Oil & Gas Stock Roundup: Week's Action Highlighted by EPD and FTI

·7-min read

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

Energy infrastructure provider Enterprise Products Partners EPD agreed to acquire privately-held Permian operator Navitas Midstream in a $3.25 billion deal, while oilfield services provider TechnipFMC FTI sold its partial ownership stake in Technip Energies. News related to W&T Offshore WTI, Eni E and Imperial Oil IMO also made it to the headlines.

Overall, it was another good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained 6.2% to close at $83.82 per barrel, while natural gas prices rose 8.8% to end at $4.262 per million British thermal units (MMBtu). In fact, both the oil and natural gas markets managed to maintain their forward momentum from the previous three weeks.

Coming back to the week ended Jan 14, the positive oil price action could be attributed to a report from the Energy Information Administration ("EIA") showing a seventh straight draw in crude stockpiles. The commodity was also pushed up by concerns that tension between Russia and Ukraine could lead to supply disruptions.

Natural gas notched a healthy weekly gain, too, buoyed by frigid weather-induced heating demand. The sharp drop in temperatures, especially in the Midwest and East, also curbed production from some regions adding to the bullish sentiment in the natural gas market.

Recap of the Week’s Most-Important Stories

1. Midstream energy biggie Enterprise Products Partners recently announced an agreement to acquire Navitas Midstream Partners, LLC, from an affiliate of Warburg Pincus LLC. The transaction, likely to get completed by the first quarter of 2022, will be debt free and the cash consideration has been set at $3.25 billion.

With the accord, Enterprise Products is entering the prolific Midland basin and will capitalize on the mounting demand for natural gas infrastructure. In the core of the basin, a sub-basin of the broader Permian, Navitas Midstream, provides services related to natural gas gathering, treating and processing.

The assets of Navitas Midstream that Enterprise Products is expected to acquire include pipeline networks, spreading across roughly 1,750 miles along with a cryogenic natural gas processing capacity of more than 1 billion cubic feet per day. (Enterprise Signs $3.25B Deal to Buy Navitas Midstream)

2.   Energy technology and services provider TechnipFMC announced the sale of 5% of its ownership stake in Technip Energies and received gross proceeds of €118.4 million.

The transaction, which involved 9 million shares changing hands at €13.15 apiece, also saw FTI delist from the Euronext Paris stock exchange. The company believes that a single listing on the New York Stock Exchange would be enough to reflect its strategic focus and the immediate peer group.

In April 2021, FTI sold its majority interests in the Technip Energies division to partially spin-off the unit into a standalone public company. Technip Energies primarily provides onshore engineering and construction services to midstream and downstream clients. After the recent sell-off, the company's stake in Technip Energies has come down to 7% that is subject to a 30-day lock-up period expiring on Feb 9. (TechnipFMC to Sell Off 5% Stake in Technip Energies)

3   W&T Offshore signed an agreement to acquire interests in producing properties in the federal waters of the Gulf of Mexico for $47 million.

The to-be-acquired properties in the central region of shallow Gulf of Mexico waters include 53 producing wells and 16 structures. The properties currently produce 2,500 barrels of oil per day and 5.4 million cubic feet of natural gas per day.

The acquisition is expected to increase W&T Offshore’s acreage by 57,500 gross acres in the Gulf of Mexico. With the agreement, the oil and gas producer will add internally-estimated proved reserves of 5.5 million barrels of oil equivalent (Boe), and proved and probable reserves of 7.6 million Boe. (W&T Offshore to Acquire Gulf of Mexico Assets for $47M)

4.   Italian energy major Eni SPA announced that it has been awarded five exploration licenses by Egypt’s Ministry of Petroleum and Mineral Resources.

After making significant gas discoveries in the past few years, Egypt held its first oil and gas exploration bid in 2021. At the auction, 24 blocks were offered for sale. The Egyptian Ministry of Petroleum awarded eight natural gas licenses to multiple energy companies, including Zacks Rank #1 (Strong Buy) Eni, to increase the fuel’s exploration and production in the country.

You can see the complete list of today’s Zacks #1 Rank stocks here.
The licenses are in blocks EGY-MED-E5 and EGY-MED-E6 in the Eastern Mediterranean Sea, and the EGY-GOS-13 and EGY-GOS-14 concessions in the Gulf of Suez. The remaining awarded blocks are in the Western Desert. The licenses, in which Eni is the operator at four, cover 8,410 square kilometers. (Eni Grabs Five Natural Gas Exploration Licenses in Egypt)

4.   Canadian integrated energy firm Imperial Oil along with the majority owner, ExxonMobil, announced plans to market interests in XTO Energy Canada. As part of the proposal, the companies offer to sell shale oil and gas properties in the Western part of Canada. The intended divestiture is consistent with Imperial’s strategy to prioritize its upstream capital on major oil sands assets, although a definitive decision to sell the properties has not yet been made, according to the company.

Both Imperial and Exxon are equal partners in XTO Energy, with assets that include the Montney and Duvernay basins of central Alberta. The properties are spread over 568,000 net acres in the Montney shale region and about 85,000 net acres in the Duvernay shale region and some additional land in other parts of Alberta.

The to-be-marketed assets produce about 140 million cubic feet of natural gas and about 9,000 barrels of crude, condensate and natural gas liquids daily. (Imperial Plans to Sell Assets in Montney, Duvernay)

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               +4.3%                 +25.4%
CVX                +3.1%                 +30.8%
COP               +7.6%                 +56.3%
OXY                +6.9%                 +36.9%
SLB                +7.9%                 +35.7%
RIG                +6.3%                  +0.6%
VLO               +5.2%                  +31.3%
MPC              +5.4%                  +40.3%

The Energy Select Sector SPDR — a popular way to track energy companies — was up 5.2% last week. Over the past six months, the sector tracker has increased 32.5%.

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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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Eni SpA (E) : Free Stock Analysis Report
TechnipFMC plc (FTI) : Free Stock Analysis Report
W&T Offshore, Inc. (WTI) : Free Stock Analysis Report
Imperial Oil Limited (IMO) : Free Stock Analysis Report
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