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It was a week when both oil and natural gas prices posted losses. For the year, oil and natural gas closed down some 10% and 40%, respectively.
The headlines revolved around energy infrastructure provider The Williams Companies (WMB - Free Report) agreeing to buy natural gas storage assets worth $1.95 billion and upstream behemoth ConocoPhillips’ (COP - Free Report) positive investment decision for its Willow project in Alaska. Developments associated with Shell (SHEL - Free Report) , Eni (E - Free Report) and Vital Energy (VTLE - Free Report) also grabbed attention.
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures edged down around 0.2% to close at $71.65 per barrel, while natural gas prices fell 3.7% to end at $2.514 per million British thermal units (MMBtu).
The crude price action turned negative on continued demand concerns as record-high domestic production added to the supply glut.
Natural gas also dropped after rising the previous week, overwhelmed by high production and insipid weather-related demand.
Recap of the Week’s Most Important Stories
1. Energy pipeline operator The Williams Companies declared its agreement to acquire a portfolio of natural gas storage assets from an affiliate of Hartree Partners LP, a merchant commodities firm, for $1.95 billion. This strategic move is poised to reshape Zacks Rank #1 (Strong Buy) WMB’s position in the market and establish a strong foothold in the rapidly evolving energy landscape.
The acquisition encompasses six underground natural gas storage facilities situated in Louisiana and Mississippi. These facilities boast a collective capacity of 115 billion cubic feet (Bcf), making them a substantial addition to WMB’s asset portfolio. Additionally, the transaction includes 230 miles of gas transmission pipeline and 30 pipeline interconnects strategically positioned to tap into lucrative markets, including Liquefied Natural Gas (LNG) markets.
The acquisition price, at an approximate 10x estimated 2024 EBITDA multiple, highlights the significance of this deal for WMB. It reflects the company's commitment to investing in high-value assets that align with its long-term strategic goals. (Williams to Buy Gas Storage Portfolio for $1.95 Billion)
2. One of the world’s largest independent oil and gas producers, ConocoPhillips has been granted financial approval for its Willow oil and gas drilling project in Alaska, with a budget of $8 billion. Following the green light, the company initiated winter construction. Residents of Alaska are now experiencing the positive outcomes of responsible energy development.
Earlier this spring, ConocoPhillips received favorable court decisions and approval from the Biden administration. The company had already started the initial phases of the $8-billion project. However, the latest announcement marks the official approval for the company to proceed with the development until it reaches the stage of producing the first oil.
The Willow project is positioned to be among the most productive oil fields on the North Slope. It is set to access approximately 600 million barrels of recoverable oil and has the capacity to yield up to 180,000 barrels per day. This will represent a substantial increase in North Slope production, which has declined since its peak in 1988 when it exceeded 2 million barrels per day. (ConocoPhillips to Proceed With Alaska's Willow Oil Project)
3. European supermajor Shell entered into a significant five-year crude oil supply agreement with QatarEnergy, the state-owned oil and gas company. Under the agreement, Qatar is set to provide Shell with up to 18 million barrels of oil annually, marking a milestone for the Gulf state's energy industry.
This long-term deal, regarded as QatarEnergy's first-ever five-year crude sales agreement, was announced after negotiations with Shell International Eastern Trading Company. The agreement encompasses the supply of both Qatar Land and Qatar Marine crude oils. The commencement of the supply is scheduled for January, setting the stage for a long-term partnership between the two energy giants.
The agreement aligns with QatarEnergy's broader strategy of establishing enduring strategic business relationships and fostering cooperation within the energy industry. By securing a long-term commitment from Shell, QatarEnergy aims to enhance stability and reliability in its crude oil supply chain. (Shell & QatarEnergy Ink a Major Five-Year Crude Oil Pact)
4. Rome-based energy biggie Eni has initiated the first gas into the Tango floating liquefied natural gas (FLNG) facility, marking the Republic of the Congo’s inaugural natural gas liquefaction project. The successful injection of gas was accomplished within 12 months of the final investment decision.
As an integral component of the Congo LNG project, the facility aligns with Eni’s fundamental efforts for supply diversification and is expected to fulfill the power generation requirements of the country.
The Tango FLNG facility boasts a liquefaction capacity of 1 billion cubic meters per year (bcma). The Tango FLNG facility is tethered next to the Excalibur floating storage unit and employs a configuration known as split mooring. This marks the first implementation of this design in a floating LNG terminal. (Eni Initiates First Gas Into Congo's Tango FLNG Facility).
5. Tulsa, OK-based oil and gas explorer Vital Energy is making significant strides in expanding its footprint in the Permian Basin. The company acquired additional working interests from local operators Henry Energy LP, Moriah Henry Partners LLC and Henry Resources LLC for $55 million.
Vital Energy's latest acquisition will increase its working interest in 45 wells by an average of 24%. The company anticipates a substantial boost to its estimated 2024 production by nearly 1,400 barrels of oil equivalent per day, with 57% being oil. Moreover, the deal is projected to increase Vital Energy's 2024 free cash flow by almost $20 million, contributing to the firm's deleveraging objectives.
To fund the transaction, Vital Energy utilized tag-along rights associated with the Henry acquisition, allowing the purchase and financing of assets on the same terms. The company issued 627,000 shares of its common stock and 595,000 shares of its 2.0% cumulative mandatorily convertible preferred securities. (Vital Energy in $55M Deal to Enhance Permian Presence).
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 moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 1.3% last week. But over the past six months, the sector tracker has increased 4.2%.
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: WMB's Acquisition & COP's Willow FID Grab Headlines
It was a week when both oil and natural gas prices posted losses. For the year, oil and natural gas closed down some 10% and 40%, respectively.
The headlines revolved around energy infrastructure provider The Williams Companies (WMB - Free Report) agreeing to buy natural gas storage assets worth $1.95 billion and upstream behemoth ConocoPhillips’ (COP - Free Report) positive investment decision for its Willow project in Alaska. Developments associated with Shell (SHEL - Free Report) , Eni (E - Free Report) and Vital Energy (VTLE - Free Report) also grabbed attention.
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures edged down around 0.2% to close at $71.65 per barrel, while natural gas prices fell 3.7% to end at $2.514 per million British thermal units (MMBtu).
The crude price action turned negative on continued demand concerns as record-high domestic production added to the supply glut.
Natural gas also dropped after rising the previous week, overwhelmed by high production and insipid weather-related demand.
Recap of the Week’s Most Important Stories
1. Energy pipeline operator The Williams Companies declared its agreement to acquire a portfolio of natural gas storage assets from an affiliate of Hartree Partners LP, a merchant commodities firm, for $1.95 billion. This strategic move is poised to reshape Zacks Rank #1 (Strong Buy) WMB’s position in the market and establish a strong foothold in the rapidly evolving energy landscape.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The acquisition encompasses six underground natural gas storage facilities situated in Louisiana and Mississippi. These facilities boast a collective capacity of 115 billion cubic feet (Bcf), making them a substantial addition to WMB’s asset portfolio. Additionally, the transaction includes 230 miles of gas transmission pipeline and 30 pipeline interconnects strategically positioned to tap into lucrative markets, including Liquefied Natural Gas (LNG) markets.
The acquisition price, at an approximate 10x estimated 2024 EBITDA multiple, highlights the significance of this deal for WMB. It reflects the company's commitment to investing in high-value assets that align with its long-term strategic goals. (Williams to Buy Gas Storage Portfolio for $1.95 Billion)
2. One of the world’s largest independent oil and gas producers, ConocoPhillips has been granted financial approval for its Willow oil and gas drilling project in Alaska, with a budget of $8 billion. Following the green light, the company initiated winter construction. Residents of Alaska are now experiencing the positive outcomes of responsible energy development.
Earlier this spring, ConocoPhillips received favorable court decisions and approval from the Biden administration. The company had already started the initial phases of the $8-billion project. However, the latest announcement marks the official approval for the company to proceed with the development until it reaches the stage of producing the first oil.
The Willow project is positioned to be among the most productive oil fields on the North Slope. It is set to access approximately 600 million barrels of recoverable oil and has the capacity to yield up to 180,000 barrels per day. This will represent a substantial increase in North Slope production, which has declined since its peak in 1988 when it exceeded 2 million barrels per day. (ConocoPhillips to Proceed With Alaska's Willow Oil Project)
3. European supermajor Shell entered into a significant five-year crude oil supply agreement with QatarEnergy, the state-owned oil and gas company. Under the agreement, Qatar is set to provide Shell with up to 18 million barrels of oil annually, marking a milestone for the Gulf state's energy industry.
This long-term deal, regarded as QatarEnergy's first-ever five-year crude sales agreement, was announced after negotiations with Shell International Eastern Trading Company. The agreement encompasses the supply of both Qatar Land and Qatar Marine crude oils. The commencement of the supply is scheduled for January, setting the stage for a long-term partnership between the two energy giants.
The agreement aligns with QatarEnergy's broader strategy of establishing enduring strategic business relationships and fostering cooperation within the energy industry. By securing a long-term commitment from Shell, QatarEnergy aims to enhance stability and reliability in its crude oil supply chain. (Shell & QatarEnergy Ink a Major Five-Year Crude Oil Pact)
4. Rome-based energy biggie Eni has initiated the first gas into the Tango floating liquefied natural gas (FLNG) facility, marking the Republic of the Congo’s inaugural natural gas liquefaction project. The successful injection of gas was accomplished within 12 months of the final investment decision.
As an integral component of the Congo LNG project, the facility aligns with Eni’s fundamental efforts for supply diversification and is expected to fulfill the power generation requirements of the country.
The Tango FLNG facility boasts a liquefaction capacity of 1 billion cubic meters per year (bcma). The Tango FLNG facility is tethered next to the Excalibur floating storage unit and employs a configuration known as split mooring. This marks the first implementation of this design in a floating LNG terminal. (Eni Initiates First Gas Into Congo's Tango FLNG Facility).
5. Tulsa, OK-based oil and gas explorer Vital Energy is making significant strides in expanding its footprint in the Permian Basin. The company acquired additional working interests from local operators Henry Energy LP, Moriah Henry Partners LLC and Henry Resources LLC for $55 million.
Vital Energy's latest acquisition will increase its working interest in 45 wells by an average of 24%. The company anticipates a substantial boost to its estimated 2024 production by nearly 1,400 barrels of oil equivalent per day, with 57% being oil. Moreover, the deal is projected to increase Vital Energy's 2024 free cash flow by almost $20 million, contributing to the firm's deleveraging objectives.
To fund the transaction, Vital Energy utilized tag-along rights associated with the Henry acquisition, allowing the purchase and financing of assets on the same terms. The company issued 627,000 shares of its common stock and 595,000 shares of its 2.0% cumulative mandatorily convertible preferred securities. (Vital Energy in $55M Deal to Enhance Permian Presence).
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 -1.9% -4.7%
CVX -1.3% -4.9%
COP -1.4% +12.8%
OXY -1.8% +1.4%
SLB -2% +5.1%
RIG -0.2% -10.3%
VLO -1.7% +11.3%
MPC -1.7% +29.6%
With oil and gas moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 1.3% last week. But over the past six months, the sector tracker has increased 4.2%.
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.