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Oil & Gas Stock Roundup: Eni's Angola Start-Up, SilverBow's Acquisition & More
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It was a week when oil prices plunged to a three-month low and natural gas futures trended slightly downward.
On the news front, Italian major Eni SpA (E - Free Report) started production at its Cuica development, offshore Angola, while exploration and production company SilverBow Resources (SBOW - Free Report) snapped up energy assets in the Eagle Ford Shale.
Overall, it was a not-so-good week for the sector. West Texas Intermediate (WTI) crude futures lost 8.9% to close at $62.32 per barrel and natural gas prices inched down 0.3% to end at $3.85 per million British thermal units (MMBtu). In particular, the oil market experienced the biggest weekly drop since October after posting a marginal gain the previous week.
Coming back to the week ended Aug 20, crude prices slumped after a surprise build-up in gasoline inventories and worries over a slowdown in energy demand from the spread of the coronavirus Delta variant outweighed the larger-than-expected fall in domestic oil stocks.
Natural gas finished down too, pressured by a bearish inventory report and subdued cooling demand.
Recap of the Week’s Most-Important Stories
1. Eni recently announced that it has commenced production from the Cuica field, located offshore Block 15/06 in Angola. This is a milestone for the Italy-based energy giant as it took only a little more than four months to bring the discovery into production.
Eni discovered the Cuica field in March. The company’s Infrastructure Led Exploration principle is supporting its exploration success in Angola and other places. The latest development further strengthened the Zacks Rank #1 (Strong Buy) company’s presence in the country, wherein it produced 37 million barrels of oil equivalent last year. Eni’s exploration campaign offshore Angola led to several major discoveries that are expected to hold billions of barrels of oil.
Eni is the operator at the Block 15/06 with a 36.84% stake. Another 36.84% interest is owned by SonangolPesquisa e Produção, while the remaining 26.32% is held by SSI Fifteen Limited. (Eni Begins Production From Cuica Field Offshore Angola)
2. SilverBow Resources entered an agreement to acquire oil and gas assets in the Eagle Ford Shale from an unidentified seller. The total consideration for the Eagle Ford assets involves $33 million, which includes nearly 1.5 million shares of SilverBow common stock. With the latest natural gas-rich purchase, SilverBow continues to expand its Lower 48 acreage to gain a competitive edge in the marketplace.
Earlier this month, the natural gas producer announced another deal worth $24 million, which increased its Eagle Ford and Austin Chalk locations. The acquisition also provided additional ownership interest in producing wellbores in the La Mesa position. The deal will add 10 million cubic feet per day of net gas production, 850 net acres and 17 net drilling locations.
The latest acquisition will increase the company’s gas portfolio in the Western Eagle Ford, while adding oil acreage in three new counties. During April, the to-be-acquired properties produced nearly 1,580 net barrels of oil equivalent per day, of which 39% comprised liquids. The transaction is expected to close on or about Oct 1, 2021. (SilverBow Signs Agreement to Acquire Eagle Ford Assets)
3. China Petroleum & Chemical Corporation or Sinopec , made a natural gas discovery at the Zhongjiang gas field in the Sichuan province of China.
Located in Zhongjiang County, Deyang City, the Zhongjiang field is an ordinary sandstone gas reservoir, with low porosity, low permeability and strong concealment. The main gas reservoir is 2,000-3,000 meters deep and covers 404.9 square kilometers.
The Zhongjiang field produced 5.29 billion cubic meters (bcm) of gas until now. For two years, the field produced more than 1 bcm of gas every year, which is equivalent to meeting the daily gas consumption of 5.5 million households per year. The latest discovery increases the proved natural gas reserves at the Zhongjiang field to more than 34 bcm. (Sinopec Strikes Big Gas Find at China's Zhongjiang Field)
4. Energy infrastructure operator TC Energy (TRP - Free Report) signed a memorandum of understanding with Irving Oil Limited to explore the development of clean energy projects in Canada. Both companies identified a series of potential exploration projects focused on decarbonizing existing assets and implementing technologies to reduce emissions. The projects seek to reduce the emission of greenhouse gases and creating opportunities in New Brunswick and other areas in Atlantic Canada.
TC Energy and Irving Oil have long-term experience in collaborative activities. This includes the development and operation of the Grandview Cogeneration facility, which is a 90-MW low-carbon power plant placed inside the Saint John refinery.
Per the latest MoU, the partnership will initially focus on upgrade projects at Irving Oil’s refinery in Saint John, New Brunswick. It aims to significantly reduce emissions by the production and use of low-carbon power generation. (TC Energy Signs MoU for Clean Energy Projects in Canada)
5. ConocoPhillips (COP - Free Report) recently witnessed a setback for the Willow oil development project in Alaska. U.S. District Court Judge Sharon Gleason vacated Bureau of Land Management's approval for the project on Aug 18 saying the reviews were inadequate, as they didn’t incorporate emissions from foreign oil consumption in the environmental analysis.
The Willow oil development project was expected to produce up to 160,000 barrels of oil per day, per the Bureau of Land Management. Over three decades, the project can churn around 590 million barrels of oil. It received approval from the Trump administration by 2020-end. Also, the Biden administration deemed the oil project as legal.
ConocoPhillips is expected to review the court’s decision and assess other options for the Willow oil project. The agencies involved — including the U.S. Fish and Wildlife Service — and the upstream company will likely have to do parts of the environmental analysis again. Earlier, the oil and gas explorer was expected to make construction decision on the project by year-end. A new environmental analysis might introduce delays in the $8-billion capital project. It can also affect the expected new oil volumes in the Trans-Alaska Pipeline System, which is currently running below capacity. (ConocoPhillips' Willow Oil Project Faces Legal Setback)
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 six months.
The Energy Select Sector SPDR — a popular way to track energy companies — was down 7.1% last week. The worst performer was Houston-TX based upstream biggie Occidental Petroleum (OXY - Free Report) whose stock lost 14.9%.
Over the past six months, the sector tracker has decreased 2%. Refining giant Valero Energy (VLO - Free Report) was the major casualty during the period, experiencing a 16.8% price depreciation.
What’s Next in the Energy World?
As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will be closely tracking the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the energy service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Last but not the least, investors will closely scrutinize the effects of the rapidly spreading Delta variant outbreak on crude demand.
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Oil & Gas Stock Roundup: Eni's Angola Start-Up, SilverBow's Acquisition & More
It was a week when oil prices plunged to a three-month low and natural gas futures trended slightly downward.
On the news front, Italian major Eni SpA (E - Free Report) started production at its Cuica development, offshore Angola, while exploration and production company SilverBow Resources (SBOW - Free Report) snapped up energy assets in the Eagle Ford Shale.
Overall, it was a not-so-good week for the sector. West Texas Intermediate (WTI) crude futures lost 8.9% to close at $62.32 per barrel and natural gas prices inched down 0.3% to end at $3.85 per million British thermal units (MMBtu). In particular, the oil market experienced the biggest weekly drop since October after posting a marginal gain the previous week.
Coming back to the week ended Aug 20, crude prices slumped after a surprise build-up in gasoline inventories and worries over a slowdown in energy demand from the spread of the coronavirus Delta variant outweighed the larger-than-expected fall in domestic oil stocks.
Natural gas finished down too, pressured by a bearish inventory report and subdued cooling demand.
Recap of the Week’s Most-Important Stories
1. Eni recently announced that it has commenced production from the Cuica field, located offshore Block 15/06 in Angola. This is a milestone for the Italy-based energy giant as it took only a little more than four months to bring the discovery into production.
Eni discovered the Cuica field in March. The company’s Infrastructure Led Exploration principle is supporting its exploration success in Angola and other places. The latest development further strengthened the Zacks Rank #1 (Strong Buy) company’s presence in the country, wherein it produced 37 million barrels of oil equivalent last year. Eni’s exploration campaign offshore Angola led to several major discoveries that are expected to hold billions of barrels of oil.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Eni is the operator at the Block 15/06 with a 36.84% stake. Another 36.84% interest is owned by SonangolPesquisa e Produção, while the remaining 26.32% is held by SSI Fifteen Limited. (Eni Begins Production From Cuica Field Offshore Angola)
2. SilverBow Resources entered an agreement to acquire oil and gas assets in the Eagle Ford Shale from an unidentified seller. The total consideration for the Eagle Ford assets involves $33 million, which includes nearly 1.5 million shares of SilverBow common stock. With the latest natural gas-rich purchase, SilverBow continues to expand its Lower 48 acreage to gain a competitive edge in the marketplace.
Earlier this month, the natural gas producer announced another deal worth $24 million, which increased its Eagle Ford and Austin Chalk locations. The acquisition also provided additional ownership interest in producing wellbores in the La Mesa position. The deal will add 10 million cubic feet per day of net gas production, 850 net acres and 17 net drilling locations.
The latest acquisition will increase the company’s gas portfolio in the Western Eagle Ford, while adding oil acreage in three new counties. During April, the to-be-acquired properties produced nearly 1,580 net barrels of oil equivalent per day, of which 39% comprised liquids. The transaction is expected to close on or about Oct 1, 2021. (SilverBow Signs Agreement to Acquire Eagle Ford Assets)
3. China Petroleum & Chemical Corporation or Sinopec , made a natural gas discovery at the Zhongjiang gas field in the Sichuan province of China.
Located in Zhongjiang County, Deyang City, the Zhongjiang field is an ordinary sandstone gas reservoir, with low porosity, low permeability and strong concealment. The main gas reservoir is 2,000-3,000 meters deep and covers 404.9 square kilometers.
The Zhongjiang field produced 5.29 billion cubic meters (bcm) of gas until now. For two years, the field produced more than 1 bcm of gas every year, which is equivalent to meeting the daily gas consumption of 5.5 million households per year. The latest discovery increases the proved natural gas reserves at the Zhongjiang field to more than 34 bcm. (Sinopec Strikes Big Gas Find at China's Zhongjiang Field)
4. Energy infrastructure operator TC Energy (TRP - Free Report) signed a memorandum of understanding with Irving Oil Limited to explore the development of clean energy projects in Canada. Both companies identified a series of potential exploration projects focused on decarbonizing existing assets and implementing technologies to reduce emissions. The projects seek to reduce the emission of greenhouse gases and creating opportunities in New Brunswick and other areas in Atlantic Canada.
TC Energy and Irving Oil have long-term experience in collaborative activities. This includes the development and operation of the Grandview Cogeneration facility, which is a 90-MW low-carbon power plant placed inside the Saint John refinery.
Per the latest MoU, the partnership will initially focus on upgrade projects at Irving Oil’s refinery in Saint John, New Brunswick. It aims to significantly reduce emissions by the production and use of low-carbon power generation. (TC Energy Signs MoU for Clean Energy Projects in Canada)
5. ConocoPhillips (COP - Free Report) recently witnessed a setback for the Willow oil development project in Alaska. U.S. District Court Judge Sharon Gleason vacated Bureau of Land Management's approval for the project on Aug 18 saying the reviews were inadequate, as they didn’t incorporate emissions from foreign oil consumption in the environmental analysis.
The Willow oil development project was expected to produce up to 160,000 barrels of oil per day, per the Bureau of Land Management. Over three decades, the project can churn around 590 million barrels of oil. It received approval from the Trump administration by 2020-end. Also, the Biden administration deemed the oil project as legal.
ConocoPhillips is expected to review the court’s decision and assess other options for the Willow oil project. The agencies involved — including the U.S. Fish and Wildlife Service — and the upstream company will likely have to do parts of the environmental analysis again. Earlier, the oil and gas explorer was expected to make construction decision on the project by year-end. A new environmental analysis might introduce delays in the $8-billion capital project. It can also affect the expected new oil volumes in the Trans-Alaska Pipeline System, which is currently running below capacity. (ConocoPhillips' Willow Oil Project Faces Legal Setback)
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 six months.
Company Last Week Last 6 Months
XOM -7.1% -0.3%
CVX -6.3% -2.9%
COP -5.7% +5.2%
OXY -14.9% -9.9%
SLB -6.7% -0.9%
RIG -10.3% -2.4%
VLO -9.1% -16.8%
MPC -6.5% +1.9%
The Energy Select Sector SPDR — a popular way to track energy companies — was down 7.1% last week. The worst performer was Houston-TX based upstream biggie Occidental Petroleum (OXY - Free Report) whose stock lost 14.9%.
Over the past six months, the sector tracker has decreased 2%. Refining giant Valero Energy (VLO - Free Report) was the major casualty during the period, experiencing a 16.8% price depreciation.
What’s Next in the Energy World?
As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will be closely tracking the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the energy service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Last but not the least, investors will closely scrutinize the effects of the rapidly spreading Delta variant outbreak on crude demand.