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Energy Market Commentary: IEA Says Global Oil Surplus Is Shrinking .

Oil and gas stocks are set for a higher opening with further strength in the crude oil markets and without much direction from US equity futures.

Energy Market Commentary: IEA Says Global Oil Surplus Is Shrinking

Thursday, September 14, 2017

Sector Commentary

Oil and gas stocks are set for a higher opening with further strength in the crude oil markets and without much direction from US equity futures. Shares of EQT will be in focus today after getting pressure from a second activist investor on the proposed Rice acquisition with DE Shaw calling for a breakup of the company after it completes its purchase of Rice Energy. Otherwise corporate news was very light today.

Crude oil futures are higher, with WTI futures testing the $50 mark again as price have hit 6-week highs while Brent has moved above $55, building on recent gains after forecasts for stronger oil demand by the International Energy Agency. The IEA said that a global oil surplus was shrinking thanks to strong European and U.S. demand as well as production declines in OPEC and non-OPEC countries. Barclays added that a softer market balance is expected next year, which should ensure that the OPEC-led production deal remains in place beyond March. A rebound in Chinese refinery processing rates also supported oil prices this morning along with news that Exxon was going to restart the Beaumont plant for the first time since Harvey.

Natural gas futures are trading marginally lower ahead of this morning’s inventory report which analysts are expecting to show a build of 85 Bcf which would far exceed the five year average build of only 63 Bcf.

U.S. INTEGRATEDS

Press Release - The Russian Government ordered to conclude an amicable agreement with ExxonMobil on the dispute over Sakhalin-1.

(Late Wednesday) Press Release - Sabinal Energy, LLC, oil and natural gas exploration and production company backed by Kayne Anderson Capital Advisors LP, acquired certain producing oil and gas assets located in Hockley, Terry and Gaines counties in the Central Basin platform and Northern Shelf, west Texas, the US, from Chevron U.S.A. Inc.

Press Release - The Azerbaijan government and the State Oil Company of the Republic of Azerbaijan, together with BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh signed the amended and restated agreement on the joint development and production sharing for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field in the Azerbaijan Sector of the Caspian Sea. The contract is now subject to ratification by the Parliament of the Republic of Azerbaijan.

(Late Wednesday) Reuters - ExxonMobil may return its 362,300 barrel per day Beaumont, Texas, refinery to full production by the end of September.

INTERNATIONAL INTEGRATEDS

Press Release - The Azerbaijan government and the State Oil Company of the Republic of Azerbaijan, together with BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh signed the amended and restated agreement on the joint development and production sharing for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field in the Azerbaijan Sector of the Caspian Sea. The contract is now subject to ratification by the Parliament of the Republic of Azerbaijan.

Reuters - BP and Azerbaijan on Thursday signed a contract extending a production sharing deal for the ex-Soviet country's biggest oilfields until 2050.

Press Release - The Supreme Court of Ukraine rejected Gazprom’s appeal against the decision to impose a penalty of $6.7 bln.


Reuters - Statoil scheduled a production outage at one of its natural gas fields, reducing output by 18 mcm per day from Sept. 20-24.

CAnadian INTergrateds

JPMorgan downgraded Imperial Oil to ‘Underweight’ from ‘Neutral’.

U.S. E&PS

JPMorgan downgraded Apache to ‘Underweight’ from ‘Neutral’.

Press Release - Apache intends to sell oil and gas assets located in Lea County in Permian Basin, New Mexico, the US. The assets include 100% working interest in approximately 22,708 gross leasehold acres in the Ranger Prospect.

Press Release - Concho Resources announced that it has priced an offering of a total of $1,800 million aggregate principal amount of senior unsecured notes, consisting of $1,000 million aggregate principal amount of senior unsecured notes due 2027 and $800 million aggregate principal amount of senior unsecured notes due 2047.

Press Release - D. E. Shaw & Co., L.P., on behalf of certain investment funds advised by it that in the aggregate own an approximately 4.0% interest in the common stock and equivalents of EQT Corporation, sent a letter to the Board of Directors of EQT outlining a plan that could unlock $8 billion of value for the Company’s shareholders—representing a 50% upside to the current stock price—and that could be completed during the first half of 2018.

(Late Wednesday) Press Release - EQT Corporation today announced that, immediately upon the closing of the Rice transaction, it will establish a Committee of the Board of Directors to evaluate options for addressing EQT’s sum-of-the-parts discount. The Committee will be led by Stephen A. Thorington and include select EQT independent directors. Based on the Committee’s recommendation, EQT’s Board will announce a decision by the end of the first quarter 2018.

JPMorgan downgraded Hess Corp to ‘Neutral’ from ‘Overweight’.

CANADIAN E&PS

Press Release - Touchstone Exploration’s July and August 2017 crude oil production averaged 1,470 bbls/d. The increase was buoyed by incremental production from the four well drilling campaign as well as continued production from recompletions conducted earlier in the year. The Company’s current field estimated production is approximately 1,500 bbls/d.

OIL SERVICES

(Late Wednesday) Press Release - Wilks Brothers announced that on September 13, 2017, the Acquiror acquired 2,453,000 common shares of Calfrac Well Services at a price of approximately $4.25 per Common Share for a total of $10,425,250 through the facilities of the Toronto Stock Exchange.

DRILLERS

(Late Wednesday) Reuters – Seadrill received court approval of "first day" motions. Expects its operations to continue uninterrupted throughout the reorganization process. Says approved motions give company authority to, continue to pay employee wages and benefits without interruption. Approved motions gives authority to continue to utilize cash management system; continue to pay suppliers, vendors in full under normal terms.

REFINERs

Press Release – Valero Energy Corporation and Magellan Midstream Partners, L.P. announced today the expansion and joint development of the marine storage facility currently under construction along the Houston Ship Channel in Pasadena, Texas. The Pasadena facility, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero Terminaling and Distribution Company, a wholly owned subsidiary of Valero (“VTDC”), and will initially include five million barrels of storage, truck loading facilities, and two proprietary ship docks.

MLPs & Pipelines

Press Release - Cheniere Energy Partners priced the public offering of 5.25% senior notes, due October 1, 2025, for gross proceeds of US$1,500 million. The notes are priced at 100% of the principal amount.

Press Release - Enterprise Products Partners announced that its operating subsidiary, Enterprise Products Operating LLC, has entered into new revolving credit facilities to extend the respective maturity dates of its existing credit facilities. The new facilities consist of a $4.0 billion multi-year revolving credit agreement that matures on September 13, 2022 and a $1.5 billion 364-day revolving credit agreement that matures on September 12, 2018.

Press Release – Valero Energy Corporation and Magellan Midstream Partners, L.P. announced today the expansion and joint development of the marine storage facility currently under construction along the Houston Ship Channel in Pasadena, Texas. The Pasadena facility, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero Terminaling and Distribution Company, a wholly owned subsidiary of Valero (“VTDC”), and will initially include five million barrels of storage, truck loading facilities, and two proprietary ship docks.

MARKET COMMENTARY

U.S. stock index futures were little changed ahead of key U.S. inflation data that could impact the Federal Reserve's decision on another rate hike this year. Weekly jobless claims data is also on the economic calendar. Oracle Corp is expected to report after markets close. World stock prices pulled back from record highs after weaker-than-expected Chinese economic data. Britain's pound jumped after the Bank of England warned interest rates were likely to rise for the first time in more than a decade in the "coming months". Gold steadied as the dollar softened. Oil prices rose on positive oil demand growth forecast.


Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

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