Chicago, IL – April 5, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: ExxonMobil XOM, Transocean RIG, BP plc BP, ConocoPhillips COP and Shell SHEL.
It was a week when oil prices moved up while natural gas futures briefly broke below the $2 threshold for the first time since 2020.
On the news front, U.S. energy biggie ExxonMobil signed a deal to sell stakes in two of its offshore explorations in Canada, while offshore driller Transocean announced a series of contract wins. Developments associated with BP plc, ConocoPhillips and Shell also made it to the headlines.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 9.2% to close at $75.67 per barrel but natural gas prices fell 6.1% to end at $2.216 per million British thermal units (MMBtu). In particular, the oil market closed up for the second week in a row.
Coming back to the week ended Mar 31, oil prices jumped, as worries over the banking crisis eased considerably. The commodity also got a leg up after the closure of a key oil export pipeline in northern Iraq and the Federal Reserve’s signal of an imminent end to interest rate increases.
Meanwhile, natural gas finished down on a bearish inventory report and forecasts for warmer weather amid plentiful supply.
1. ExxonMobil entered into an agreement with QatarEnergy to divest stakes in two exploration blocks offshore Newfoundland & Labrador. Per the terms of the agreement, QatarEnergy will acquire interests in exploration licenses (ELs) 1162 and 1167. The companies did not reveal any financial details of the agreement.
The acquisition will enable QatarEnergy to expand its offshore exploration portfolio in Atlantic Canada. EL 1167 and EL 1162 cover more than 3800 square kilometers.
Once the deal closes, QatarEnergy will have a 28% interest in EL 1167. ExxonMobil will continue to operate EL 1167 with a 50% interest. QatarEnergy will also have a 40% interest in EL 1162, while the American integrated major holds the rest. (ExxonMobil to Sell Stake in Canada Exploration Blocks)
2. Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services, recently informed that it has secured contracts for two of its harsh environment semisubmersibles.
The deals add a significant $113 million to the company’s contract backlog. This announcement comes on the heels of its contract wins from Equinor, wherein the Norwegian energy major entered into agreements for two of Transocean’s semisubmersibles drilling rigs. These developments are great news for RIG and its investors and further solidify the company’s position as a leading provider of offshore drilling services.
As part of the latest order, one of the contracts was awarded to Transocean Endurance in Australia, where it will enter into a multi-well plug and abandonment contract with an unnamed operator. This particular contract alone will contribute an impressive $91 million to RIG’s backlog. In addition to the Australian contract, Transocean also secured a deal with Wintershall DEA in Norway. The one-well option on the Transocean Norge is expected to begin in May 2023, ahead of the existing firm term of 60 days. It will contribute a further $22 million to the company's backlog. (Transocean Continues to Secure Drilling Contracts)
3. BP signed an agreement to help drivers on Uber Technologies’ platform shift to electric vehicles (EVs) by granting access to its high-speed charging network. The companies will utilize their global footprints to help drivers switch to EVs by providing access to reliable and convenient charging, including those at ultra-fast speeds.
Uber intends to have all rides on its platform be carried through EVs, micro-mobility or public transport by 2040. The agreement will boost Uber’s strategy to be a zero-tailpipe emissions mobility platform in the United States, Canada and Europe by 2030, and globally by 2040.
The incentives will be initially offered in markets, including the United States, the U.K. and parts of Europe. Per the contract, BP will provide bespoke deals to drivers on the Uber platform, which are tailored to each market. This includes incentives for drivers to charge their cars at stations that are part of the British energy giant’s Pulse charging network. (BP to Offer Access to Charging to Help Uber Drivers Go Electric)
4 One of the world’s largest independent oil and gas producers, ConocoPhillips plans to acquire an additional stake in Australia Pacific LNG (“APLNG”) from a subsidiary of institutional investor EIG. ConocoPhillips currently holds a 47.5% stake in the APLNG project. The Zacks Rank #3 (Hold) company operates the 9-metric-ton-per-annum LNG export facility on Curtis Island near Gladstone. Origin Energy, the current upstream operator, owns a 22.5% stake
You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips agreed to acquire up to an additional 2.49% interest in APLNG for $500 million, subject to customary adjustments. Once the transaction closes, the energy giant will own up to a 49.99% stake and become the upstream operator of APLNG.
APLNG is currently the largest natural gas supplier of Australia’s East Coast domestic market. APLNG addresses about 20-30% of the region’s total demand. In January 2016, the facility shipped its first LNG cargo after five years of development and construction. (ConocoPhillips to Acquire Additional Stake in APLNG)
5. Shell, Europe's largest oil and gas company, recently appointed a new CEO, Wael Sawan, who faces a challenging task in balancing the increasing demand for fossil fuels against the pressing need to address climate risks. In the wake of rising global temperatures and increasing concerns about carbon emissions, Shell is under pressure to transition to a cleaner, more sustainable energy future.
Shell has acknowledged the need to transition to a more sustainable energy future and has set targets to reduce its carbon emissions. The company has also set a target to reduce the carbon intensity of its products by 20% and 45% in 2030 and 2035, respectively. It has also committed to becoming a net-zero emissions company by 2050.
Shell’s new CEO, Wael Sawan faces several challenges in his quest to balance the increasing demand for fossil fuels against the pressing need to address climate change risks. One of the biggest challenges is the company's traditional business of producing and selling fossil fuels. Despite the increasing demand for renewable energy, oil and gas still account for the majority of Shell's revenues. (Shell Faces Dilemma Over Climate Change & Oil Demand)
With oil rising for the week, stocks were up too. The Energy Select Sector SPDR — a popular way to track energy companies — rose 6.3% last week. Over the past six months, the sector tracker has increased 8.9%.
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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