It was a week where oil prices rose back above the psychological $50-a-barrel mark, while a bearish build created selling pressure on natural gas futures.

On the news front, world’s second largest oilfield services group Halliburton Co. (HAL Quick QuoteHAL - Free Report) appointed Jeff Miller – a board member and president – as its new chief executive officer, while energy equipment maker National Oilwell Varco Inc. (NOV Quick QuoteNOV - Free Report) is set to form a Joint Venture in Saudi Arabia with state-owned Saudi Aramco.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures gained 5.2% to close at $50.33 per barrel, natural gas prices fell 4.9% to $3.256 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Exxon's Petrochem Plant Buy, WildHorse's Eagle Ford Acquisition & More.)

Oil prices climbed past $50 for the first time in a month, bolstered by the U.S. Energy Department's inventory release. The report revealed that crude stockpiles declined for the sixth straight week, continuing to drag down the overall surplus. Moreover, domestic oil production fell for the first time in 3 months. Prices were further supported by suggestions from top exporters that the OPEC and non-OPEC countries might expand output cuts until the end of Mar 2018.

Meanwhile, natural gas turned lower following a larger-than-expected storage build. The commodity was also undone by predictions of mild temperatures over the next two weeks that will limit cooling demand for the fuel.

Recap of the Week’s Most Important Stories

1.    Major oilfield service provider Halliburton Co. announced that its board of directors has appointed Jeff Miller as the new CEO of the company effective Jun 1.

Miller will replace Dave Lesar, who will continue to serve as the executive chairman of the company till Dec 2018, when he reaches Halliburton’s mandatory retirement age of 65. As the executive chairman, Lesar will mainly focus on the strategic direction of the company. Per his new executive employment agreement, Lesar will be prohibited to work for any of the company’s peers for the next four years. Lesar took over as the company’s CEO in 2000, after Dick Cheney became the U.S. Vice President.

Miller is known for his solid rapport with customers and employees, and for leading successful projects. Miller joined Halliburton in 1997 and was promoted to the post of President and a fellow board member in mid-2014.

As the company’s new CEO, Miller will be responsible for the day to day leadership and management, planning and execution of the company’s strategic direction. He would also be in-charge of the financial objectives and technology development with the company’s management team who would be reporting directly to him.(Read more: Halliburton Elects Miller as CEO, Chalks Out Recovery Plans.)

2.    Houston-based energy equipment supplier National Oilwell Varco Inc. entered into a memorandum of understanding with Saudi Arabian Oil Co., or Saudi Aramco, to form a joint venture (JV) in the Middle Eastern country.

While National Oilwell will own 70% interest in the JV, Saudi Aramco will hold the remaining 30% interest. The JV will be supported by a commitment from drilling contractor Nabors Industries Ltd., which entered into a partnership with Saudi Aramco to purchase fifty onshore drilling rigs over ten years. The memorandum of understanding contains detailed commercial term sheet and is subject to negotiations.

The JV will manufacture high-specification land rigs and drilling equipments and will offer certain aftermarket services. The deal will also create a training center for Saudi technicians to maintain and operate the drilling technology of JV. It will create over 1,000 jobs and lead to economic growth.

The formation of the JV is expected to strengthen National Oilwell‘s drilling technology franchise as well as support Aramco’s supply chain integration initiative. (Read more: National Oilwell, Saudi Aramco Team Up to form Joint Venture.)

3.    Energy giant BP plc (BP Quick QuoteBP - Free Report) – on behalf of its partners Royal Dutch Shell plc and Siccar Point Energy – announced the resumption of operations of the Quad 204 project in the redeveloped Schiehallion Area, west of Shetland region, offshore UK. The production start-up will help BP to double its volumes in the area by the end of the decade after output was suspended in 2013.

BP and its co-venturers had estimated the cost for the Quad 204 project at 4.4 billion pounds ($5.7 billion). The cost included construction of a new floating production and supply offloading (FPSO) vessel, the ‘Glen Lyon’, along with redevelopment of the mature Schiehallion and Loyal fields.

In 2017, BP expects output from Quad 204 to grow to 130,000 barrels of oil per day and estimates the output to nearly double to 200,000 barrels of oil per day by 2020. BP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The first development of the Schiehallion and the adjacent Loyal fields began in the mid-1990s. Since the commencement of production in 1998, the fields have produced about 400 million barrels of oil. Further, around 450 million barrels of resources are expected to be unlocked from the fields through the redevelopment of the Quad 204 project. This in turn will extend the life of the fields out to 2035 and beyond.

The redevelopment of the Quad 204 project will boost BP’s North Sea business. Additionally, BP is likely to gain from the increased production and cash flows from the steady commissioning of major projects over the coming years. (Read more BP Reinitiates $5.7 Billion Quad 204 Project at Offshore UK.)

4.    Dallas-based pipeline operator Energy Transfer Partners L.P. is set to acquire the outstanding units of its Houston-based subsidiary, PennTex Midstream Partners L.P.

Energy Transfer Partners launched a tender offering of $20 per unit in cash to purchase the remaining units of PennTex on May 18. The total transaction value is estimated at $280.25 million and the offering is scheduled to expire on Jun 19.

Energy Transfer Partners currently owns 32.4% of common units of PennTex and needs another 47.6 % to increase its ownership to 80%. This will enable Energy Transfer Partners to exercise its call option for the remaining 20%. After the partnership exercises its right, PennTex’s remaining unit holders will receive at least the same cash price per common unit as paid in the tender offer.

Acquisition of PennTex interests by Energy Transfer Partners is a prudent move. Since Energy Transfer Partner’s existing midstream footprint is complementary to PennTex midstream assets, it is likely to create additional opportunities for the partnership and boost growth and value. (Read more: Energy Transfer Partners to Buy the Remaining PennTex Units.)

5.    Well completion services provider Keane Group Inc. announced that it has entered into an agreement to acquire Denver-based fracking firm RockPile Energy Services, LLC for $284.5 million. Keane expects the deal to be closed by Jul 31, subject to regulatory approval.

Keane is expected to pay $135 million in cash and 8.7 million shares of its common stocks for the transaction. The deal also incorporates contingent consideration of up to $20 million in case Keane’s stock price falls below $19 per unit. 

The buyout will make Keane one of the largest and extremely advanced pressure pumping fleet owners in the country. The company's pressure pumping fleet size will increase approximately 26% after the acquisition. Keane will have around 1.2 million hydraulic fracturing horsepower fleet placed strategically across the most prolific shale basins in the U.S. (Read more: Keane Inks Deal to Buy RockPile Energy for $284.5M.)

Price Performance

The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months.

Over the course of last week, the Energy Select Sector SPDR – a popular way to track energy companies – fell by 0.42%. The worst performer was offshore drilling giant Transocean Ltd. (RIG Quick QuoteRIG - Free Report) whose stock price plunged 6.80%.

Longer-term, over the last 6 months, the sector tracker is down 7.05%. Houston-based energy explorer Occidental Petroleum Corp. (OXY Quick QuoteOXY - Free Report) was the major laggard during this period, experiencing a 13.26% price decline.

What’s Next in the Energy World?

Market participants will be closely tracking the regular releases i.e. the U.S. government statistics on oil and natural gas. Energy traders will also be focusing on the Baker Hughes data on rig count.

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