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Oil & Gas Stock Roundup: Exxon's Hebron Approval & Shell's Sparta FID Stand Out
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It was a week when both oil and natural gas prices posted gains.
The headlines revolved around American biggie ExxonMobil’s (XOM - Free Report) receipt of approval for the expansion of the Hebron field and European peer Shell’s (SHEL - Free Report) positive investment decision for its Sparta deepwater project in the Gulf of Mexico. Developments associated with Equinor (EQNR - Free Report) , Cenovus Energy (CVE - Free Report) and Imperial Oil (IMO - Free Report) also grabbed attention.
Overall, it was a bullish seven-day period for the sector. West Texas Intermediate (WTI) crude futures increased around 2.5% to close at $73.56 per barrel, while natural gas prices moved up 4.8% to end at $2.61 per million British thermal units (MMBtu).
The crude price action remained positive following global trade worries arising out of vessel attacks in the Red Sea, believed to be by Yemen's Houthi rebels. However, gains were capped by a weekly report from the Energy Information Administration that showed builds in crude and fuel stockpiles.
Meanwhile, natural gas turned higher after six consecutive weeks of declines, with cold temperatures in the New Year set to boost the commodity’s demand.
Recap of the Week’s Most Important Stories
1. U.S. supermajor ExxonMobil has received a green signal from national petroleum development regulator and Canadian province of Newfoundland and Labrador for the new development plan of the Hebron oil field. This approval grants ExxonMobil and its partners the authority to proceed with the development of sands within the Jeanne d’Arc Formation, an aspect not covered in the initial Hebron Development Plan.
Located offshore Newfoundland and Labrador, the field is projected to yield more than 700 million barrels of recoverable resources. The integration of new sands into the development plan further adds an estimated 165 million barrels of proven and probable reserves.
Per ExxonMobil, the expansion will optimize the development, improving its economic viability and minimizing waste. These additional development activities do not necessitate alterations to installation, equipment deployment in the field, operational processes, shipping activities and safety zones. Also, no new excavated drill centers or drilling installations are deemed necessary. (ExxonMobil Gets Approval for Hebron Field Expansion)
2. A subsidiary of European supermajor Shell declared the Final Investment Decision (FID) for Sparta, a deep-water development project in the U.S. Gulf of Mexico. Sparta will be Shell's 15th deep-water host in the Gulf of Mexico and is scheduled to commence production in 2028. The project's design is rooted in Shell's cost-effective development approach, emphasizing standardized and simplified host designs.
Sparta, in which Shell has a 51% operating interest, is poised to achieve a peak production of approximately 90,000 barrels of oil equivalent per day (boe/d). The project currently boasts an estimated discovered recoverable resource volume of 244 million boe. It's important to note that the estimated peak production and the current estimated recoverable resources are presented as 100% total gross figures.
Built on more than four decades of deep-water expertise, Sparta represents a milestone as Shell's inaugural development in the Gulf of Mexico, designed to produce oil and associated gas from reservoirs with pressures reaching up to 20,000 pounds per square inch. (Shell's Subsidiary Announces FID for Sparta Development)
3. Stavanger, Norway-headquartered integrated major Equinor, said that it has entered into an agreement to sell its assets in Azerbaijan to the state-owned energy firm SOCAR (State Oil Company of Azerbaijan Republic).
The deal encompasses Equinor's 7.27% non-operated interest in the Azeri Chirag Gunashli (ACG) oil fields, an 8.71% stake in the Baku-Tbilisi-Ceyhan (BTC) pipeline and a 50% interest in the Karabagh field. The ACG oil fields, operated by British energy biggie BP plc, stand as the largest in the Caspian basin, while the Baku-Tbilisi-Ceyhan pipeline serves as a vital conduit for transferring crude oil to the Turkish Mediterranean coast.
Socar, being a state-owned energy company, is expected to enhance its presence in the region further through this acquisition. The completion of the transaction is subject to meeting specific conditions, including obtaining regulatory and contractual approvals. (Equinor Divests Azerbaijan Assets to State-Owned Socar)
4. Canada-based oil and gas operators Cenovus Energy and Athabasca Oil Corporation have announced the formation of a joint venture (JV) stand-alone company named Duvernay Energy Corporation. This independent, self-funded entity aims to generate strong, high netback cash flow and production growth, with the expectation of unlocking significant value.
In this JV, Athabasca will hold a 70% equity interest in Duvernay Energy, while Cenovus will own the remaining 30%. To kickstart the creation of Duvernay Energy, Athabasca will contribute $22 million in seed capital and Cenovus will contribute $18 million.
The consolidation of assets will focus on the Kaybob Duvernay resource play in northwest Alberta, particularly in the volatile oil region. Presently, Duvernay Energy’s assets yield a daily production of 2,000 barrels of oil equivalent, with plans to expand to 25,000 barrels of oil equivalent per day by the end of the decade. (Cenovus Creates Kaybob Duvernay JV With Athabasca).
5. Imperial Oil, a leading North American energy producer, recently presented its corporate guidance for 2024, allocating a capital spending budget of C$1.7 billion and providing insights into production forecasts across its Upstream and Downstream segments.
For the Upstream segment, the Zacks Rank #1 (Strong Buy) company anticipates production in the range of 420,000-442,000 gross oil-equivalent barrels per day for 2024. For the Downstream segment, throughput is projected in the band of 385,000-400,000 barrels per day, with a capacity utilization of 89-92% throughout 2024.
Imperial Oil's strategic agenda for 2024 includes the completion of turnarounds at all three of its refineries. This initiative incorporates a scope to facilitate the co-processing of vegetable oils alongside conventional feedstock at the Strathcona refinery. The company expects these planned turnarounds to yield a modestly higher impact on throughput while maintaining a lower cost compared with the 2023 turnaround activities. (Imperial Oil Issues 2024 Outlook and C$1.7B Capex Plan).
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 moving up for the week, stocks were mostly positive. The Energy Select Sector SPDR — a popular way to track energy companies — rose 1.8% last week. Over the past six months, the sector tracker has increased 7.9%.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for 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.
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Oil & Gas Stock Roundup: Exxon's Hebron Approval & Shell's Sparta FID Stand Out
It was a week when both oil and natural gas prices posted gains.
The headlines revolved around American biggie ExxonMobil’s (XOM - Free Report) receipt of approval for the expansion of the Hebron field and European peer Shell’s (SHEL - Free Report) positive investment decision for its Sparta deepwater project in the Gulf of Mexico. Developments associated with Equinor (EQNR - Free Report) , Cenovus Energy (CVE - Free Report) and Imperial Oil (IMO - Free Report) also grabbed attention.
Overall, it was a bullish seven-day period for the sector. West Texas Intermediate (WTI) crude futures increased around 2.5% to close at $73.56 per barrel, while natural gas prices moved up 4.8% to end at $2.61 per million British thermal units (MMBtu).
The crude price action remained positive following global trade worries arising out of vessel attacks in the Red Sea, believed to be by Yemen's Houthi rebels. However, gains were capped by a weekly report from the Energy Information Administration that showed builds in crude and fuel stockpiles.
Meanwhile, natural gas turned higher after six consecutive weeks of declines, with cold temperatures in the New Year set to boost the commodity’s demand.
Recap of the Week’s Most Important Stories
1. U.S. supermajor ExxonMobil has received a green signal from national petroleum development regulator and Canadian province of Newfoundland and Labrador for the new development plan of the Hebron oil field. This approval grants ExxonMobil and its partners the authority to proceed with the development of sands within the Jeanne d’Arc Formation, an aspect not covered in the initial Hebron Development Plan.
Located offshore Newfoundland and Labrador, the field is projected to yield more than 700 million barrels of recoverable resources. The integration of new sands into the development plan further adds an estimated 165 million barrels of proven and probable reserves.
Per ExxonMobil, the expansion will optimize the development, improving its economic viability and minimizing waste. These additional development activities do not necessitate alterations to installation, equipment deployment in the field, operational processes, shipping activities and safety zones. Also, no new excavated drill centers or drilling installations are deemed necessary. (ExxonMobil Gets Approval for Hebron Field Expansion)
2. A subsidiary of European supermajor Shell declared the Final Investment Decision (FID) for Sparta, a deep-water development project in the U.S. Gulf of Mexico. Sparta will be Shell's 15th deep-water host in the Gulf of Mexico and is scheduled to commence production in 2028. The project's design is rooted in Shell's cost-effective development approach, emphasizing standardized and simplified host designs.
Sparta, in which Shell has a 51% operating interest, is poised to achieve a peak production of approximately 90,000 barrels of oil equivalent per day (boe/d). The project currently boasts an estimated discovered recoverable resource volume of 244 million boe. It's important to note that the estimated peak production and the current estimated recoverable resources are presented as 100% total gross figures.
Built on more than four decades of deep-water expertise, Sparta represents a milestone as Shell's inaugural development in the Gulf of Mexico, designed to produce oil and associated gas from reservoirs with pressures reaching up to 20,000 pounds per square inch. (Shell's Subsidiary Announces FID for Sparta Development)
3. Stavanger, Norway-headquartered integrated major Equinor, said that it has entered into an agreement to sell its assets in Azerbaijan to the state-owned energy firm SOCAR (State Oil Company of Azerbaijan Republic).
The deal encompasses Equinor's 7.27% non-operated interest in the Azeri Chirag Gunashli (ACG) oil fields, an 8.71% stake in the Baku-Tbilisi-Ceyhan (BTC) pipeline and a 50% interest in the Karabagh field. The ACG oil fields, operated by British energy biggie BP plc, stand as the largest in the Caspian basin, while the Baku-Tbilisi-Ceyhan pipeline serves as a vital conduit for transferring crude oil to the Turkish Mediterranean coast.
Socar, being a state-owned energy company, is expected to enhance its presence in the region further through this acquisition. The completion of the transaction is subject to meeting specific conditions, including obtaining regulatory and contractual approvals. (Equinor Divests Azerbaijan Assets to State-Owned Socar)
4. Canada-based oil and gas operators Cenovus Energy and Athabasca Oil Corporation have announced the formation of a joint venture (JV) stand-alone company named Duvernay Energy Corporation. This independent, self-funded entity aims to generate strong, high netback cash flow and production growth, with the expectation of unlocking significant value.
In this JV, Athabasca will hold a 70% equity interest in Duvernay Energy, while Cenovus will own the remaining 30%. To kickstart the creation of Duvernay Energy, Athabasca will contribute $22 million in seed capital and Cenovus will contribute $18 million.
The consolidation of assets will focus on the Kaybob Duvernay resource play in northwest Alberta, particularly in the volatile oil region. Presently, Duvernay Energy’s assets yield a daily production of 2,000 barrels of oil equivalent, with plans to expand to 25,000 barrels of oil equivalent per day by the end of the decade. (Cenovus Creates Kaybob Duvernay JV With Athabasca).
5. Imperial Oil, a leading North American energy producer, recently presented its corporate guidance for 2024, allocating a capital spending budget of C$1.7 billion and providing insights into production forecasts across its Upstream and Downstream segments.
For the Upstream segment, the Zacks Rank #1 (Strong Buy) company anticipates production in the range of 420,000-442,000 gross oil-equivalent barrels per day for 2024. For the Downstream segment, throughput is projected in the band of 385,000-400,000 barrels per day, with a capacity utilization of 89-92% throughout 2024.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Imperial Oil's strategic agenda for 2024 includes the completion of turnarounds at all three of its refineries. This initiative incorporates a scope to facilitate the co-processing of vegetable oils alongside conventional feedstock at the Strathcona refinery. The company expects these planned turnarounds to yield a modestly higher impact on throughput while maintaining a lower cost compared with the 2023 turnaround activities. (Imperial Oil Issues 2024 Outlook and C$1.7B Capex Plan).
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% -2.3%
CVX +1.1% -1.9%
COP +2.7% +16.1%
OXY +3.8% +6.2%
SLB +1.7% +12.1%
RIG +4.1% +1.3%
VLO +2.8% +17%
MPC +1.7% +33.5%
With oil moving up for the week, stocks were mostly positive. The Energy Select Sector SPDR — a popular way to track energy companies — rose 1.8% last week. Over the past six months, the sector tracker has increased 7.9%.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for 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.