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Oil & Gas Stock Roundup: Updates From EQNR and PBA Lead Week's Action
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It was a week when both oil and natural gas prices reversed course and posted healthy gains.
On the news front, Norwegian energy behemoth Equinor (EQNR - Free Report) brought on stream the second phase of its giant Johan Sverdrup development, while oil and gas pipeline operator Pembina Pipeline (PBA - Free Report) agreed to offload its 50% non-operated interest in an infrastructure asset. Developments associated with Chevron (CVX - Free Report) , Tullow Oil (TUWOY - Free Report) and Shell (SHEL - Free Report) also made it to the headlines.
Overall, it was a bullish seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained some 4.6% to close at $74.29 per barrel, while natural gas prices rose around 5.7% to end at $6.60 per million British thermal units (MMBtu). In particular, the oil and gas markets closed up for the first time in three weeks.
Coming back to the week ended Dec 16, the oil price action turned positive after the Paris-based research body, International Energy Agency, raised its demand outlook for this year and next. The U.S. government’s plan to buy crude to fill its strategic reserves was also a major factor.
Natural gas finished up too, following a bigger-than-expected decrease in weekly supplies and forecasts of colder weather.
Recap of the Week’s Most Important Stories
1. Stavanger, Norway-headquartered integrated major Equinor commenced production from the Johan Sverdrup Phase 2 project in the North Sea after the oilfield came online.
Johan Sverdrup is the third-largest oilfield offshore Norway, with recoverable volumes of 2.7 billion barrels of oil equivalent. A considerable portion of the Johan Sverdrup field’s oil and gas production is expected to reach Europe, strengthening its energy security. Equinor operates the field with a 42.6% interest.
At the plateau, the Johan Sverdrup field will produce 720,000 barrels of oil per day, with a target to rise to 755,000 barrels per day. The field alone is expected to meet 6-7% of the daily oil requirements in Europe. (Equinor Puts Johan Sverdrup Phase 2 Project Online)
2. Canada-based energy infrastructure provider Pembina Pipeline recently announced that it has signed a deal to sell 50% of its non-operated stake in the Key Access Pipeline System (“KAPS”) to the private equity firm, Stonepeak Partners LP, for a consideration worth C$662.5 million.
KAPS is a twin-pipeline system designed to deliver natural gas liquids and condensates to liquid processing and storage hubs at Fort Saskatchewan. It is currently held by Pembina Gas Infrastructure (“PGI”), a joint venture owned 60% by Pembina Pipeline and 40% by KKR’s global infrastructure funds.
Per the terms of the sale agreement, PGI will continue to fund its share of KAPS project costs until the end of next year, an equity contribution estimated to reach C$50 million. On closing the transaction, PGI will receive cash proceeds of C$662.5 million, which will be used to pay off the debt related to KAPS construction funding. (Pembina to Sell Key Access Pipeline System Interest)
3. American integrated major Chevron recently announced a joint venture with the Swedish geothermal investment company, Baseload Capital, to develop geothermal projects in the United States.
As part of the collaboration, the two firms intend to identify opportunities to advance the next generation of geothermal technologies from pilot to commercial scale. CVX and Baseload Capital will work together to create awareness around geothermal energy, which will be a crucial supply option for renewable energy, according to the two partners.
Additionally, the joint venture aims to leverage the companies’ geothermal operational experience and the primary know-how in the traditional oil and gas sector to advance scalable novel geothermal technologies to tap the earth’s core heat. (Chevron, Baseload Capital to Develop Geothermal Projects)
4 Tullow Oil recently declared that it signed a production-sharing contract (PSC) for Ivory Coast's offshore exploration license CI-803. The UK.-based, West Africa-focused oil and gas exploration firm will operate the license with 90% equity, with the remaining 10% interest owned by the local partner PetroCi Holdings.
Adjacent to the CI-524 license, which is also owned by Tullow (90%) and PetroCi (10%), the CI-803 offshore block covers an area of approximately 1,345 square kilometers. With the newly acquired license, Zacks Rank #3 (Hold) Tullow has strengthened its position in the Tano Basin, where significant prospects have been identified within the proven Cretaceous turbidite plays.
TUWOY stated that the work program for the initial two and a half years includes the reprocessing of existing 3D seismic data, along with prospect evaluation. Additionally, in CI-524, many drill candidates are being matured, while preparations continue for an exploration well to be drilled in 2024. (Tullow Signs Ivory Coast Offshore Exploration Contract)
5 Shell recently announced that its subsidiary in Malaysia, Sarawak Shell Berhad, has agreed to sell its non-operated stake in two offshore PSC in the Baram Delta to Petroleum Sarawak Exploration & Production.
The sale consists of the London-based oil supermajor’s 40% stake in the Amended 2011 Baram Delta EOR PSC and 50% of the SK307 PSC. The remaining interests in both PSCs are owned by the operator, Petronas Carigali.
The Petroleum Sarawak will pay Shell a consideration of $475 million and as much as $50 million between 2023 and 2024, depending on commodity prices. The deal, subject to regulatory approval, has an effective date of Jan 1, 2023, and is intended to be closed early next year. (Shell to Sell Interest in Baram Delta Offshore Malaysia)
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.
With oil and gas being in green for the week, stocks were up too. The Energy Select Sector SPDR — a popular way to track energy companies — rose 2% last week. Over the past six months, the sector tracker has increased 13.6%.
What’s Next in the Energy World?
Following last week’s improving fortunes for oil and gas, market participants will closely track the regular releases to look for further guidance on the direction of the commodities. 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/natural gas production, is closely followed too. News related to the ongoing Russia-Ukraine geopolitical conflict and the potential demand boost from the easing of coronavirus lockdowns in China will be the other factors that will dictate the near-term price movement of the commodities.
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Oil & Gas Stock Roundup: Updates From EQNR and PBA Lead Week's Action
It was a week when both oil and natural gas prices reversed course and posted healthy gains.
On the news front, Norwegian energy behemoth Equinor (EQNR - Free Report) brought on stream the second phase of its giant Johan Sverdrup development, while oil and gas pipeline operator Pembina Pipeline (PBA - Free Report) agreed to offload its 50% non-operated interest in an infrastructure asset. Developments associated with Chevron (CVX - Free Report) , Tullow Oil (TUWOY - Free Report) and Shell (SHEL - Free Report) also made it to the headlines.
Overall, it was a bullish seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained some 4.6% to close at $74.29 per barrel, while natural gas prices rose around 5.7% to end at $6.60 per million British thermal units (MMBtu). In particular, the oil and gas markets closed up for the first time in three weeks.
Coming back to the week ended Dec 16, the oil price action turned positive after the Paris-based research body, International Energy Agency, raised its demand outlook for this year and next. The U.S. government’s plan to buy crude to fill its strategic reserves was also a major factor.
Natural gas finished up too, following a bigger-than-expected decrease in weekly supplies and forecasts of colder weather.
Recap of the Week’s Most Important Stories
1. Stavanger, Norway-headquartered integrated major Equinor commenced production from the Johan Sverdrup Phase 2 project in the North Sea after the oilfield came online.
Johan Sverdrup is the third-largest oilfield offshore Norway, with recoverable volumes of 2.7 billion barrels of oil equivalent. A considerable portion of the Johan Sverdrup field’s oil and gas production is expected to reach Europe, strengthening its energy security. Equinor operates the field with a 42.6% interest.
At the plateau, the Johan Sverdrup field will produce 720,000 barrels of oil per day, with a target to rise to 755,000 barrels per day. The field alone is expected to meet 6-7% of the daily oil requirements in Europe. (Equinor Puts Johan Sverdrup Phase 2 Project Online)
2. Canada-based energy infrastructure provider Pembina Pipeline recently announced that it has signed a deal to sell 50% of its non-operated stake in the Key Access Pipeline System (“KAPS”) to the private equity firm, Stonepeak Partners LP, for a consideration worth C$662.5 million.
KAPS is a twin-pipeline system designed to deliver natural gas liquids and condensates to liquid processing and storage hubs at Fort Saskatchewan. It is currently held by Pembina Gas Infrastructure (“PGI”), a joint venture owned 60% by Pembina Pipeline and 40% by KKR’s global infrastructure funds.
Per the terms of the sale agreement, PGI will continue to fund its share of KAPS project costs until the end of next year, an equity contribution estimated to reach C$50 million. On closing the transaction, PGI will receive cash proceeds of C$662.5 million, which will be used to pay off the debt related to KAPS construction funding. (Pembina to Sell Key Access Pipeline System Interest)
3. American integrated major Chevron recently announced a joint venture with the Swedish geothermal investment company, Baseload Capital, to develop geothermal projects in the United States.
As part of the collaboration, the two firms intend to identify opportunities to advance the next generation of geothermal technologies from pilot to commercial scale. CVX and Baseload Capital will work together to create awareness around geothermal energy, which will be a crucial supply option for renewable energy, according to the two partners.
Additionally, the joint venture aims to leverage the companies’ geothermal operational experience and the primary know-how in the traditional oil and gas sector to advance scalable novel geothermal technologies to tap the earth’s core heat. (Chevron, Baseload Capital to Develop Geothermal Projects)
4 Tullow Oil recently declared that it signed a production-sharing contract (PSC) for Ivory Coast's offshore exploration license CI-803. The UK.-based, West Africa-focused oil and gas exploration firm will operate the license with 90% equity, with the remaining 10% interest owned by the local partner PetroCi Holdings.
Adjacent to the CI-524 license, which is also owned by Tullow (90%) and PetroCi (10%), the CI-803 offshore block covers an area of approximately 1,345 square kilometers. With the newly acquired license, Zacks Rank #3 (Hold) Tullow has strengthened its position in the Tano Basin, where significant prospects have been identified within the proven Cretaceous turbidite plays.
You can see the complete list of today’s Zacks #1 Rank stocks here.
TUWOY stated that the work program for the initial two and a half years includes the reprocessing of existing 3D seismic data, along with prospect evaluation. Additionally, in CI-524, many drill candidates are being matured, while preparations continue for an exploration well to be drilled in 2024. (Tullow Signs Ivory Coast Offshore Exploration Contract)
5 Shell recently announced that its subsidiary in Malaysia, Sarawak Shell Berhad, has agreed to sell its non-operated stake in two offshore PSC in the Baram Delta to Petroleum Sarawak Exploration & Production.
The sale consists of the London-based oil supermajor’s 40% stake in the Amended 2011 Baram Delta EOR PSC and 50% of the SK307 PSC. The remaining interests in both PSCs are owned by the operator, Petronas Carigali.
The Petroleum Sarawak will pay Shell a consideration of $475 million and as much as $50 million between 2023 and 2024, depending on commodity prices. The deal, subject to regulatory approval, has an effective date of Jan 1, 2023, and is intended to be closed early next year. (Shell to Sell Interest in Baram Delta Offshore Malaysia)
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 +1.1% +22.1%
CVX +0.4% +14.5%
COP +0.4% +17.8%
OXY -0.1% +12.1%
SLB +5.1% +36%
RIG +14.7% +21.6%
VLO +4.1% +6.5%
MPC +2.7% +27.2%
With oil and gas being in green for the week, stocks were up too. The Energy Select Sector SPDR — a popular way to track energy companies — rose 2% last week. Over the past six months, the sector tracker has increased 13.6%.
What’s Next in the Energy World?
Following last week’s improving fortunes for oil and gas, market participants will closely track the regular releases to look for further guidance on the direction of the commodities. 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/natural gas production, is closely followed too. News related to the ongoing Russia-Ukraine geopolitical conflict and the potential demand boost from the easing of coronavirus lockdowns in China will be the other factors that will dictate the near-term price movement of the commodities.