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The Zacks Analyst Blog Highlights: Hess Corp, Equinor ASA, BP, Exxon Mobil and Kosmos Energy

Zacks Equity Research
·6-min read

For Immediate Release

Chicago, IL – September 18, 2020 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Hess Corporation HES, Equinor ASA EQNR, BP p.l.c. BP, Exxon Mobil Corporation XOM and Kosmos Energy Ltd. KOS.

Here are highlights from Thursday’s Analyst Blog:  

Oil & Gas Stock Roundup: Oil Find, Wind Deal & More

  It was a week wherein both oil and natural gas futures logged sharp declines.

On the news front, energy explorer Hess Corp. confirmed its 18th oil discovery off the coast of Guyana, while Norway’s Equinor ASA agreed to sell a 50% stake in two wind projects to London-based BP plc for $1.1billion.

Overall, it was another pretty bad week for the sector. West Texas Intermediate (WTI) crude futures suffered a loss of 6.1% to close at $37.33 per barrel, while natural gas prices decreased 12.3% for the week to finish at 2.269 per million Btu (MMBtu). In fact, both the markets extended their decline from the previous week.

Coming back to the holiday-shortened week ended Aug 11, the crude sell-off deepened as U.S. oil stocks rose, breaking the six-week streak of declines. Meanwhile, product demand weakened and refinery runs dropped, pointing to an oversupply situation, data from the Energy Information Administration showed.

Meanwhile, natural gas suffered heavy losses too after the U.S. Energy Department's weekly inventory release showed a larger-than-expected increase in supplies. The bearish injection, together with an unfavorable weather forecast, sparked a collapse.

Recap of the Week’s Most-Important Stories

1.  Hess announced another offshore Guyana oil finding, marking the 18th discovery in the Stabroek block. This time, the discovery has been made at the Redtail-1 well and the company is expecting the discovery to increase its prior estimate of more than 8 billion barrels of oil equivalent for gross discovered recoverable resources.

ExxonMobil, with a 45% interest is the operator of the block, covering 6.6 million acres. Hess owns 30% interest in the block. The remaining 25% stake is being held by a wholly owned subsidiary of CNOOC Limited.

Hess added that it encountered 21 meters of high-quality oil-bearing reservoirs at Yellowtail-2 well, which marked the 17th discovery in the Stabroek Block. Importantly, the leading upstream player believes that discoveries at Redtail-1 and Yellowtail-2 wells reflect remarkable exploration potential of the offshore block and has brightened the company’s oil production prospects. (Hess Makes 18th Oil Discovery in Guyana's Stabroek Block)

2.  Equinor ASA recently agreed to divest a 50% non-operated stake in Empire Wind and Beacon Wind assets located on the east coast of the United States to BP. The total consideration of the deal before adjustments is $1.1 billion.

The deal is in line with Equinor’s renewable strategy. The move will enable the company to de-risk high equity ownership positions and capture value. Collaborating with a partner will likely boost financial flexibility to fund further growth opportunities. The deal has an effective date of Jan 1, 2020 and is expected to close early next year. Equinor will remain the operator at the renewable projects.

Empire Wind — located 15-30 miles southeast of Long Island — covers 80,000 acres at water depths of 65-131 feet. Equinor acquired the lease of the project in 2017. It is developing the offshore wind farm, with an expected total installed capacity of more than 2 gigawatts (GW), in two phases.

The Beacon Wind is located 60 miles east of Montauk Point and spans 128,000 acres. The company acquired the lease last year and the project has an estimated total capacity of more than 2.4 GW. (Equinor to Offload Stake in US Offshore Wind Projects to BP)

3.  Kosmos Energy recently entered into an agreement with one of Royal Dutch Shell’s wholly-owned subsidiaries to sell its certain offshore exploration assets in Africa and South America for up to $200 million.

Per the deal, Shell will acquire Kosmos' existing 45% stake at the PEL0039 block in Nambia; 45% interest at Block NCUD in South Africa and own 33.33% stake at Block 42 in Suriname. Shell will also buy Kosmos’ shares in the following blocks of São Tomé & Príncipe, such as 25% in Block 6, 35% in Block 11 and 35% in Blocks 10 and 13.

The contract also comprises contingent payments of $50 million to be made upon each commercial discovery from the first four exploration wells drilled across the company’s asset portfolio, set at a maximum limit of $100 million in total. Three of the four well explorations are currently scheduled for next year. (Kosmos to Sell $200M of Exploration Assets to Shell)

4.   In its weekly release, Baker Hughes reported that the count of rigs engaged in the exploration and production of oil and natural gas in the United States was 254 in the week through Sep 11 versus the prior-week’s count of 256. The current national rig count is, however, well below the prior year’s 886.

Oil rig count was 180 in the week through Sep11 compared with 181 in the week ended Sep 4. Investors should also note that the current tally of oil rigs — far from the peak of 1,609 attained in October 2014 — is also below the year-ago 733.

The natural gas rig count of 71 was lower than the prior-week count of 72. Moreover, the count of rigs exploring the commodity is lower than the prior-year week’s 153. Importantly, per the latest report, the number of natural gas-directed rigs is 95.6% below the all-time high of 1,606 recorded in 2008. (Permian Basin Witnesses Removal of Two Oil Drilling Rigs)

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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