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News From Eni & Shell Dominate Oil & Gas Stock Roundup

It was a week when both oil and natural gas prices settled higher.

Italian energy giant Eni E entered into a countrywide electric vehicle (“EV”) charging agreement, while European peer Royal Dutch Shell plc (RDS.A) signed a gas production deal with Oman. News related to BP plc BP, Helmerich & Payne HP and Delek US Holdings DK also made it to the headlines.

Overall, it was a good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 4.3% to close at $73.79 per barrel, while natural gas prices rose 1.1% to end at $3.7310 per million British thermal units (MMBtu). In fact, both the oil and natural gas markets reversed their decline from the previous week.

Coming back to the holiday-shortened week ended Dec 24, the positive price action could be attributed to a report from the Energy Information Administration ("EIA") that showed a large drawdown in crude supplies. Easing concerns about the potential Omicron-related fall in demand also boosted the commodity.

Natural gas notched a weekly gain too, buoyed by weather forecasts, indicating bouts of cold temperatures over most of the country in the coming days.

Recap of the Week’s Most-Important Stories

1.  Rome-based energy biggie Eni entered into an agreement with power company Enel to enable EV drivers to charge their vehicles across Italy through their infrastructure networks.

Eni’s recently acquired Be Charge and Enel’s energy e-service unit, Enel X, operate primary EV charging networks in Italy, with about 20,000 charging points. The interoperability of EV charging infrastructures is crucial to scale up the transition to electric mobility in the country. Per the terms of the agreement, customers will be able to access the service from their smartphones through the Enel X, BeCharge and Eni apps.

Enel X and Be Charge intend to spread electric mobility by installing high-powered chargers that allow an ultra-fast, simple and reliable charging experience. In recent years, Enel X developed an extensive charging network, which covers the entire Italian peninsula. It enables people to drive electric cars effortlessly. With the latest agreement, Enel X is working in close collaboration with partners to make the transition to electric power more convenient and cost-effective. (Eni Signs Agreement With Enel for EV Charging in Italy)

2.   Royal Dutch Shell’s subsidiary Shell Integrated Gas Oman BV and its partners have agreed to develop and produce natural gas from block 10 of the Saih Rawl gas field under a concession agreement with Oman. A separate gas sales agreement for gas generated from the block was also signed by the parties.

Per the concession agreement, Zacks Rank #3 (Hold) Shell operates block 10 with 53.45% working interest, while OQ and Marsa Liquefied Natural Gas LLC have a 13.36% and 33.19% stake, respectively. According to Oman's energy ministry, the block is estimated to produce 0.5 billion cubic feet of gas per day (bscf/d). Production is likely to commence within a couple of years.

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

Over the last many decades, Shell remained a partner in Oman's growth and success. Europe’s largest energy company is active in the oil and gas industry within the country, with joint venture and independent activities ranging from research and development, exploration and production to trade, retail and alternative energy. (Shell Inks Gas Deal With Oman for Block 10, Saih Rawl)

3   British energy giant BP plc's Norwegian joint venture, Aker BP, announced plans to acquire the oil and gas business of Lundin Energy in an effort to create a combined exploration and production (E&P) company.

The companies intend to form the largest listed E&P company focused on the Norwegian Continental Shelf. The transaction involves a cash consideration of $2.22 billion and about 272 million new shares assumed from Aker BP.

The combined entity will have an exceptional asset base, industry-leading operating costs, and a lower carbon footprint with increased and sustainable dividends. The company will produce more than 400,000 barrels of oil per day. Also, the merged firm would have a resource base of 2.7 billion barrels of oil equivalents with significant development prospects.

4.   Helmerich & Payne recently announced that the Rig Enablement Framework Agreement with ADNOC Drilling Company is finalized.

The Framework Agreement will allow Helmerich & Payne to extend its drilling and operating experience outside the United States. It will help ADNOC Drilling improve the performance of its land rigs and support the company's aggressive development and expansion objectives. Further, the agreement, which focuses on enhancing drilling efficiencies and achieving operational savings, expands on the Asset Purchase Agreement and IPO Cornerstone Agreement announced on Sep 8, 2021. It also strengthens ADNOC Drilling's strategic collaboration with HP.
    
Helmerich & Payne’s $100-MILLION cornerstone investment in ADNOC Drilling's IPO aided its worldwide expansion plan by allowing it to commit extra cash outside the United States. This demonstrates the contract drilling provider’s faith in what the two companies can accomplish together. (Helmerich & Payne Inks Rig Enablement Framework With ADNOC)

5.   Delek US Holdings recently announced that it will sell up to 434,590 common limited partner units in its logistics partnership over the next three months in open market transactions. The initiative aims to monetize a portion of Delek's present 80% ownership in the entity and showcase the actual value of that holding that isn't currently reflected in the stock price of DK.

The independent refiner, transporter and marketer of petroleum products established the logistics unit (Delek Logistics Partners), based in Brentwood, TN, to own, operate, acquire, and build crude oil and refined product logistics and marketing assets.

In the future, Delek US Holdings will explore methods to monetize incremental units, with an emphasis on preserving the partnership’s unitholders and the residual ownership share. (Delek to Partially Divest Delek Logistics Partners' Units)

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                +1.6%              -1.5%
CVX                 +2.5%              +14.3%
COP                +3.8%              +23.8%
OXY                 +2.9%              -5.8%
SLB                 +2.1%              -5.6%
RIG                  +4.8%              -34%
VLO                 +4.4%              -3.2%
MPC                +0.9%              +7.1%

The Energy Select Sector SPDR — a popular way to track energy companies — was up 2.3% last week. But over the past six months, the sector tracker has increased 5.4%.

What’s Next in the Energy World?

As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. 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 trends in U.S. crude production, is closely followed. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Last but not least, investors will keep an eye on the potential demand hit from the Omicron variant.


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BP p.l.c. (BP): Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
 
Helmerich & Payne, Inc. (HP): Free Stock Analysis Report
 
Eni SpA (E): Free Stock Analysis Report
 
Delek US Holdings, Inc. (DK): Free Stock Analysis Report
 
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