Yahoo Finance Oil & Gas Stock Roundup: Updates From Chevron and Shell Lead Week's Action
It was a week when oil prices moved down while natural gas futures rebounded from past losses.
On the news front, the headlines came from supermajor Chevron’s CVX start-up of the Gorgon extension project in Australia and London-based biggie Shell’s SHEL pullout from its European home retail energy businesses. Developments associated with ConocoPhillips COP, Eni E and Cactus WHD also made it to the headlines.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures decreased 2.2% to close at $70.17 per barrel but natural gas prices rose 3.8% to end at $2.25 per million British thermal units (MMBtu).
In particular, the crude price action continued in the negative, with even Saudi Arabia’s surprise decision to slash output by an additional one million barrels per day from next month unable to stop oil from slipping back to below $70 during the week. The EIA report revealing builds in fuel stocks was also a major factor.
Meanwhile, natural gas performed far better following a lower-than-expected increase in stockpiles held in underground storage in the lower 48 states and signs of curtailment in domestic output.
Recap of the Week’s Most Important Stories
1. U.S. oil major Chevron’s unit in Australia and its Gorgon joint venture partners recently commenced gas production from the Gorgon Stage 2 development project. Located off the coast of Western Australia, the expansion project aims to enhance the existing subsea gas gathering network of the massive Gorgon development, which supplies LNG to customers across Asia and caters to the domestic gas market. With a 47% ownership stake, CVX is the owner as well as the operator of this ground-breaking venture.
The LNG sourced from the Gorgon fields is primarily exported to customers across Asia, where there’s growing demand for clean and reliable energy sources. The Gorgon LNG project contributes to the energy security and economic prosperity of Western Australia by fostering long-term partnerships and providing a sustainable energy solution.
This gas supply is essential for powering industries, supporting economic growth, and meeting the energy needs of residential and commercial consumers in the region. Chevron's commitment to the local market reinforces its position as a key contributor to the region’s energy landscape. (Chevron Achieves First LNG Production at Gorgon Stage 2)
2. Shell declared the exit of its home energy retail unit from the energy markets in the United Kingdom, Netherlands and Germany. The announcement came following a comprehensive review undertaken by Europe’s largest oil company in late January.
Shell has assured that there will be no disruption to its energy services during the sales process. The company remains committed to providing uninterrupted support to customers and ensuring their interests. SHEL is also focused on facilitating a seamless transfer to a potential buyer that is capable of delivering on its obligations, including the maximization of employment opportunities.
It is important to note that the impending divestment pertains exclusively to Shell's home energy retail unit operating in certain European countries. The business-to-business wholesale and small-to-medium-enterprise customer supply divisions under the Shell Energy brand, as well as the home energy retail businesses outside Europe, remain unaffected by this decision. (Shell to Wind Down European Retail Power Business)
3. One of the world’s largest independent oil and gas producers, ConocoPhillips will start developing its Nuna field in Alaska, which is expected to add up to 20,000 barrels per day of oil from the site. The Zacks Rank #2 (Buy) company cited that funding had been approved for developing the Nuna project.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In 2019, ConocoPhillips acquired the Nuna acreage from Dallas-based Caelus, which had already constructed the gravel road and pad for the drill site. The project’s construction activities will commence this year at ConocoPhillips’ 3T drill site at its Kuparuk River Unit (“KRU”). Drill site 3T is the 49th drill site developed within the KRU. It will continue in 2024 with pipeline and on-pad construction. The company expects drilling activities to start in late 2024, with the first oil anticipated by early 2025.
ConocoPhillips is the largest crude oil producer in Alaska. The company is the largest owner of exploration leases, with 1.2 million net undeveloped acres as of 2022. It has major ownership interests in two of North America’s largest legacy conventional oil fields — Kuparuk and Prudhoe Bay. Both are situated on Alaska’s North Slope. (ConocoPhillips Commences Alaska's Nuna Oilfield Project)
4. Rome-based energy biggie Eni signed an agreement with the oil and gas company KazMunayGas (KMG) to develop a first-of-its-kind 250-megawatt (MW) hybrid renewable and gas power facility in Kazakhstan. The project will involve solar power, wind power and gas power facilities to produce and supply low-carbon electricity.
The hybrid model will help diversify and decarbonize the energy supply for oil and gas assets in the Mangystau region. It will contribute to human capital development in the renewable energy sector. Eni is committed to bolstering its position in Kazakhstan's energy transition. The project marks a step toward expanding the Italian oil giant’s renewable generation capacity, while supporting Kazakhstan’s decarbonization plans.
Eni has been contributing to Kazakhstan’s growth since 1992 as a joint operator in the Karachaganak field. The company is also an equity partner in various projects in the Northern Caspian Sea, including the Kashagan giant field. (Eni to Build Kazakhstan's First Hybrid Renewable Gas Plant)
5. Oilfield services provider Cactus’ board of directors approved the repurchase of its Class A common stock, par value $0.01 per share, for up to $150 million in total. Following the announcement on Jun 7, the stock rallied almost 7%. The repurchase will take place through open market transactions.
In an investor presentation released on the same date, WHD stated that it anticipates second-quarter sales for its pressure control segment to be flat to slightly higher than the first-quarter level, citing stronger-than-anticipated custom activity compared to rig declines. Second-quarter revenues for the spoolable technologies segment are anticipated in the range of $105-$110 million.
Due to increased activity and better cost management, WHD expects adjusted EBITDA margin of 34-36% for pressure control and “in the upper 30% range” for spoolable technologies. (Cactus Rises 7% on $150M Buyback & Strong Q2 Guidance)
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 +1.5% 0%
CVX +1.7% -8%
COP +1.5% -8.4%
OXY -0.3% -7.7%
SLB +2.2% -4.9%
RIG -5.2% +34.1%
VLO +3.8% -5.6%
MPC +3.8% +1.4%
While oil and gas moved in opposite directions for the week, stocks were mostly positive. The Energy Select Sector SPDR — a popular way to track energy companies — fell 1.8% last week. Over the past six months, the sector tracker has decreased 5.8%.
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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Chevron Corporation (CVX) : Free Stock Analysis Report
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Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
