Yahoo Finance Oil & Gas Stock Roundup: Q1 Updates From ExxonMobil and Shell in Focus
Yet again, it was a week when oil prices moved up while natural gas futures continued their descent.
On the news front, energy biggies ExxonMobil XOM and Shell SHEL issued updates on their upcoming Q1 earnings. Developments associated with Ovintiv OVV, Halliburton HAL and Enbridge ENB also made it to the headlines.
Overall, it was another mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 6.6% to close at $80.70 per barrel but natural gas prices fell 9.3% to end at $2.01 per million British thermal units (MMBtu). In particular, the oil market closed up for the third week in a row.
Coming back to the holiday-shortened week ended Apr 6, oil prices following the OPEC+ cartel’s unexpected pledge to cut output by some 1.16 million barrels per day starting in May until the end of the year. The commodity also got a leg up from the government data showing a weekly draw in crude, gasoline and distillate supplies.
Meanwhile, natural gas finished down on a bearish inventory report and forecasts for mild spring weather in the days ahead amid plentiful supply.
Recap of the Week’s Most Important Stories
1. ExxonMobil indicated that first-quarter 2023 operating profits could have declined from last year’s peak levels due to the drop in oil and gas prices. The American energy multinational company expects an operational profit of $9.6 billion for the first quarter, down from the $12.8 billion net profit reported in the fourth quarter of 2022.
ExxonMobil signaled slightly weaker profits for the first quarter. The Zacks Rank #3 (Hold) company expects declining oil and gas prices to lower the earnings of its production business. The oil major expects its upstream business to generate lower earnings by $1-$1.8 billion in the first quarter, sequentially, as crude prices fell.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The decline in natural gas prices is likely to have negatively impacted the upstream business’ profits by $400-$800 million, while lower crude oil prices accounted for $0.6-$1 billion. The company could face $1.8-$2.2 billion in upstream mark-to-market derivative losses. (ExxonMobil Projects $9.6B Operating Profit for Q1)
2.Shell said its first-quarter results would reflect good performances from the Integrated Gas and Chemicals & Products divisions. The London-based supermajor further revealed that its Marketing unit earnings would be sequentially stronger and upstream volumes would go up slightly.
According to the latest update, Shell’s upstream production inched up 0.5% on a sequential basis in the first quarter of 2023 at the midpoint of the guidance. The supermajor estimates its output in the range of 1,800-1,900 MBOE/d compared to 1,859 MBOE/d in the fourth quarter of 2022.
Shell’s LNG liquefaction volumes are expected in the range of 7-7.4 million tons, translating into an increase of around 6% sequentially on the back of more working time at its Australian facilities. Shell’s integrated gas production is expected to grow to the range of 930,000-970,000 barrels of oil equivalent per day (BOE/d) or 950,000 BOE/d at the midpoint. It was 917,000 BOE/d in the December quarter. (Digging Into Shell's Bright Earnings Outlook for Q1)
3. Ovintiv, an independent energy company with operations in North America, recently announced that it would acquire the leasehold interest and related assets of Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources. These companies are portfolio enterprises of funds managed by EnCap Investments L.P. The cash and stock deal is worth approximately $4.275 billion.
Ovintiv has a strong presence in the Permian Basin, where it has been actively exploring and producing oil and gas for many years. With the acquisition of Core Midland Basin Assets, the company is set to strengthen its position in the Permian Basin and increase its overall production capacity.
The deal is expected to add about 1,050 well locations to Ovintiv's Permian inventory and about 65,000 net acres to the Midland Basin's core region, which is ideally located close to the company’s existing Permian operations. (Ovintiv to Acquire Midland Basin Assets for $4.275B)
4 Oilfield service major Halliburton’s subsidiary Landmark recently announced that its iEnergy digital platform was selected by Brazilian oil and gas company Petrobras to manage the subsurface issues faced by it.
The agreement makes Halliburton’s entire Landmark DecisionSpace 365 Geoscience Suite available to Petrobras, which includes certain sophisticated technologies to help in the extraction and production of hydrocarbons. The Rio de Janeiro-based integrated player’s adoption of DecisionSpace 365 is part of its ongoing efforts to modernize operations and leverage digital technologies for better functional efficiency.
Investors should know that Halliburton’s iEnergy digital platform — behind the DecisionSpace 365 cloud applications — provides state-of-the-art solutions for different aspects of the upstream industry, together with high-performance processing and machine learning. (Halliburton to Deliver Digital Solutions to Petrobras)
5. North American energy infrastructure provider Enbridge and Yara Clean Ammonia, a subsidiary of Yara International ASA, recently declared that they signed a letter of intent to jointly develop a world-class low-carbon blue ammonia production facility. The Enbridge Ingleside Energy Center, which is near Corpus Christi, TX, will house the proposed facility that includes autothermal reforming with carbon capture.
With a projected production capacity of 1.2-1.4 million tons per year, the facility will be able to meet the rising global demand for low-carbon ammonia. Approximately 95% of the carbon dioxide produced during the production is anticipated to be captured and transferred to a nearby permanent geologic storage.
Production is anticipated to begin in 2027 or 2028 if confirmed through the Front-end Engineering Design phase. The overall project expenditure is anticipated in the $2.6-$2.9 billion range. (Enbridge, Yara to Co-build Texas Blue Ammonia Facility)
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 +4.9% +16.4%
CVX +2.8% +6.7%
COP +7.1% -9%
OXY +1% -4%
SLB +1.1% +17.8%
RIG 0% +112%
VLO -5% +19.6%
MPC -4.6% +21.3%
With oil rising for the week, most stocks were up too. The Energy Select Sector SPDR — a popular way to track energy companies — rose 2.6% last week. Over the past six months, the sector tracker has increased 6.1%.
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. Currently, news related to the financial sector in view of the bank jitters will be the key factor that will dictate the near-term price movement of the commodities.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
Ovintiv Inc. (OVV) : Free Stock Analysis Report
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
