Oil & Gas Stock Roundup: Cheniere's Export Deal, Transocean's Contract & More
It was a week when oil prices moved up while natural gas futures marked a loss.
On the news front, the headline came from liquefied natural gas supplier Cheniere Energy’s LNG long-term agreement with a China-based customer and drilling major Transocean’s RIG $184 million award for one of its vessels. Developments associated with RPC Inc. RES, TechnipFMC FTI and Vertex Energy VTNR also made it to the headlines.
Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures increased 2.1% to close at $70.64 per barrel but natural gas prices dropped 1.6% to end at $2.80 per million British thermal units (MMBtu).
In particular, the crude price action flipped to the positive once again, with government data revealing a large dent in supplies.
Meanwhile, natural gas found itself on the opposite side of expectations for comfortable temperatures and, therefore, lighter heating or cooling demand.
Recap of the Week’s Most Important Stories
1. Natural gas exporter Cheniere Energy entered into a long-term supply agreement with ENN Natural Gas Co., Ltd., a China-based energy company. The 20-year agreement facilitates long-term collaboration between the two companies.
Per the terms of the contract, Cheniere Marketing, a subsidiary of Cheniere, will provide ENN LNG (Singapore) Pte. Ltd. — a wholly-owned subsidiary of ENN Natural Gas — with 1.8 million tons of liquefied natural gas annually on a free-on-board basis. The purchase price will be indexed to the Henry Hub price, a widely recognized benchmark for natural gas prices in the United States.
Cheniere Marketing is set to begin deliveries in mid-2026 and increase its supply to 0.9 million tons per annum (mtpa) in 2027. Delivery of the remaining 0.9 mtpa is subject to the completion of the first train of the Sabine Pass Liquefaction Expansion Project and begin upon the commencement of commercial operations of Train Seven. (Cheniere Inks LNG Supply Deal With China's ENN Natural Gas)
2. Transocean recently announced a 16-well binding award for its Transocean Equinox rig in Australia, adding approximately $184 million to firm backlog. This contract, excluding mobilization and demobilization costs, is set to span 380 days. Furthermore, the award comes with additional options that could extend the harsh environment semisubmersibles rig's operations in Australia until 2028.
For investors, the growth in backlog is of utmost importance as it directly influences Transocean's sales, earnings and cash flows. As the Zacks Rank #3 (Hold) offshore driller secures new contracts, its financial outlook is strong, creating a positive trajectory for the company and its stakeholders.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The awarded project is expected to commence in the first quarter of 2025, following the rig's previously announced commitment of five wells over 300 days with a major operator in Australia, set to begin in the first quarter of 2024. These continued commitments reflect the confidence placed in Transocean's capabilities and the demand for its services in the region. (Transocean Announces $184 Million Addition to Backlog)
3. Oilfield services provider RPC announced that it acquired Spinnaker Oilwell Services, LLC, expanding its oilfield cementing service business. Per the deal, RPC paid $79.5 million for Spinnaker’s equity. The purchasing price comprised $77 million in cash, the assumption of $500,000 of capital lease liabilities and a $2-million payoff. The acquisition will be in effect from Jul 1, 2023.
Based in Oklahoma City, OK, Spinnaker is a leading oilfield cementing service provider in the Permian and Mid-Continent basins. Spinnaker, which mainly specializes in cementing operations in wells of all types, provides services to all major oil plays around Oklahoma, Kansas, Arkansas, Texas and New Mexico.
Spinnaker operates two facilities, which are situated in El Reno, OK and Hobbs, NM. Spinnaker maintains 18 full-service cementing spreads across the Permian Basin and the Midcontinent. (RPC Acquires Oilfield Service Player Spinnaker for $79.5M)
4. TechnipFMC, a leading global oil and gas service provider, secured a significant integrated Engineering, Procurement, Construction and Installation (iEPCI) contract from OMV (Norge) AS for its Berling gas development project in Norway. This project marks OMV's first iEPCI endeavor as an operator in the region.
The Berling gas development project, operated by OMV, is a notable venture on the Norwegian Continental Shelf. TechnipFMC has been entrusted with the responsibility of designing and installing the subsea production systems, controls, pipelines and umbilicals for this development. This comprehensive scope of work underscores the company's expertise in providing end-to-end solutions for complex offshore projects.
OMV’s award of the iEPCI contract to TechnipFMC follows a six-month integrated Front End Engineering and Design (iFEED) study. This study optimized the field layout and enhanced the project's cost efficiency by confirming the suitability of thermally insulated pipe-in-pipe technology for the tieback's flowline. Through iFEED, TechnipFMC demonstrated that iEPCI provides an effective solution to expedite project delivery. (TechnipFMC Clinches iEPCI Contract From OMV (Norge) AS)
5. Vertex Energy, a prominent producer and marketer of refined products, has achieved a significant milestone with respect to its renewable diesel project. The company recently announced the completion of its initial commercial sales transactions of renewable diesel from its state-of-the-art production facility at the Mobile Refinery in Alabama. In the first series, VTNR successfully sold approximately 110,000 barrels of renewable diesel to Idemitsu Apollo Renewable Corporation, a subsidiary of Idemitsu Kosan.
The company's commitment to renewable fuels and its strategic focus on reducing carbon emissions highlight its position as a leader in transitioning from fossil fuels to sustainable energy sources.
As part of its decarbonization efforts and commitment to energy security, Vertex Energy has embraced renewable sources in addition to conventional fuels. As part of that endeavor, the company acquired a refinery in Mobile, AL in 2022 and initiated a renewable diesel conversion project. As such, the sales of renewable diesel align with Vertex Energy's commitment to renewable energy and mark a significant step toward its long-term growth strategy. This will also enable it to capture the projected growth in demand for low-carbon and sustainable alternatives. (Vertex Reports First Renewable Diesel Transaction)
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 +4.7% +0.7%
CVX +4% -9.6%
COP +3.8% -8.4%
OXY +4.9% -3.7%
SLB +5.4% -4.6%
RIG +17% +62.3%
VLO +5.4% -1.8%
MPC +4.4% +5.4%
With oil moving up for the week, stocks were mostly positive. The Energy Select Sector SPDR — a popular way to track energy companies — rose 4.9% last week. Over the past six months, the sector tracker has decreased 3.6%.
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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Transocean Ltd. (RIG) : Free Stock Analysis Report
TechnipFMC plc (FTI) : Free Stock Analysis Report
Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
RPC, Inc. (RES) : Free Stock Analysis Report
Vertex Energy, Inc (VTNR) : Free Stock Analysis Report
