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The Zacks Analyst Blog ExxonMobil's, APA, TotalEnergies', Eni SpA and EQT
Read MoreHide Full Article
For Immediate Releases
Chicago, IL – October 11, 2024 – 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’s (XOM - Free Report) , APA Corp. (APA - Free Report) – TotalEnergies’ (TTE - Free Report) , Eni SpA (E - Free Report) and EQT Corp. (EQT - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Oil & Gas Stock Roundup: XOM's Q3 Update and More
It was a week when oil prices logged its biggest percentage climb since March 2023 while natural gas futures flipped into negative territory.
The headlines revolved around energy biggie ExxonMobil’s Q3 earnings update and APA Corp. – TotalEnergies’ Suriname oil field approval. Developments associated with Eni SpA and EQT Corp. also grabbed attention.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures jumped around 9.1% to close at $74.38 per barrel, but natural gas prices moved down 1.7% to end at $2.85 per million British thermal units (MMBtu).
The crude price surge resulted from heightened geopolitical tensions in the oil-rich Middle East.
Meanwhile, natural gas settled with its first loss after five consecutive gains due to worries over the commodity’s immediate consumption.
Recap of the Week’s Most Important Stories
1. American energy multinational ExxonMobil has issued a warning about its third-quarter financial results, indicating a negative impact due to declining oil prices and refining margins from the second quarter. In its regulatory filing, XOM outlined the potential effects on its earnings across various segments.
The company anticipates the decrease in crude prices to reduce $600 million to $1 billion in upstream profit. Similarly, changes in industry margins for energy products are expected to have a comparable impact. Then again, gas prices might either improve upstream earnings by $200 million or reduce them by the same amount.
Lower refining margins are projected to reduce third-quarter earnings by up to $1 billion. For each segment, earnings from specialty and chemical products are estimated between breakeven and $200 million. (ExxonMobil Warns of $1B Hit to Q3 Earnings Amid Falling Oil Prices)
2. The U.S. exploration and production company APA and French oil major TotalEnergies, through its subsidiary, signed a final investment decision regarding the production of 220,000 barrels of oil per day in Block 58 located offshore Suriname.
The oil production project, named GranMorgu, will include production from the Sapakara and Krabdagu oil fields, which have combined recoverable resources estimated above 700 million barrels. TTE and APA will jointly develop the GranMorgu project and tap the vast oil reserves discovered in both fields. With a total investment of $10.5 billion, the project is expected to start oil production by 2028 and to reach a daily output of 220,000 barrels of oil.
The production and development of the Sapakara and Krabdagu fields, located between 100 and 1,000 meters, will take place by drilling a total of 32 wells connected to a Floating Production, Storage and Offloading (FPSO) unit, located approximately 150 km off the Suriname coast. The FPSO is designed with such advanced technology that it can accommodate future development opportunities too. (APA and TotalEnergies Announce Joint Venture Offshore Suriname)
3. Italy’s energy giant Eni has merged its UK upstream oil and gas assets with Delek Group's Ithaca Energy, excluding East Irish Sea and carbon capture, utilization and storage activities. Recently, Ithaca Energy finalized a £754 million all-share deal to acquire nearly all of Eni's UK oil and gas production assets, establishing one of the largest independent energy companies in the North Sea.
Following this merger, the newly expanded Ithaca Energy now holds stakes in six of the UK’s 10 largest oil fields, including major assets like Rosebank, Cambo and Schiehallion, reinforcing its position in the North Sea oil and gas sector.
The combined entity has the potential to produce more than 100,000 barrels of oil equivalent per day (boe/d) in 2024, with ambitions to ramp up production to 150,000 boe/d by the early 2030s. Eni aims to use this merger to enhance operational and financial synergies, boost growth, and ensure long-term value for shareholders. (Eni-Ithaca Merger Expands Footprint in North Sea Oil and Gas)
4. EQT, a U.S.-based natural gas producer, has planned to cut its workforce by 15% following the acquisition of Equitrans Midstream Corporation. This marks the second-largest round of layoffs by EQT since 2019 when the company had reduced its manpower by 23% after the appointment of Toby Rice as its CEO.
The recent layoffs are part of the process of combining the operations of the two companies, following Equitrans Midstream’s acquisition. This includes the termination of several senior-level employees and former executives of Equitrans Midstream. However, EQT has not disclosed any detail regarding the timeline of the layoffs.
In March 2024, EQT acquired Equitrans Midstream, its former pipeline subsidiary. This move was aimed at improving natural gas margins as the commodity’s price had collapsed to multi-year lows at the beginning of the year. Natural gas producers struggled due to low gas prices, and this acquisition was intended to improve EQT’s profitability. (EQT Plans to Cut Jobs by 15%, Could Face Pre-Tax Charges Up to $185M)
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.
With oil moving up for the week, stocks were northbound. The Energy Select Sector SPDR — a popular way to track energy companies — rose 6.9% last week. However, the sector tracker has decreased 6.6% over the past six months.
What’s Next in the Energy World?
Market participants will also keep a close eye on regular data releases to gauge the direction of commodities. U.S. government statistics on oil and natural gas, one of the most reliable indicators, will be a key focus for energy traders. Fuel demand and stock drawdowns in the coming weeks will shape commodity price trends. Additionally, Baker Hughes' rig count data, a critical indicator of U.S. crude and natural gas production trends, is also closely monitored.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog ExxonMobil's, APA, TotalEnergies', Eni SpA and EQT
For Immediate Releases
Chicago, IL – October 11, 2024 – 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’s (XOM - Free Report) , APA Corp. (APA - Free Report) – TotalEnergies’ (TTE - Free Report) , Eni SpA (E - Free Report) and EQT Corp. (EQT - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Oil & Gas Stock Roundup: XOM's Q3 Update and More
It was a week when oil prices logged its biggest percentage climb since March 2023 while natural gas futures flipped into negative territory.
The headlines revolved around energy biggie ExxonMobil’s Q3 earnings update and APA Corp. – TotalEnergies’ Suriname oil field approval. Developments associated with Eni SpA and EQT Corp. also grabbed attention.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures jumped around 9.1% to close at $74.38 per barrel, but natural gas prices moved down 1.7% to end at $2.85 per million British thermal units (MMBtu).
The crude price surge resulted from heightened geopolitical tensions in the oil-rich Middle East.
Meanwhile, natural gas settled with its first loss after five consecutive gains due to worries over the commodity’s immediate consumption.
Recap of the Week’s Most Important Stories
1. American energy multinational ExxonMobil has issued a warning about its third-quarter financial results, indicating a negative impact due to declining oil prices and refining margins from the second quarter. In its regulatory filing, XOM outlined the potential effects on its earnings across various segments.
The company anticipates the decrease in crude prices to reduce $600 million to $1 billion in upstream profit. Similarly, changes in industry margins for energy products are expected to have a comparable impact. Then again, gas prices might either improve upstream earnings by $200 million or reduce them by the same amount.
Lower refining margins are projected to reduce third-quarter earnings by up to $1 billion. For each segment, earnings from specialty and chemical products are estimated between breakeven and $200 million. (ExxonMobil Warns of $1B Hit to Q3 Earnings Amid Falling Oil Prices)
2. The U.S. exploration and production company APA and French oil major TotalEnergies, through its subsidiary, signed a final investment decision regarding the production of 220,000 barrels of oil per day in Block 58 located offshore Suriname.
The oil production project, named GranMorgu, will include production from the Sapakara and Krabdagu oil fields, which have combined recoverable resources estimated above 700 million barrels. TTE and APA will jointly develop the GranMorgu project and tap the vast oil reserves discovered in both fields. With a total investment of $10.5 billion, the project is expected to start oil production by 2028 and to reach a daily output of 220,000 barrels of oil.
The production and development of the Sapakara and Krabdagu fields, located between 100 and 1,000 meters, will take place by drilling a total of 32 wells connected to a Floating Production, Storage and Offloading (FPSO) unit, located approximately 150 km off the Suriname coast. The FPSO is designed with such advanced technology that it can accommodate future development opportunities too. (APA and TotalEnergies Announce Joint Venture Offshore Suriname)
3. Italy’s energy giant Eni has merged its UK upstream oil and gas assets with Delek Group's Ithaca Energy, excluding East Irish Sea and carbon capture, utilization and storage activities. Recently, Ithaca Energy finalized a £754 million all-share deal to acquire nearly all of Eni's UK oil and gas production assets, establishing one of the largest independent energy companies in the North Sea.
Following this merger, the newly expanded Ithaca Energy now holds stakes in six of the UK’s 10 largest oil fields, including major assets like Rosebank, Cambo and Schiehallion, reinforcing its position in the North Sea oil and gas sector.
The combined entity has the potential to produce more than 100,000 barrels of oil equivalent per day (boe/d) in 2024, with ambitions to ramp up production to 150,000 boe/d by the early 2030s. Eni aims to use this merger to enhance operational and financial synergies, boost growth, and ensure long-term value for shareholders. (Eni-Ithaca Merger Expands Footprint in North Sea Oil and Gas)
4. EQT, a U.S.-based natural gas producer, has planned to cut its workforce by 15% following the acquisition of Equitrans Midstream Corporation. This marks the second-largest round of layoffs by EQT since 2019 when the company had reduced its manpower by 23% after the appointment of Toby Rice as its CEO.
The recent layoffs are part of the process of combining the operations of the two companies, following Equitrans Midstream’s acquisition. This includes the termination of several senior-level employees and former executives of Equitrans Midstream. However, EQT has not disclosed any detail regarding the timeline of the layoffs.
In March 2024, EQT acquired Equitrans Midstream, its former pipeline subsidiary. This move was aimed at improving natural gas margins as the commodity’s price had collapsed to multi-year lows at the beginning of the year. Natural gas producers struggled due to low gas prices, and this acquisition was intended to improve EQT’s profitability. (EQT Plans to Cut Jobs by 15%, Could Face Pre-Tax Charges Up to $185M)
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.
With oil moving up for the week, stocks were northbound. The Energy Select Sector SPDR — a popular way to track energy companies — rose 6.9% last week. However, the sector tracker has decreased 6.6% over the past six months.
What’s Next in the Energy World?
Market participants will also keep a close eye on regular data releases to gauge the direction of commodities. U.S. government statistics on oil and natural gas, one of the most reliable indicators, will be a key focus for energy traders. Fuel demand and stock drawdowns in the coming weeks will shape commodity price trends. Additionally, Baker Hughes' rig count data, a critical indicator of U.S. crude and natural gas production trends, is also closely monitored.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.