Greetings from Houston. We returned from our six-week trip to China, during which we climbed six mountains in the Jiangxi and Sichuan provinces in China’s southern region.
Now, it’s time to dig into two pieces of energy news from last week.
Shangyou Nie
Editor, Well Read
Equinor Will Acquire More Marcellus Shale from EQT
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Norwegian major Equinor recently announced that it has reached an agreement with EQT to acquire all its remaining non-operating interest in the Northern Marcellus Shale for $1.3 billion, continuing to grow its international upstream portfolio.
What Equinor is buying:
The acquisition covers the same acreage in the swap agreement with EQT announced in April, which initially increased Equinor’s equity from 15.7 percent to 25.7 percent in the Northern Marcellus formation.
Equinor will now add roughly 80,000 barrels of oil equivalent per day of production to its portfolio and increase its equity holding from 25.7 percent to 40.7 percent.
The effective date will be 31 December 2024, subject to approvals.
The assets are now operated by Expand Energy, the combination of Chesapeake Energy and Southwestern Energy and the largest natural gas producer in the United States.
Expand Energy is producing gas from Haynesville, the Northeast Appalachian, and the Southwest Appalachian. It has a market cap of $20 billion and is listed on the NASDAQ.
What they are saying: “The U.S. is a core country for Equinor, where we have … onshore and offshore oil and gas portfolios alongside our activities in offshore wind, battery storage, and low-carbon value chains,” says Philippe Mathieu, EVP for Exploration and Production International at Equinor.
About Equinor:
Equinor has a market capitalization of $64 billion.
Its share price is down 31 percent during the past year and 26 percent YTD, underperforming compared to other European majors.
EQT is one of the largest gas producers in the United States, with operations in Pennsylvania, West Virginia, and Ohio.
EQT has a market cap of $22 billion. EQT’s share price is down 13.4 percent over the past year and 5.5 percent YTD.
EQT claims to be the “first traditional energy producer… to achieve net-zero, Scope 1, and Scope 2 greenhouse gas emissions.”
What to watch:
Who might be the next buyer to acquire gas assets in the United States post-election?
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Chevron Stock Rises and ExxonMobil Falls as Both Confront Lower Oil Prices
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Last Friday, the world’s two biggest international oil companies, ExxonMobil and Chevron, both reported lower Q3 earnings than a year ago, largely due to lower oil prices. Chevron’s share price rose nearly 3 percent, while ExxonMobil’s share price dropped 1.5 percent.
Oil and gas price trend:
The price of crude has been down 15 percent over the past six months, reaching a three-year low last Friday. Brent was $72.9/barrel; WTI was at $69.2/barrel. These lower prices are due to weak demand and increased production by the United States and several non-OPEC countries, including Guyana, Canada, and Brazil.
U.S. crude production reached a record of 13.4 million barrels per day in August 2024, according to the U.S. Energy Information Administration.
In the United States, natural gas prices reached historical lows driven by a supply glut.
On 4 November, however, OPEC announced that it would further delay increasing its production, leading to a strong rebound of more than 2 percent for Brent and WTI.
Chevron Q3 results:
Chevron made $4.5 billion in earnings in Q3—compared to $6.5 billion in Q3 2023—due to lower margins.
Chevron’s share price rose 2.9 percent, as its earnings beat analyst expectations, according to the WSJ.
Production was 3.4 million barrels of oil equivalent per day, up 7 percent over Q3 2023.
Chevron did $4.7 billion in stock buybacks in Q3, a single-quarter record.
Chevron also announced $8 billion in divestments of non-core assets in Canada, Alaska, and the Congo. These deals are expected to close in Q4.
What they are saying: “We are prepared to compete in any price environment, and a downcycle would not be a surprise,” said Chevron CEO Mike Wirth during an interview.
ExxonMobil Q3 results:
ExxonMobil reported a net income of $8.6 billion in Q3— compared to $9.1 billion in Q3 2023—due to lower oil price and reduced margins. This drop occurred despite higher upstream production.
ExxonMobil achieved oil production of 3.2 million barrels per day, the highest in over 40 years, and a total production of 4.6 million barrels of oil equivalent per day, including 1.4 million barrels of oil equivalent per day from the Permian.
Despite setting records, Exxon’s upstream results were still considered “underperforming” vs analyst expectations, as noted by TD Cowen.
Earnings from its Energy Products division were $1.3 billion, down 46 percent compared to the $2.4 billion reported in Q3 2023.
What they are saying: “The largest single factor that we would have seen year over year is just industry price margins… especially both in terms of gas prices and refining margins, coming off of historical highs,” said Kathryn Mikells, ExxonMobil’s CFO.
European majors:
BP reported earnings of $2.3 billion for Q3, the lowest quarterly profit since Covid-19. BP said that it would review its stock buyback program in February 2025, according to the Financial Times.
BP shares went down by 4 percent last Tuesday, and 18 percent down YTD before a 2 percent rebound following OPEC's announcement this Monday.
Shell reported $6 billion for Q3, exceeding analyst estimates of $5.4 billion, thanks to a strong performance from its LNG business, according to the Financial Times.
Shell announced $3.5 billion in stock buybacks, its 12th consecutive quarter with more than $3 billion in stock repurchases.
TotalEnergies reported $4.1 billion net profit for Q3, a three-year low.
What to watch:
How many international and American oil and gas companies will adjust their stock buyback programs as oil price pressure mounts?
What new policies will be implemented post-election in the United States?
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