It was a week where oil prices tallied a small gain, while natural gas futures fell from their 2-year highs.

On the news front, American energy giant ExxonMobil Corp. (XOM Quick QuoteXOM - Free Report) elected Darren W. Woods to succeed Rex Tillerson as chairman and chief executive of the company, while London-based BP plc (BP Quick QuoteBP - Free Report) agreed to take a 10% stake in Abu Dhabi's ADCO onshore oil concession for 40 years.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures edged up 0.8% to close at $51.90 per barrel, natural gas prices ended down 8.8% to $3.415 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: CVX Spending Cut, PTEN Acquisition and More.)

Oil logged a modest weekly gain as traders and analysts grow more confidant that producers will adhere to their agreed output cut quotas, which will reduce the global inventory glut next year. However, the potential return of supply from Libya, surge in U.S. crude production, strong dollar and a burgeoning rig count kept prices in check.  

Meanwhile, natural gas turned sharply lower despite a bigger-than-expected withdrawal as the heating fuel was pressured by forecasts of warmer weather that translates into weak demand.

Recap of the Week’s Most Important Stories

1.    U.S. energy behemoth ExxonMobil Corp. announced the appointment of Darren Woods as the chairman and CEO. Woods would succeed Rex Tillerson, who is stepping down from the position after President-elect Donald Trump put forth his name as secretary of state.

Woods has been associated with ExxonMobil for nearly 25 years. Woods earned a good reputation in ExxonMobil's refinery and chemicals businesses and emerged as Tillerson's potential successor a year ago, when he was named president and joined the board of directors.

Woods is expected to take over the top spot on Jan 1. Tillerson was to retire in early 2017, when he will turn 65 – the mandatory retirement age at ExxonMobil. His selection by Trump for the nation's top diplomatic job – subject to Senate approval – brought his retirement forward.

Most analysts expect the change in leadership to be smooth. However, a few substantial changes in policy or leadership style are expected under Woods. Given that ExxonMobil is the world's largest publicly traded oil company, the strategic decisions have been taken with a long timeframe in view. (Read more: ExxonMobil Names Darren Woods as CEO; Tillerson Resigns.)

2.    British oil major BP plc inked an agreement with the Supreme Petroleum Council of the Emirate of Abu Dhabi and the Abu Dhabi National Oil Company (“ADNOC”) per which, the company gained an interest of 10% in Abu Dhabi Company for Onshore Petroleum Operations Limited (“ADCO”) onshore oil concession.

The ADCO concession has a life of 40 years. Apart from the interest in the ADCO concession, BP has gained a 10% ownership in ADCO, which operates the concession. With this agreement, BP becomes the asset leader for the Bab asset group within the concession.

The ADCO concession, which comprises the Bab, Bu Hasa, Shah and Asab fields, is estimated to hold total resources of approximately 20–30 billion barrels of oil equivalent over the term of the concession. In 2016, the total production is anticipated to average around 1.66 million barrels of oil per day (bpd). Brought online in Jan 2015, the concession is valid until the end of 2054. (Read more: BP Clinches 10% Interest in Abu Dhabi's ADCO Concession.)

3.    Oil and gas finder Anadarko Petroleum Corp. made a number of announcements, including the acquisition of Freeport-McMoRan Oil & Gas's deepwater Gulf of Mexico (“GoM”) assets for $2 billion, an increase in the oil volume projection, plans to accelerate rig activity and an update on deepwater drilling activities in the Gulf of Mexico.

The acquisition of the GoM assets will make Anadarko the largest operator of floating production facilities in the deepwater GOM, besides doubling its ownership in the Lucius development to nearly 49% and doubling GoM production to over 160,000 barrels of oil equivalent (“BOE”) per day.

The company also informed that increased investment in the U.S. Delaware and DJ basins, an improving cost structure and midstream infrastructure advantages is expected to position Anadarko to achieve a five-year compounded oil growth rate of 12–14% amid the $50–$60 per barrel oil price environment.

Further, Anadarko noted that its Warrior exploration well has encountered over than 210 net feet of oil pay, while the Phobos appraisal well has witnessed over 90 net feet of high-quality oil pay. Anadarko owns a 65% working interest in Warrior and a 100% working interest in Phobos. (Read more: Anadarko Discloses New Buyout, Lifts Oil Volume Outlook.)

4.    Europe’s largest energy company Royal Dutch Shell plc announced that it has entered into an agreement to divest its aviation fuels business in Australia to Viva Energy Australia Pty. Ltd. for about US$250 million. Shell currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The transaction is expected to close by mid-2017. Post divestiture, however, the Australian business unit will continue to use the Shell brand and logo. Moreover, employees of Shell Aviation Australia will remain employed by the company after the deal.

In a separate discussion, Shell reported that it has sold its 31.2% stake in Showa Shell Sekiyu K.K. to Idemitsu Kosan Co. Ltd. The sale follows anti-trust approval from the Japan Fair Trade Commission and is worth US$1.4 billion. Post completion of the deal, Shell now retains 3.8% stake in the company.

The above-mentioned deals by Shell are in line with its $30 billion divestment initiative. Shell intends to offload assets worth as much as $30 billion by exiting operations in five to 10 countries. It has, however, made relatively slow progress in this regard as the oil price rout dampened buyer enthusiasm for deals at the prices Shell is targeting. In 2016, Shell sold or agreed to sell around $6 billion of assets.

5.    Brazil's state-run energy giant Petrobras (PBR Quick QuotePBR - Free Report) announced that it has inked definitive terms for a $5 billion, 10-year financing agreement with China Development Bank Corp. Also, the company declared that it has entered into an oil supply accord with Chinese companies. We believe that through these moves the company is seeking stable revenues for the future following the corruption scandal and its struggle with huge debt load.

Under Petrobras’ 10-year financing deal with China Development Bank Corp., the company will be selling a total volume of 100,000 barrels per day to China National United Oil Corporation, China Zhenhua Oil Co. Ltd, and Chemchina Petrochemical Co. Ltd. over a period of 10 years.

Petrobras, with net debt of around $103.56 billion, is the most indebted energy company in the world. The company is undergoing a deep financial crisis due to low oil prices and the loss of goodwill owing to the discovery of massive corruption within its ranks. (Read more: Petrobras Signs Chinese Funding and Oil Supply Deal for $5B.)

Price Performance

The following table shows the price movement of some 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 up 0.74%. Consequently, investors witnessed buying in most market heavyweights. The best performer was Houston, TX-based energy explorer Occidental Petroleum Corp. (OXY Quick QuoteOXY - Free Report) whose stock price soared 6.41%.

Longer-term, over the last 6 months, the sector tracker has gained 12.88%. Rig supplier Transocean Ltd. (RIG Quick QuoteRIG - Free Report) was one of the major beneficiaries during this period, experiencing a 35.33% 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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