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Oil & Gas Stock Roundup Headlined by Shell & Enbridge's Renewables Push

It was a week when oil prices climbed but natural gas futures continued to trend downward.

On the news front, Europe’s largest oil company, Shell plc SHEL bought Nigerian clean energy provider Daystar Power, while North American pipeline operator Enbridge ENB agreed to purchase U.S. wind and solar firm, Tri Global Energy LLC or TGE. Developments associated with TechnipFMC FTI, Transocean RIG and VAALCO Energy EGY also made it to the headlines.

Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained some 1% to close at $79.49 per barrel but natural gas prices decreased around 1% to end at $6.766 per million British thermal units (MMBtu). In particular, the oil market reversed its course after falling for four straight weeks.

Coming back to the week ended Sep 30, U.S. oil prices settled with gains on speculation that a meeting of crude exporters will decide on a production cut. Government data showing draws in crude, gasoline and distillate supplies also contributed to the upside.

Meanwhile, natural gas finished down, primarily due to mild weather and demand destruction from Hurricane Ian.

Recap of the Week’s Most Important Stories

1. Shell acquires the Nigerian renewable energy provider Daystar Power for an undisclosed sum, marking the London-based oil supermajor’s first power sector acquisition in Africa.

The buyout of Daystar by Shell comes as the Zacks Rank #1 (Strong Buy) company intends to grow its global renewables portfolio and transform it into a green energy business that will ultimately decrease its fossil fuel dependence.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Daystar Power, headquartered in Lagos, operates in Nigeria, Ghana, Senegal, and Togo and provides off-grid power to commercial and industrial clients in these countries. Moreover, the firm also offers solar and hybrid power solutions with battery storage. (Shell Takes Over Nigerian Renewables Firm Daystar Power)

2.  Energy infrastructure provider Enbridge announced that it acquired Tri Global Energy (“TGE”) for $270 million and assumed its debt as part of plans to strengthen its renewable business.

TGE is a leading onshore wind developer in the United States, with a large pipeline of wind and solar energy projects under construction. The company will receive up to $50 million in additional payments upon the implementation of certain projects. TGE’s debt amounted to $17 million.

Enbridge is known for its pipeline network that transports huge quantities of Canada crude to the United States. Renewables currently comprise only 5% of ENB’s overall business. The company is focused on expanding its renewable portfolio. (Enbridge Acquires TGE to Expand Its Renewable Business)

3. TechnipFMC announced that it was awarded a “significant” engineering, procurement, construction, and installation (EPCI) contract by energy biggie Shell for the Jackdaw gas development project in the United Kingdom North Sea. Per FTI’s definition of a significant contract, the deal is worth somewhere between $75 million and $250 million.

The French-American, U.K.-domiciled oilfield services major stated that the contract covers pipelay for a 30-kilometer tieback from Jackdaw’s new platform to Shell’s Shearwater platform along with an associated riser, spool pieces, subsea structures and umbilicals. Moreover, the tieback will utilize the pipe-in-pipe technology designed for high-pressure and high-temperature use.

President, Subsea, at TechnipFMC, Jonathan Landes, mentioned that FTI is excited to start this substantial project in the U.K. North Sea. “Our strong technical record and our ability to design, engineer, construct and install were key to our success in winning this award,” he ended. (TechnipFMC Gets EPCI Contract for Shell's Jackdaw Project)

4   Offshore driller Transocean declared that it received a contract for its harsh environment semi-submersible Transocean Norge from two Norwegian oil and gas companies — OMV and Wintershall Dea.

OMV and Wintershall Dea awarded a rig contract for the use of Transocean Norge for 17 wells off the Norwegian coast, of which 11 will be for Wintershall Dea and six for OMV. Moreover, the deal provides RIG with the exclusive right to drill all the wells for the firms’ respective drilling campaigns commencing in 2023 through 2027, contingent on rig availability and other conditions.

Assuming that all the necessary sanctions are received on a portion of the contract work, which is subject to operator and government approval, the full contract period, per RIG, is 1,071 days. The average day rate is $408,000, which will contribute $437 million to the backlog. (Transocean Gets Drilling Contract From Norway-Based Firms)

5   Houston, TX-based independent oil and gas explorer, VAALCO Energy  recently declared the successful drilling of the North Tchibala 2H-ST well from the Southeast Etame North Tchibala platform in the Etame field, offshore Gabon.

The company mentioned that the North Tchibala 2H-ST well came across 100 meters of gross Dentale sand, exceeding expectations and comparable to sands previously productive in the North Tchibala field, with similar porosity and permeability.

EGY also provided an operational update on the Teli Floating Storage and Offloading (FSO) vessel installation and field reconfiguration at Etame. The company mentioned it is close to completing the installation of the FSO. (VAALCO's Gabon Drilling Results Better Expectations)

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                +1.8%                +5%
CVX                 -0.8%                 -12.5%
COP                +3.2%                +1.8%
OXY                 +4.6%                +5.8%
SLB                 +2.6%                -13.9%
RIG                  +4.7%                -46.6%
VLO                 +6.2%                +5.5%
MPC                +8.6%                +17.1%

With oil gaining for the week, stocks broke out higher. The Energy Select Sector SPDR — a popular way to track energy companies — was up 2.2% last week. Over the past six months, the sector tracker has decreased 6.5%.

What’s Next in the Energy World?

Following last week’s mixed fortunes for oil and gas, market participants will closely track the regular releases to look for further guidance on the direction of prices. 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. News related to the ongoing Russia-Ukraine geopolitical conflict and the OPEC+ decision on output cuts will be the other factors that will dictate the near-term price movement of the commodities.


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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
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