Oil & Gas Stock Roundup: Equinor's Statfjord Ost Update, BP's Egypt Plans & More
It was a week when both oil and natural gas prices posted decent gains.
On the news front, the headlines revolved around Norwegian behemoth Equinor’s EQNR production start-up from the Statfjord Ost life extension project and London-based supermajor BP plc’s BP plans to drill exploratory wells in Egypt. Developments associated with Transocean Ltd. RIG, Oceaneering International OII and Expro Group Holdings XPRO also made it to the headlines.
Overall, it was a bullish seven-day period for the sector. West Texas Intermediate (WTI) crude futures increased 7.2% to close at $85.55 per barrel, while natural gas prices moved up 4.1% to end at $2.77 per million British thermal units (MMBtu).
In particular, the crude price action flipped from negative to positive on speculation that Saudi Arabia and Russia will extend their output curbs. A coup in African crude producer Gabon that could tighten the fundamentals further supported the commodity, which hit a seven-month high. It was also aided by a weekly report from the Energy Information Administration ("EIA") showing a much bigger-than-expected decline in crude stockpiles.
Meanwhile, natural gas settled with a weekly gain, too, buoyed by a hint of tightening supply and predictions of strong cooling demand.
Recap of the Week’s Most Important Stories
1. Stavanger, Norway-headquartered integrated major Equinor and its partners announced that production has begun at the Statfjord Ost life extension project in the Norwegian North Sea. The project aims to increase hydrocarbon output from the mature field by 26 million barrels of oil equivalent.
According to Zacks Rank #3 (Hold) EQNR, despite inflation and the weakening of the Norwegian krone, the project was successfully completed with sound safety results and is anticipated to be delivered within the estimated costs, while also beginning six months earlier than expected.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the company, three wells will be drilled in addition to the two new wells that have been drilled from the existing subsea templates. The project involves modifying Statfjord C and laying a new pipeline for gas lift to the subsea wells since Statfjord Ost is located five kilometers from Statfjord C in the Norwegian North Sea. Statfjord Ost started production in 1994. (Equinor Begins Statfjord Ost Oil Production Project)
2. British energy major BP is planning to drill four natural gas exploration wells in Egypt in the fourth quarter of 2023. Of the total, two wells are situated at the Raven gas field in the North Alexandria Concession. The remaining wells will be drilled at the King Mariout offshore exploration block. BP and its natural gas partners also plan to invest $3.5 billion over three years to explore and develop natural gas resources in Egypt.
Egypt has been progressing toward developing the energy sector and positioning itself as an energy hub. The Egyptian government intends to drill 45 natural gas exploratory wells in the Mediterranean and the Nile Delta, with $1.9 billion in investments until mid-2025.
The program aims to drill 35 wells for gas exploration to increase the field’s capacity, with 10 wells to be drilled between July 2022 and June 2023. In 2023, Egypt expects to produce 8 million tons of liquified natural gas, a year-over-year increase of more than 6.5%. (BP Plans to Drill Four Natural Gas Exploration Wells in Egypt)
3. Transocean, a Switzerland-based leading international provider of offshore contract drilling services, announced that it has received a binding notification of award from Oil and Natural Gas Corporation (“ONGC”), India's largest oil and gas exploration and production company, for the Dhirubhai Deepwater KG1 (DDKG1) drillship.
The contract, set to span over 21 months, is anticipated to commence in the first quarter of 2024. The value of this contract stands at a commendable $222 million, excluding a mobilization fee of $5 million, an impressive figure that underscores the trust and confidence ONGC has placed in Transocean's capabilities.
The contract with ONGC marks a significant achievement for Transocean. It accentuates the company's stronghold in the ultra-deepwater drilling domain, demonstrating its ability to secure high-profile contracts. This accomplishment not only solidifies Transocean's reputation but also showcases its commitment to delivering exceptional results in offshore drilling operations. (Transocean Secures $222M Drilling Contract From ONGC)
4. Oilfield service provider Oceaneering International announced that its Offshore Projects Group segment has been awarded two international contracts, with a combined total value of more than $100 million. As part of the Girassol Life Extension project, Oceaneering has been added as a consortium partner to assist with installation and transportation tasks.
The company will provide Angolan personnel for the project and manage the consortium's in-country operations, owing to its significant experience in Angolan offshore developments. In support of the prime contractor's recovery and replacement of 12 risers, the scope of work comprises air and saturation diving services, project management, engineering and procurement activities. It is anticipated that OII will offer its services over the course of many phases beginning in late 2023 and lasting until late 2025.
In addition to the above, Oceaneering has also been awarded a contract for a jumper installation project in the Stabroek block, offshore Guyana. According to the company, the scope of the project adds to the growing body of work in the South American country in support of a key client. Along with other associated tasks, the scope entails installing jumpers and subsea field developments. The scope of supply is underway and anticipated to last through the remainder of 2023. (Oceaneering Scores International Contracts Worth $100M)
5. Energy services provider Expro Group Holdings recently agreed to snap up Houston, TX-based PRT Offshore for a total consideration of approximately $106 million. The amount includes $62 million in cash plus $44 million worth of newly issued Expro shares. There might be additional consideration linked to PRT Offshore's financial performance during the four quarters following closing.
PRT Offshore, with its all-encompassing Hook-to-Hanger solution, is the only firm that facilitates comprehensive well completions, interventions, and decommissioning services from surface to subsea. This innovative system ensures safe and efficient wellbore access, while reducing the need for personnel onboard. PRT Offshore employs around 90 people across Texas and Louisiana.
The transaction — expected to be finalized in the fourth quarter — marks Expro's foray into enhancing its subsea well access offerings and expanding its portfolio of services across the key North and Latin America regions. Moreover, the growth of PRT Offshore's surface equipment solutions in the Europe and Sub-Saharan Africa and Asia Pacific regions will get a leg-up. (Expro Set to Buy PRT Offshore, Strengthen Portfolio)
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 +4.9% +0.6%
CVX +3.3% -0.4%
COP +4.8% +12.4%
OXY +4.4% +5.4%
SLB +6.5% +7.4%
RIG +9.6% +12.7%
VLO +0.3% -5.4%
MPC +1.4% +9.3%
With oil and gas moving up for the week, stocks were mostly positive. The Energy Select Sector SPDR — a popular way to track energy companies — rose 3.6% last week. Over the past six months, the sector tracker has increased 4%.
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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BP p.l.c. (BP) : Free Stock Analysis Report
Transocean Ltd. (RIG) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report
Equinor ASA (EQNR) : Free Stock Analysis Report
Expro Group Holdings N.V. (XPRO) : Free Stock Analysis Report
