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Oil & Gas Stock Roundup: Spotlight on Petrobras' Mega Capex Plan, Shell's Gas Find

It was another week when both oil and natural gas prices posted losses.

On the news front, the headlines revolved around Brazilian biggie Petrobras’ PBR ambitious strategic plan for the 2024-2028 period and London-based Shell’s SHEL natural gas discovery offshore Egypt. Developments associated with TechnipFMC FTI and Northern Oil and Gas NOG also made it to the headlines.

Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures decreased 0.7% to close at $75.54 per barrel, while natural gas prices moved down 3.6% to end at $2.855 per million British thermal units (MMBtu).

The crude price action remained negative for the fifth week running after government data showed a build in inventories and record-high crude production. Reports that the OPEC+ group of producers have failed to agree on any additional production cuts and delayed their weekend meeting also put pressure on the commodity.

Meanwhile, natural gas settled with a bigger weekly loss, overwhelmed by high production and predictions of insipid weather-related demand.

Recap of the Week’s Most Important Stories

1.  Petrobras, Brazil's state-controlled oil giant, has announced a significant increase in its investment plans for the next five years, with a total of $102 billion reserved for capital expenditures. This represents a substantial boost from the $78 billion previously projected for the 2023-2027 period.

Petrobras is set to invest heavily in its exploration and production operations, with a planned outlay of $72 billion, accounting for 72% of its total investment. This will enable the Zacks Rank #3 (Hold) company to ramp up its production from 2.8 million barrels of oil equivalent per day (boed) in 2024 to 3.2 million boed by 2028.

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

Additionally, Petrobras has allocated $7.5 billion for exploration activities, including $3.1 billion specifically earmarked for exploration at the Equatorial Margin, which is considered its most promising new frontier for oil and gas exploration. (Petrobras Reveals $102 Billion Investment Plan)

2. European supermajor Shell’s subsidiary, Shell Egypt, made a significant natural gas discovery in the North East El-Amriya block of the Mediterranean Sea. This momentous achievement marks the culmination of drilling operations at the Mina West-1X exploratory well, the first of three wells planned for the Mina West exploration project.

The drilling activities took place in the offshore Nile Delta, approximately 250 meters below sea level. The presence of a significant natural gas reservoir is strongly suggested by preliminary data analysis. This discovery holds immense potential for boosting Egypt's energy landscape and propelling Shell Egypt's growth trajectory.

Khaled Kacem, vice president and country chair of Shell Egypt, emphasized the discovery as a significant step forward, highlighting the company's commitment to growth and its role in Egypt's energy sector. This discovery also aligns with Egypt's ambitious plans to expand its energy infrastructure and diversify its energy portfolio. (Shell Discovers Natural Gas in the Mediterranean Sea)

3. TechnipFMC, an oilfield service provider, announced plans to sell its Measurement Solutions business to One Equity Partners in a deal worth $205 million cash. The agreement is pending customary adjustments at the closing of the transaction.

The Measurement Solutions business, operating under the Surface Technologies segment, specializes in terminal management solutions and metering products and systems. It has engineering and manufacturing facilities in North America and Europe.

The transaction is expected to conclude during the first half of 2024, subject to customary closing conditions. TechnipFMC will collaborate closely with One Equity Partners to facilitate a smooth transition of business activities. The sale is in line with FTI’s efforts to streamline its portfolio and concentrate on key areas of expertise. The company aims to enhance its focus on core products, market-leading technologies, and integrated solutions and services. (TechnipFMC to Sell Measurement Solutions for $205M Cash)

4.   Northern Oil and Gas announced two strategic acquisitions. The independent upstream operator has secured non-operated interests in the Northern Delaware and Appalachian basins for a combined initial purchase price of $170 million in cash and 107,657 shares of common stock. This strategic expansion is expected to boost NOG's production and financial performance in the years to come.

NOG's acquisition in the Northern Delaware Basin encompasses non-operated interests spanning approximately 3,000 net acres, primarily located in Lea and Eddy Counties, NM. The acquired assets currently generate an average production of around 2,800 barrels of oil equivalent (Boe) per day. NOG anticipates a slight decline in production to an average of 2,500 Boe per day in 2024. The company already owns approximately 90% of the Delaware Basin leasehold and is optimistic about the long-term growth potential of these assets.

The second acquisition expands NOG's presence in the Appalachian Basin, securing non-operated interests in Jefferson, Harrison, Belmont, and Monroe Counties, OH. These assets currently contribute an average production of 23 million cubic feet of gas equivalent (MMcfe) per day. NOG expects production to remain stable in 2024 and plans to invest around $14 million in capital expenditures (in these assets) during 2023. (Northern Acquires Non-Operated Interests in Two Basins).

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                -0.4%                  -1%
CVX                 +0.3%                 -6.3%
COP                +0.8%                 +12.7%
OXY                 -1.3%                  +1.6%
SLB                 -0.5%                  +18.1%
RIG                 +0.9%                  +2.4%
VLO                 +0.7%                 +10.4%
MPC                +1.1%                 +38.4%

Stocks had a mixed week, indicative of the uncertain trading in oil and gas. The Energy Select Sector SPDR — a popular way to track energy companies — edged up 0.3% last week. Over the past six months, the sector tracker has increased 7.4%.

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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Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report

TechnipFMC plc (FTI) : Free Stock Analysis Report

Northern Oil and Gas, Inc. (NOG) : Free Stock Analysis Report

Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report

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