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Oil & Gas Stock Roundup: BP's EV Investment & Eni's Discovery Take Center Stage
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It was a week when both oil and natural gas prices registered small increases.
On the news front, European energy biggie BP plc (BP - Free Report) said that it expects to spend £1 billion for electric car charging points in the UK, while Italian peer Eni SpA (E - Free Report) made a hydrocarbon discovery in Algeria. Acquisition announcements from Targa Resources (TRGP - Free Report) and Baker Hughes Company (BKR - Free Report) also made it to the headlines.
Overall, it was a good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 8.8% to close at $113.90 per barrel, while natural gas prices surged almost 15% to end at $5.571 per million British thermal units (MMBtu). In particular, the oil market reversed its course after falling for two weeks in a row.
Coming back to the week ended Mar 25, oil prices rallied on tensions in the Middle East. The commodity got a boost from rising friction between the Iran-backed Houthi rebels and Saudi Arabia. Yemen's Houthi forces fired drones and missiles at the heart of the Saudi oil industry during the week, including certain Saudi Aramco facilities vital to petroleum exports.
Natural gas tallied a weekly gain too, following favorable weather predictions and a key agreement between the United States and the European Union to export additional LNG to wean the bloc off its dependence on Russian supplies.
Recap of the Week’s Most-Important Stories
1. London-based energy major BP announced that it plans to invest £1 billion in electric vehicle (EV) charging in the U.K. in the next 10 years, marking its largest-ever expansion into EV charging.
The move is part of Zacks Rank #3 (Hold) BP’s plan to address the country’s rising demand for clean energy sources. The investment would help triple the number of public charging points in the U.K. by 2030. Besides this, it is expected to support hundreds of new jobs in the country.
The electrification of transportation is a crucial approach to reducing emissions, which have increased immensely in recent years due to the rising number of fossil fuel-powered vehicles on the road. BP is among the companies pledging to increase the number of EV charge points. (BP Reveals Plans to Invest 1B Pounds in UK's EV Charging)
2. Eni announced a significant oil and gas discovery with Sonatrach in Algeria's gas-rich Berkine North Basin.
The discovery is situated in the Zemlet el Arbi concession in the Algerian desert. It is operated by Eni and Sonatrach. The latest find is estimated to contain 140 million barrels of crude oil.
Since 1981, Eni has been contributing to Algeria’s growth, wherein it operates multiple concessions. The Italian integrated major has an equity production of 95,000 barrels of oil equivalent per day in the country. The latest discovery will back Eni’s near-field and infrastructure-led exploration strategy, enabling a rapid valuation of the new resources. (Eni Makes Major Onshore Oil & Gas Discovery in Algeria)
3 Targa Resources declared that it signed agreements to take over Southcross Energy Operating LLC and its subsidiaries in South Texas in a deal worth $200 million. This deal will help strengthen the premier energy infrastructure company’s natural gas gathering and processing footprint.
Per Targa, this transaction signifies a 4X adjusted EBITDA multiple and provides the added synergy potential to reduce the acquisition multiple over time. The deal also offers the potential to move a presently idle 200 million cubic feet per day plant through fee-based contracts and continued simplification through the acquisition of Southcross’ remaining T2 joint-venture interests.
4. Baker Hughes entered an agreement to acquire Altus Intervention as part of its strategy to transform its core oil and gas operations by enhancing technological capabilities and providing high-efficiency solutions.
Norway-based Altus Intervention is a leading provider of fully integrated well intervention services, and downhole oil and gas technology. The company’s services and digital technologies provide customers with more efficient solutions than other technologies. The technology and techniques are important components to improve production, well intervention, and plug and abandonment.
The acquisition adds to Baker Hughes’ existing portfolio of oilfield technologies and integrated solutions. It will enhance the oilfield service provider’s life-of-well capabilities as operators seek to improve efficiencies in mature oil and gas fields. The acquisition involves all intellectual property, workers and business agreements. (Baker Hughes Signs Deal to Acquire Altus Intervention)
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 7.6% last week. Over the past six months, the sector tracker has increased 44.8%.
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 the trends in U.S. crude production, is closely followed. News related to the ongoing Russia-Ukraine geopolitical conflict will be of utmost importance too. Finally, investors will keep an eye on the potential demand hit from the resurgence of new coronavirus cases and the pandemic-related lockdowns in China.
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Oil & Gas Stock Roundup: BP's EV Investment & Eni's Discovery Take Center Stage
It was a week when both oil and natural gas prices registered small increases.
On the news front, European energy biggie BP plc (BP - Free Report) said that it expects to spend £1 billion for electric car charging points in the UK, while Italian peer Eni SpA (E - Free Report) made a hydrocarbon discovery in Algeria. Acquisition announcements from Targa Resources (TRGP - Free Report) and Baker Hughes Company (BKR - Free Report) also made it to the headlines.
Overall, it was a good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 8.8% to close at $113.90 per barrel, while natural gas prices surged almost 15% to end at $5.571 per million British thermal units (MMBtu). In particular, the oil market reversed its course after falling for two weeks in a row.
Coming back to the week ended Mar 25, oil prices rallied on tensions in the Middle East. The commodity got a boost from rising friction between the Iran-backed Houthi rebels and Saudi Arabia. Yemen's Houthi forces fired drones and missiles at the heart of the Saudi oil industry during the week, including certain Saudi Aramco facilities vital to petroleum exports.
Natural gas tallied a weekly gain too, following favorable weather predictions and a key agreement between the United States and the European Union to export additional LNG to wean the bloc off its dependence on Russian supplies.
Recap of the Week’s Most-Important Stories
1. London-based energy major BP announced that it plans to invest £1 billion in electric vehicle (EV) charging in the U.K. in the next 10 years, marking its largest-ever expansion into EV charging.
The move is part of Zacks Rank #3 (Hold) BP’s plan to address the country’s rising demand for clean energy sources. The investment would help triple the number of public charging points in the U.K. by 2030. Besides this, it is expected to support hundreds of new jobs in the country.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The electrification of transportation is a crucial approach to reducing emissions, which have increased immensely in recent years due to the rising number of fossil fuel-powered vehicles on the road. BP is among the companies pledging to increase the number of EV charge points. (BP Reveals Plans to Invest 1B Pounds in UK's EV Charging)
2. Eni announced a significant oil and gas discovery with Sonatrach in Algeria's gas-rich Berkine North Basin.
The discovery is situated in the Zemlet el Arbi concession in the Algerian desert. It is operated by Eni and Sonatrach. The latest find is estimated to contain 140 million barrels of crude oil.
Since 1981, Eni has been contributing to Algeria’s growth, wherein it operates multiple concessions. The Italian integrated major has an equity production of 95,000 barrels of oil equivalent per day in the country. The latest discovery will back Eni’s near-field and infrastructure-led exploration strategy, enabling a rapid valuation of the new resources. (Eni Makes Major Onshore Oil & Gas Discovery in Algeria)
3 Targa Resources declared that it signed agreements to take over Southcross Energy Operating LLC and its subsidiaries in South Texas in a deal worth $200 million. This deal will help strengthen the premier energy infrastructure company’s natural gas gathering and processing footprint.
Per Targa, this transaction signifies a 4X adjusted EBITDA multiple and provides the added synergy potential to reduce the acquisition multiple over time. The deal also offers the potential to move a presently idle 200 million cubic feet per day plant through fee-based contracts and continued simplification through the acquisition of Southcross’ remaining T2 joint-venture interests.
The deal, which is subject to conventional closing conditions, is anticipated to be closed by the second quarter of 2022. (Targa to Acquire Southcross Energy for $200 Million)
4. Baker Hughes entered an agreement to acquire Altus Intervention as part of its strategy to transform its core oil and gas operations by enhancing technological capabilities and providing high-efficiency solutions.
Norway-based Altus Intervention is a leading provider of fully integrated well intervention services, and downhole oil and gas technology. The company’s services and digital technologies provide customers with more efficient solutions than other technologies. The technology and techniques are important components to improve production, well intervention, and plug and abandonment.
The acquisition adds to Baker Hughes’ existing portfolio of oilfield technologies and integrated solutions. It will enhance the oilfield service provider’s life-of-well capabilities as operators seek to improve efficiencies in mature oil and gas fields. The acquisition involves all intellectual property, workers and business agreements. (Baker Hughes Signs Deal to Acquire Altus Intervention)
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 +8.3% +37.5%
CVX +4.7% +59%
COP +7.9% +48.5%
OXY +4.4% +89.9%
SLB +9.9% +37.9%
RIG +18.1% +17.6%
VLO +7.5% +35.8%
MPC +5% +33%
The Energy Select Sector SPDR — a popular way to track energy companies — was up 7.6% last week. Over the past six months, the sector tracker has increased 44.8%.
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 the trends in U.S. crude production, is closely followed. News related to the ongoing Russia-Ukraine geopolitical conflict will be of utmost importance too. Finally, investors will keep an eye on the potential demand hit from the resurgence of new coronavirus cases and the pandemic-related lockdowns in China.