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Oil & Gas Stock Roundup: Shell's Q4 Update, Exxon's Discoveries & More
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It was a week when both oil and natural gas prices settled higher.
Europe’s largest energy company Royal Dutch Shell issued an update on its upcoming Q4 earnings, while U.S. behemoth ExxonMobil (XOM - Free Report) confirmed two oil discoveries off the coast of Guyana. News related to Equinor (EQNR - Free Report) and Enterprise Products Partners (EPD - Free Report) also made it to the headlines.
Overall, it was another good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 4.9% to close at $78.90 per barrel, while natural gas prices rose 5% to end at $3.916 per million British thermal units (MMBtu). In fact, both the oil and natural gas markets managed to maintain their forward momentum from the previous two weeks.
Coming back to the week ended Jan 7, the positive price action could be attributed to a report from the Energy Information Administration ("EIA") showing draw in crude stockpiles. The OPEC+ cartel’s decision to stick to its planned easing of production cuts in February and supply disruptions in the Central Asian country of Kazakhstan also boosted the commodity.
Natural gas notched a weekly gain too, buoyed by weather forecasts, indicating bouts of cold temperatures over most of the country in the coming days.
Recap of the Week’s Most-Important Stories
1. Royal Dutch Shell will use the remaining $5.5 billion of the Permian sale proceeds to buy back stock “at pace.” The cash pledge is part of the $7 billion payout investors got from $9.5 billion that the company received last year for its assets in America’s biggest oil field. Shell already commenced up to $1.5 billion of share repurchases in December, which will continue through Jan 28, 2022.
Shell released a preliminary report for the October-December period wherein the Anglo-Dutch biggie informed that the Permian-related disbursements are over and above the regular shareholder distributions of 20-30% of cash flow from operations.
At the same time, Shell cautioned that its marketing division, which includes the world's biggest network of petrol stations, will see earnings fall sequentially due to the Omicron-induced demand dip and some foreign exchange effects in Turkey. But the performance of the firm’s trading division — instrumental in helping the supermajor partly cushion the impact of the coronavirus-induced oil price slump — is likely to be “significantly higher” for the Integrated Gas business on the back of surging LNG prices. (Shell's Q4 Earnings Update: All You Need to Know)
2. ExxonMobil (XOM - Free Report) announced two new oil discoveries in the Stabroek Block off the coast of Guyana. The discoveries were made at the Fangtooth-1 and Lau Lau-1 wells in the Stabroek block.
Guyana has become a hotspot of oil and gas exploration globally, with 10 billion barrels of oil equivalent (boe) of recoverable resources. America’s biggest energy group began production from the Stabroek Block in 2019 and operates with a 45% interest. The latest oil discoveries will add to the Zacks Rank #3 (Hold) company’s previous estimates of recoverable resources from the block.
Located 11 miles northwest of ExxonMobil's Liza field, the Fangtooth-1 well encountered 164 feet of high-quality oil-bearing sandstone reservoirs. Then again, the Lau Lau-1 well, located 42 miles southeast of the large Liza field, encountered 315 feet of high-quality hydrocarbon-bearing sandstone reservoirs. (ExxonMobil Announces New Oil Finds in Offshore Guyana)
3 Norwegian energy biggie Equinor announced a significant oil discovery at the Fram and Troll fields. The find, off Norway’s coast, was made in exploration wells 35/10-7 S and 35/10-7 A in the Toppand prospect. Toppand is the fifth discovery in the Fram and Troll area, with total proven resources of more than 300 million barrels of oil equivalent.
The exploration wells were drilled in production license (PL) 630, which was awarded to Equinor in the 2011 Award in Predefined Areas. Equinor is the operator of the license with a 50% interest. Per preliminary estimates, the discovery size is estimated at 3.3-5.2 million standard cubic meters of recoverable oil equivalent. This corresponds to 21-33 million barrels of recoverable oil equivalent.
The 35/10-7 S well encountered a total oil column of 75 meters in the Ness and Etive formation. This also involves 68 meters of sandstone with moderate to good reservoir properties. Then again, the 35/10-7 A well encountered 67 meters of sandstone with good to moderate reservoir quality, with an estimated 60 meters of oil column in the Ness and Etive formation. (Equinor Announces Oil Discovery in Offshore Norway)
4. Enterprise Products Partners announced that its board of directors increased its cash distribution for fourth-quarter 2021 to 46.5 cents per unit ($1.86 per unit on an annualized basis). The cash distribution suggests a 3.3% hike from the previous dividend of 45 cents. The quarterly distribution will be paid out on Feb 11, 2022, to common unitholders of record as of the close of business on Jan 31, 2022.
In fourth-quarter 2021, the oil and gas pipeline operator purchased $125 million of its common units in the open market. The purchased units resulted in total share buybacks in 2021 to $200 million. The partnership utilized 24% of its $2-billion buyback program authorized in January 2019, which includes these repurchases.
The hike in cash distribution is reflective of Enterprise’s strong performance. EPD continues its history of consistently returning capital to its investors. The partnership will continue to assess new market opportunities to increase future cash distributions, invest in midstream projects, buy back common units and maintain a healthy balance sheet. (Enterprise Hikes Q4 Cash Distribution to 46.5 Cents)
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 10.5% last week. Over the past six months, the sector tracker has increased 16.1%.
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: Shell's Q4 Update, Exxon's Discoveries & More
It was a week when both oil and natural gas prices settled higher.
Europe’s largest energy company Royal Dutch Shell issued an update on its upcoming Q4 earnings, while U.S. behemoth ExxonMobil (XOM - Free Report) confirmed two oil discoveries off the coast of Guyana. News related to Equinor (EQNR - Free Report) and Enterprise Products Partners (EPD - Free Report) also made it to the headlines.
Overall, it was another good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 4.9% to close at $78.90 per barrel, while natural gas prices rose 5% to end at $3.916 per million British thermal units (MMBtu). In fact, both the oil and natural gas markets managed to maintain their forward momentum from the previous two weeks.
Coming back to the week ended Jan 7, the positive price action could be attributed to a report from the Energy Information Administration ("EIA") showing draw in crude stockpiles. The OPEC+ cartel’s decision to stick to its planned easing of production cuts in February and supply disruptions in the Central Asian country of Kazakhstan also boosted the commodity.
Natural gas notched a weekly gain too, buoyed by weather forecasts, indicating bouts of cold temperatures over most of the country in the coming days.
Recap of the Week’s Most-Important Stories
1. Royal Dutch Shell will use the remaining $5.5 billion of the Permian sale proceeds to buy back stock “at pace.” The cash pledge is part of the $7 billion payout investors got from $9.5 billion that the company received last year for its assets in America’s biggest oil field. Shell already commenced up to $1.5 billion of share repurchases in December, which will continue through Jan 28, 2022.
Shell released a preliminary report for the October-December period wherein the Anglo-Dutch biggie informed that the Permian-related disbursements are over and above the regular shareholder distributions of 20-30% of cash flow from operations.
At the same time, Shell cautioned that its marketing division, which includes the world's biggest network of petrol stations, will see earnings fall sequentially due to the Omicron-induced demand dip and some foreign exchange effects in Turkey. But the performance of the firm’s trading division — instrumental in helping the supermajor partly cushion the impact of the coronavirus-induced oil price slump — is likely to be “significantly higher” for the Integrated Gas business on the back of surging LNG prices. (Shell's Q4 Earnings Update: All You Need to Know)
2. ExxonMobil (XOM - Free Report) announced two new oil discoveries in the Stabroek Block off the coast of Guyana. The discoveries were made at the Fangtooth-1 and Lau Lau-1 wells in the Stabroek block.
Guyana has become a hotspot of oil and gas exploration globally, with 10 billion barrels of oil equivalent (boe) of recoverable resources. America’s biggest energy group began production from the Stabroek Block in 2019 and operates with a 45% interest. The latest oil discoveries will add to the Zacks Rank #3 (Hold) company’s previous estimates of recoverable resources from the block.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Located 11 miles northwest of ExxonMobil's Liza field, the Fangtooth-1 well encountered 164 feet of high-quality oil-bearing sandstone reservoirs. Then again, the Lau Lau-1 well, located 42 miles southeast of the large Liza field, encountered 315 feet of high-quality hydrocarbon-bearing sandstone reservoirs. (ExxonMobil Announces New Oil Finds in Offshore Guyana)
3 Norwegian energy biggie Equinor announced a significant oil discovery at the Fram and Troll fields. The find, off Norway’s coast, was made in exploration wells 35/10-7 S and 35/10-7 A in the Toppand prospect. Toppand is the fifth discovery in the Fram and Troll area, with total proven resources of more than 300 million barrels of oil equivalent.
The exploration wells were drilled in production license (PL) 630, which was awarded to Equinor in the 2011 Award in Predefined Areas. Equinor is the operator of the license with a 50% interest. Per preliminary estimates, the discovery size is estimated at 3.3-5.2 million standard cubic meters of recoverable oil equivalent. This corresponds to 21-33 million barrels of recoverable oil equivalent.
The 35/10-7 S well encountered a total oil column of 75 meters in the Ness and Etive formation. This also involves 68 meters of sandstone with moderate to good reservoir properties. Then again, the 35/10-7 A well encountered 67 meters of sandstone with good to moderate reservoir quality, with an estimated 60 meters of oil column in the Ness and Etive formation. (Equinor Announces Oil Discovery in Offshore Norway)
4. Enterprise Products Partners announced that its board of directors increased its cash distribution for fourth-quarter 2021 to 46.5 cents per unit ($1.86 per unit on an annualized basis). The cash distribution suggests a 3.3% hike from the previous dividend of 45 cents. The quarterly distribution will be paid out on Feb 11, 2022, to common unitholders of record as of the close of business on Jan 31, 2022.
In fourth-quarter 2021, the oil and gas pipeline operator purchased $125 million of its common units in the open market. The purchased units resulted in total share buybacks in 2021 to $200 million. The partnership utilized 24% of its $2-billion buyback program authorized in January 2019, which includes these repurchases.
The hike in cash distribution is reflective of Enterprise’s strong performance. EPD continues its history of consistently returning capital to its investors. The partnership will continue to assess new market opportunities to increase future cash distributions, invest in midstream projects, buy back common units and maintain a healthy balance sheet. (Enterprise Hikes Q4 Cash Distribution to 46.5 Cents)
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 +12.6% +12.5%
CVX +6.5% +20.1%
COP +11.7% +34.1%
OXY +14.6% +9.8%
SLB +17% +12.3%
RIG +19.9% -27.4%
VLO +7.8% +12%
MPC +10.8% +20.9%
The Energy Select Sector SPDR — a popular way to track energy companies — was up 10.5% last week. Over the past six months, the sector tracker has increased 16.1%.
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.