Dec 3, 2018

Dec. 4, 2018 - Daily Energy Update

WTI crude oil: $53.36/bbl
Brent crude: $62.17/bbl
Natural gas: $4.43/MMBtu

Oil continued to climb, following strong gains from the previous day amid expected supply cuts from OPEC+ and a mandated reduction in output from Canada.

Cenovus Energy (NYSE:CVE) expects 2019 capital expenditure of approximately C$1.5 billion, in line with this year’s spending level. The update comes after Alberta’s government ordered oil production cuts from Jan. 1 in order to lift depressed prices.  (Source)

Rachel Notley, premier of oil rich Canadian province Alberta, has announced 8.7% reduction in oil production starting from January. Around 25 companies will reduce output until 35 million barrels of stockpiles are cleared. The differential between Western Canadian Select and  West Texas Intermediate climbed to as high as C$45 a barrel in recent weeks but the move should have a positive impact on prices moving forward. Notley, however, is facing push back from some companies who've complained about the government's intervention. (Source I , Source II)

Kinder Morgan (NYSE:KMI) has announced 2019 Financial Expectations. The pipeline giant has forecasted 7% increase in DCF to $2.20 per share and 4% increase in adjusted EBITDA to $7.8 billion, despite sale of Trans Mountain asset. The company will increases dividends to $1.00 per share (annualized) for 2019, starting with 0.25 per share for the Q1 2019 which depicts 25% increase from 2018 and 100 increase from 2017. The company will invest $3.1 billion in expansion projects and contributions to joint ventures in 2019. Kinder Morgan will end 2019 with Net Debt-to-Adjusted EBITDA ratio of 4.5 times.  (Source)

Cheniere Energy (LNG) is gearing up to ship liquefied natural gas from its $15 billion Corpus Christi LNG export facility in Texas as a first LNG vessel has arrived to take the cargo. Corpus Christi is Chenier’s second LNG export facility and the third in the US’s Lower 48 states. The company’s Sabine Pass terminal in Louisiana has shipped ~500 cargoes so far after it came online in February 2016. The first train at Corpus Christi and fifth at Sabine Pass will enter commercial service  in Q1-2019 followed by the start up of third train at Corpus Christi in H2-2019 and third train in H2-2021.

Exxon Mobil (XOM), which is developing the 6.6 million acres Stabroek Block in offshore Guyana, has announced 10th discovery in the region and increased its recoverable resource  estimate to 5 billion oil-equivalent barrels. (Source)

Gas focused Qatar is leaving OPEC amid feud with the cartel's de facto leader Saudi Arabia. Qatar was a minor oil producer but a major player in the global LNG space. (Source)