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Overall, it was a mixed seven-day period for the sector. West Texas Intermediate crude futures increased around 1% to close at $73.41 per barrel, but natural gas prices plunged some 24% to end at $2.52 per million British thermal units (MMBtu).
The crude price action flipped into positive territory after a weekly report from the Energy Information Administration showed shrinking supplies. The strong demand growth forecast for 2024 by the International Energy Agency and rising Middle East tensions further supported the commodity.
Meanwhile, natural gas fell sharply following bearish inventory numbers and predictions of weaker weather-related demand in late January.
Recap of the Week’s Most Important Stories
1. SLB, the largest oilfield contractor, announced fourth-quarter 2023 earnings of 86 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 84 cents. SLB’s bottom line also significantly increased from the year-ago quarter’s earnings of 71 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activity in the international market. As of Dec 31, 2023, the company had approximately $4 billion in cash and short-term investments. It had a long-term debt of $10.8 billion at the end of 2023.
SLB believes that the overall market fundamentals are clearly in favor of its business activities. Strong growth is expected from international and offshore markets, and the leading oilfield service provider is likely to benefit significantly from the region where it has a significant footprint. The anticipated capital investment for full-year 2024 (including capex, exploration data costs and APS investments) is $2.6 billion, which is in line with the previous year’s actuals.
2. Energy infrastructure provider Kinder Morgan reported fourth-quarter adjusted earnings per share of 28 cents, slightly below the Zacks Consensus Estimate of 31 cents. The bottom line was adversely affected by a decline in realized weighted natural gas liquid price and milder winter conditions observed in 2023. However, KMI’s fourth-quarter DCF was $1.2 billion, down $46 million from a year ago.
In its initial budget for 2024, KMI projected an EPS of $1.21 and DCF per share of $2.21, excluding the NextEra Energy Partners’ STX Midstream assets acquisition completed on Dec 28, 2023. With the inclusion of the acquisition, the revised 2024 budget reveals an increased EPS of $1.22, marking a 15% rise from 2023, and DCF per share of $2.26.
As of Dec 31, 2023, Kinder Morgan reported $83 million in cash and cash equivalents. Its long-term debt amounted to $27.9 billion at the quarter-end. In its initial budget for 2024, KMI also set its adjusted EBITDA guidance of $8.2 billion and a dividend of $1.15 per share for 2024, suggesting an increase from the prior-year reported figure of $1.13. (Kinder Morgan Lags on Q4 Earnings, Ups '24 EPS Guidance)
3. ExxonMobil, the U.S.-based energy giant, signed an agreement to purchase an additional 1.2 million metric tons per year (MMtpa) of liquefied natural gas (“LNG”) from Mexico Pacific on a free-on-board basis.
This 20-year supply deal with ExxonMobil paves the way for Mexico Pacific to reach a final investment decision to expand its Saguaro Energia LNG Plant, situated on the west coast of Mexico.
The deal follows the exercise of options by ExxonMobil for additional volumes under separate sales and purchase agreements signed in January 2023. Per the terms of the aforementioned agreement, ExxonMobil purchased 2 million tons per year of LNG from Saguaro Energia’s first two LNG Trains. The Saguaro Energia project, worth $15 billion, has been planned to transport 15 MMtpa of LNG to Asia. (ExxonMobil Signs a 20-year Agreement for LNG Purchase)
4. Shell recently announced its final investment decision on the Victory gas project in the West of Shetland waters. This monumental decision, taken 47 years after the field's original discovery by Texaco, signifies a crucial development in the challenging environment of the Atlantic Margin.
The London-based energy biggie’s decision to greenlight the Victory gas project is a testament to its commitment to sustaining domestic production amid a decline in the U.K.'s demand for oil and gas. The field, located 47 kilometers northwest of the Shetland Islands, was heavily assessed before the final investment decision, showcasing Shell's dedication to ensuring the project's viability.
With expectations to come online in the middle of this decade, the project is poised to produce approximately 150 million cubic feet per day of gas at its peak. The majority of the field's recoverable gas, estimated at 180 billion cubic feet, is anticipated to be extracted from its Block 207/1a location by the end of this decade. (Shell's Victory Gas Project to Boost U.K. Production).
5. U.S. supermajor Chevron has disclosed its intention to divest its shale-gas business in Alberta's Duvernay field, signaling a strategic effort to streamline operations following recent acquisitions. Boasting a 70% interest in around 235,000 acres, Chevron currently yields 40,000 barrels of oil and gas per day from these assets.
Analysts project the Duvernay assets' value to be as high as $900 million. This divestment aligns with Chevron's broader strategy to shed $10 to $15 billion in assets, emphasizing an intensified focus on high-performing sectors. While the Duvernay field holds substantial value, its sale underscores Chevron's dedication to optimizing its global portfolio. In actively seeking potential buyers, the overarching objective is portfolio diversification, prioritizing high-return assets, geographical diversity, and reduced carbon intensity.
The Duvernay move is part of its broader asset divestment strategy, following the $53 billion Hess Corp. acquisition. Over the past few years, the company’s other significant buyouts include PDC Energy and Noble Energy, which have significantly expanded Chevron's oil and gas output. (Chevron Plans Duvernay Asset Sale, Optimizes Portfolio).
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 staying essentially unchanged and natural gas moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 3% last week. Over the past six months, the sector tracker has decreased 4.5%.
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: Q4 Earnings From SLB, KMI & More
It was a week when oil prices rose while natural gas futures experienced heavy losses.
The headlines revolved around the December-quarter earnings of SLB (SLB - Free Report) and Kinder Morgan (KMI - Free Report) . Developments associated with ExxonMobil (XOM - Free Report) , Shell (SHEL - Free Report) and Chevron (CVX - Free Report) also grabbed attention.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate crude futures increased around 1% to close at $73.41 per barrel, but natural gas prices plunged some 24% to end at $2.52 per million British thermal units (MMBtu).
The crude price action flipped into positive territory after a weekly report from the Energy Information Administration showed shrinking supplies. The strong demand growth forecast for 2024 by the International Energy Agency and rising Middle East tensions further supported the commodity.
Meanwhile, natural gas fell sharply following bearish inventory numbers and predictions of weaker weather-related demand in late January.
Recap of the Week’s Most Important Stories
1. SLB, the largest oilfield contractor, announced fourth-quarter 2023 earnings of 86 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 84 cents. SLB’s bottom line also significantly increased from the year-ago quarter’s earnings of 71 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activity in the international market. As of Dec 31, 2023, the company had approximately $4 billion in cash and short-term investments. It had a long-term debt of $10.8 billion at the end of 2023.
SLB believes that the overall market fundamentals are clearly in favor of its business activities. Strong growth is expected from international and offshore markets, and the leading oilfield service provider is likely to benefit significantly from the region where it has a significant footprint. The anticipated capital investment for full-year 2024 (including capex, exploration data costs and APS investments) is $2.6 billion, which is in line with the previous year’s actuals.
2. Energy infrastructure provider Kinder Morgan reported fourth-quarter adjusted earnings per share of 28 cents, slightly below the Zacks Consensus Estimate of 31 cents. The bottom line was adversely affected by a decline in realized weighted natural gas liquid price and milder winter conditions observed in 2023. However, KMI’s fourth-quarter DCF was $1.2 billion, down $46 million from a year ago.
In its initial budget for 2024, KMI projected an EPS of $1.21 and DCF per share of $2.21, excluding the NextEra Energy Partners’ STX Midstream assets acquisition completed on Dec 28, 2023. With the inclusion of the acquisition, the revised 2024 budget reveals an increased EPS of $1.22, marking a 15% rise from 2023, and DCF per share of $2.26.
As of Dec 31, 2023, Kinder Morgan reported $83 million in cash and cash equivalents. Its long-term debt amounted to $27.9 billion at the quarter-end. In its initial budget for 2024, KMI also set its adjusted EBITDA guidance of $8.2 billion and a dividend of $1.15 per share for 2024, suggesting an increase from the prior-year reported figure of $1.13. (Kinder Morgan Lags on Q4 Earnings, Ups '24 EPS Guidance)
3. ExxonMobil, the U.S.-based energy giant, signed an agreement to purchase an additional 1.2 million metric tons per year (MMtpa) of liquefied natural gas (“LNG”) from Mexico Pacific on a free-on-board basis.
This 20-year supply deal with ExxonMobil paves the way for Mexico Pacific to reach a final investment decision to expand its Saguaro Energia LNG Plant, situated on the west coast of Mexico.
The deal follows the exercise of options by ExxonMobil for additional volumes under separate sales and purchase agreements signed in January 2023. Per the terms of the aforementioned agreement, ExxonMobil purchased 2 million tons per year of LNG from Saguaro Energia’s first two LNG Trains. The Saguaro Energia project, worth $15 billion, has been planned to transport 15 MMtpa of LNG to Asia. (ExxonMobil Signs a 20-year Agreement for LNG Purchase)
4. Shell recently announced its final investment decision on the Victory gas project in the West of Shetland waters. This monumental decision, taken 47 years after the field's original discovery by Texaco, signifies a crucial development in the challenging environment of the Atlantic Margin.
The London-based energy biggie’s decision to greenlight the Victory gas project is a testament to its commitment to sustaining domestic production amid a decline in the U.K.'s demand for oil and gas. The field, located 47 kilometers northwest of the Shetland Islands, was heavily assessed before the final investment decision, showcasing Shell's dedication to ensuring the project's viability.
With expectations to come online in the middle of this decade, the project is poised to produce approximately 150 million cubic feet per day of gas at its peak. The majority of the field's recoverable gas, estimated at 180 billion cubic feet, is anticipated to be extracted from its Block 207/1a location by the end of this decade. (Shell's Victory Gas Project to Boost U.K. Production).
5. U.S. supermajor Chevron has disclosed its intention to divest its shale-gas business in Alberta's Duvernay field, signaling a strategic effort to streamline operations following recent acquisitions. Boasting a 70% interest in around 235,000 acres, Chevron currently yields 40,000 barrels of oil and gas per day from these assets.
Analysts project the Duvernay assets' value to be as high as $900 million. This divestment aligns with Chevron's broader strategy to shed $10 to $15 billion in assets, emphasizing an intensified focus on high-performing sectors. While the Duvernay field holds substantial value, its sale underscores Chevron's dedication to optimizing its global portfolio. In actively seeking potential buyers, the overarching objective is portfolio diversification, prioritizing high-return assets, geographical diversity, and reduced carbon intensity.
The Duvernay move is part of its broader asset divestment strategy, following the $53 billion Hess Corp. acquisition. Over the past few years, the company’s other significant buyouts include PDC Energy and Noble Energy, which have significantly expanded Chevron's oil and gas output. (Chevron Plans Duvernay Asset Sale, Optimizes Portfolio).
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 -3% -6.8%
CVX -3.4% -10.2%
COP -3.4% -4.4%
OXY -2.8% -6.5%
SLB -0.6% -9.5%
RIG -4.1% -33.1%
VLO -2.5% +5%
MPC -2.8% +22.8%
With oil staying essentially unchanged and natural gas moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 3% last week. Over the past six months, the sector tracker has decreased 4.5%.
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.