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Oil & Gas Stock Roundup: BP & Shell Grab Headlines This Week
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It was a week when oil prices rose above $70 once again but natural gas futures registered further decline.
London-based oil major BP plc (BP - Free Report) agreed to snap up U.S. electric vehicle charging provider Amply Power, why continental rival Royal Dutch Shell announced hydrocarbon discovery in the deepwater Gulf of Mexico. News related to ExxonMobil (XOM - Free Report) , ConocoPhillips (COP - Free Report) and Cenovus Energy (CVE - Free Report) also made it to the top stories.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 8.2% to close at $71.67 per barrel but natural gas prices lost around 5% to end at $3.925 per million British thermal units (MMBtu). In particular, the oil market reversed its decline from the previous six weeks.
Coming back to the week ended Dec 10, oil prices bounced back as fears of a slowdown in demand recovery from the Omicron variant subsided with the strain likely to be less deadly than expected as available vaccines might be effective in neutralizing it.
Meanwhile, natural gas notched another weekly loss, hurt by weather forecasts indicating above-normal temperatures over most of the country in the coming days.
Recap of the Week’s Most-Important Stories
1. BP announced that it acquired Amply Power for an undisclosed amount as part of plans to help the world reach net-zero emissions by 2050. The transaction represents the British energy behemoth's first major foray into the electric vehicle ("EV") charging space in the United States, one of the largest automotive markets globally.
Amply Power is an EV charging and energy infrastructure provider for fleets, which operate trucks, transit and school buses, vans, and light-duty vehicles. Per the terms of the deal, Amply Power will continue operating independently as part of BP's business portfolio.
BP is planning to accelerate electrification in the fleet segment, which is crucial to reducing emissions from the transport sector. In 2019, emissions from the transport sector accounted for nearly 29% of total U.S. greenhouse gas emissions, making it the largest contributor to greenhouse gas emissions in the United States.
2. A subsidiary of Royal Dutch Shell recently made a major oil discovery at the Blacktip North prospect in the Alaminos Canyon block 336 in the deep-water U.S. Gulf of Mexico (GoM). At multiple stages, the Blacktip North Well encountered more than 300 feet (91 meters) of net oil pay and an assessment is underway to further determine development options.
Blacktip North is run by Shell, with a stake of 89.49%. It is located about 30 miles northeast of the Whale discovery, 4.5 miles northeast of the recently reviewed Blacktip discovery and 42 miles from the Perdido host. The discovery well was drilled at a water depth of 8,443 meters by Transocean’s ultra-deepwater drillship Deepwater Poseidon.
Shell's Deepwater executive vice president Paul Goodfellow believes that the Blacktip North potential is the most recent example of fresh resources being discovered in Shell's lucrative corridors. The Perdido Corridor, for example, is at the center of value creation in the Gulf of Mexico and represents an opportunity to utilize Europe’s largest oil company’s existing infrastructure to unlock the full value potential of its finds. (Shell Hits Oil in Gulf of Mexico's Blacktip North Prospect)
3 ExxonMobil announced plans to achieve net-zero emissions from operated assets in the Permian Basin by 2030.
Energy companies have been under immense pressure due to the growing urgency from investors and environmentalists to curb climate change. ExxonMobil's latest initiative is part of a company-wide effort to reduce upstream greenhouse gas emissions intensity by 40-50% by 2030 from the 2016 levels. The move will expand XOM's emission-reduction plans for unconventional operations in New Mexico and Texas.
The U.S. energy major intends to accomplish its net-zero targets by electrifying operations, allocating more investments in methane mitigation and detection technology, eliminating routine gas flaring and upgrading equipment. XOM also plans to use emission offset technology, including nature-based solutions. (ExxonMobil Aims Net-Zero Emissions for Permian Operation)
4. ConocoPhillips announced a preliminary 2022 capital budget following the recent acquisition of Permian Basin assets. Next year, the Zacks Rank #1 (Strong Buy) upstream biggie expects a company-wide capital expenditure of $7.2 billion, which includes $700 million associated with the Permian asset acquisition. The capital budget increased from $5.3 billion expected for 2021.
About 60% of the total budget will be addressed to the Lower 48 for short-cycle projects across ConocoPhillips’ high-quality unconventional asset base. The rest will be directed to mid-and longer-cycle projects across COP’s diverse Alaska and international regions. The intended capital involves $200 million for emission-reduction projects across the company’s global operations and investments in multiple low-carbon technologies to address end-use emissions.
In 2022, ConocoPhillips expects to produce an average of 1.8 million barrels of oil equivalent per day (boe/d) compared with 1.5 million boe/d expected this year. The production estimate includes about 200,000 boe/d expected from the Permian transaction. (ConocoPhillips States Preliminary Capital Budget for 2022)
5. Cenovus Energy has provided a glimpse of its capital budget for 2022. For the next year, Cenovus Energy has set guidance for capital spending in the range of $2.6 billion to $3 billion. This suggests an improvement from this year’s capital spending guidance of $2.3 billion to $2.7 billion, as reported by CVE.
Of the total capital budget for 2022, Cenovus Energy has allocated $1.7 billion to $2 billion toward upstream operations. In upstream, $1.35 billion to $1.6 billion will likely be invested by CVE for oil sand operations.
With higher capital spending, Cenovus Energy expects its production to improve year over year in 2022. From upstream operations, the company expects average production in the range of 780 thousand barrels of oil equivalent (Mboe) to 820 Mboe, suggesting an improvement of 4% from this year’s production guidance of 750 Mboe to 790 Mboe. (Cenovus Guides for 2022 Production & Capital Spending)
Price Performance
The following table shows the price movement of some 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 up 3.8% last week. Over the past six months, the sector tracker has increased 3.4%.
What’s Next in the Energy World?
As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track 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 oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Last but not least, investors will keep an eye on the potential demand hit from the Omicron variant.
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Oil & Gas Stock Roundup: BP & Shell Grab Headlines This Week
It was a week when oil prices rose above $70 once again but natural gas futures registered further decline.
London-based oil major BP plc (BP - Free Report) agreed to snap up U.S. electric vehicle charging provider Amply Power, why continental rival Royal Dutch Shell announced hydrocarbon discovery in the deepwater Gulf of Mexico. News related to ExxonMobil (XOM - Free Report) , ConocoPhillips (COP - Free Report) and Cenovus Energy (CVE - Free Report) also made it to the top stories.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 8.2% to close at $71.67 per barrel but natural gas prices lost around 5% to end at $3.925 per million British thermal units (MMBtu). In particular, the oil market reversed its decline from the previous six weeks.
Coming back to the week ended Dec 10, oil prices bounced back as fears of a slowdown in demand recovery from the Omicron variant subsided with the strain likely to be less deadly than expected as available vaccines might be effective in neutralizing it.
Meanwhile, natural gas notched another weekly loss, hurt by weather forecasts indicating above-normal temperatures over most of the country in the coming days.
Recap of the Week’s Most-Important Stories
1. BP announced that it acquired Amply Power for an undisclosed amount as part of plans to help the world reach net-zero emissions by 2050. The transaction represents the British energy behemoth's first major foray into the electric vehicle ("EV") charging space in the United States, one of the largest automotive markets globally.
Amply Power is an EV charging and energy infrastructure provider for fleets, which operate trucks, transit and school buses, vans, and light-duty vehicles. Per the terms of the deal, Amply Power will continue operating independently as part of BP's business portfolio.
BP is planning to accelerate electrification in the fleet segment, which is crucial to reducing emissions from the transport sector. In 2019, emissions from the transport sector accounted for nearly 29% of total U.S. greenhouse gas emissions, making it the largest contributor to greenhouse gas emissions in the United States.
2. A subsidiary of Royal Dutch Shell recently made a major oil discovery at the Blacktip North prospect in the Alaminos Canyon block 336 in the deep-water U.S. Gulf of Mexico (GoM). At multiple stages, the Blacktip North Well encountered more than 300 feet (91 meters) of net oil pay and an assessment is underway to further determine development options.
Blacktip North is run by Shell, with a stake of 89.49%. It is located about 30 miles northeast of the Whale discovery, 4.5 miles northeast of the recently reviewed Blacktip discovery and 42 miles from the Perdido host. The discovery well was drilled at a water depth of 8,443 meters by Transocean’s ultra-deepwater drillship Deepwater Poseidon.
Shell's Deepwater executive vice president Paul Goodfellow believes that the Blacktip North potential is the most recent example of fresh resources being discovered in Shell's lucrative corridors. The Perdido Corridor, for example, is at the center of value creation in the Gulf of Mexico and represents an opportunity to utilize Europe’s largest oil company’s existing infrastructure to unlock the full value potential of its finds. (Shell Hits Oil in Gulf of Mexico's Blacktip North Prospect)
3 ExxonMobil announced plans to achieve net-zero emissions from operated assets in the Permian Basin by 2030.
Energy companies have been under immense pressure due to the growing urgency from investors and environmentalists to curb climate change. ExxonMobil's latest initiative is part of a company-wide effort to reduce upstream greenhouse gas emissions intensity by 40-50% by 2030 from the 2016 levels. The move will expand XOM's emission-reduction plans for unconventional operations in New Mexico and Texas.
The U.S. energy major intends to accomplish its net-zero targets by electrifying operations, allocating more investments in methane mitigation and detection technology, eliminating routine gas flaring and upgrading equipment. XOM also plans to use emission offset technology, including nature-based solutions. (ExxonMobil Aims Net-Zero Emissions for Permian Operation)
4. ConocoPhillips announced a preliminary 2022 capital budget following the recent acquisition of Permian Basin assets. Next year, the Zacks Rank #1 (Strong Buy) upstream biggie expects a company-wide capital expenditure of $7.2 billion, which includes $700 million associated with the Permian asset acquisition. The capital budget increased from $5.3 billion expected for 2021.
You can see the complete list of today’s Zacks #1 Rank stocks here.
About 60% of the total budget will be addressed to the Lower 48 for short-cycle projects across ConocoPhillips’ high-quality unconventional asset base. The rest will be directed to mid-and longer-cycle projects across COP’s diverse Alaska and international regions. The intended capital involves $200 million for emission-reduction projects across the company’s global operations and investments in multiple low-carbon technologies to address end-use emissions.
In 2022, ConocoPhillips expects to produce an average of 1.8 million barrels of oil equivalent per day (boe/d) compared with 1.5 million boe/d expected this year. The production estimate includes about 200,000 boe/d expected from the Permian transaction. (ConocoPhillips States Preliminary Capital Budget for 2022)
5. Cenovus Energy has provided a glimpse of its capital budget for 2022. For the next year, Cenovus Energy has set guidance for capital spending in the range of $2.6 billion to $3 billion. This suggests an improvement from this year’s capital spending guidance of $2.3 billion to $2.7 billion, as reported by CVE.
Of the total capital budget for 2022, Cenovus Energy has allocated $1.7 billion to $2 billion toward upstream operations. In upstream, $1.35 billion to $1.6 billion will likely be invested by CVE for oil sand operations.
With higher capital spending, Cenovus Energy expects its production to improve year over year in 2022. From upstream operations, the company expects average production in the range of 780 thousand barrels of oil equivalent (Mboe) to 820 Mboe, suggesting an improvement of 4% from this year’s production guidance of 750 Mboe to 790 Mboe. (Cenovus Guides for 2022 Production & Capital Spending)
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
Company Last Week Last 6 Months
XOM +3.5% +1.4%
CVX +3.4% +9.7%
COP +3.3% +22.5%
OXY +5.6% +8.6%
SLB +6% -11.2%
RIG +10.6% -24.6%
VLO +1.6% -12.8%
MPC +3.3% +0.8%
The Energy Select Sector SPDR — a popular way to track energy companies — was up 3.8% last week. Over the past six months, the sector tracker has increased 3.4%.
What’s Next in the Energy World?
As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track 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 oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Last but not least, investors will keep an eye on the potential demand hit from the Omicron variant.