Partners paid the first installment of $530 million at the end of Jul 2015. The company intends to use the proceeds for general corporate purposes, such as funding its drilling program across the huge acreage in the Spraberry/Wolfcamp play in the Permian Basin of West Texas.

Price Performance

The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.

Over the course of last week, ‘The Energy Select Sector SPDR’ was down 4.34% on bearish EIA data. Consequently, investors witnessed selling in most market heavyweights. The worst performer was offshore drilling giant Transocean Ltd. (RIG Quick QuoteRIG - Free Report) whose stock price fell 6.82%.

But longer-term, over the last 6 months, the sector tracker has jumped 23.39%. America’s second largest publicly traded oil company Chevron Corp. was the main beneficiary during this period, experiencing a 28.29% price increase.

What’s Next in the Energy World?

As usual, market participants will be closely tracking the regular weekly releases i.e. the U.S. government data on oil and natural gas. Energy traders will also be focusing on the Baker Hughes data on rig count.

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