The Zacks Analyst Blog Highlights Shell, The Williams Companies, Cheniere, APA and TechnipFMC

For Immediate Release

Chicago, IL – September 22, 2022 – Zacks.com 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: Shell plc SHEL, The Williams Companies WMB, Cheniere Energy LNG, APA Corp. APA and TechnipFMC FTI.

Here are highlights from Wednesday’s Analyst Blog:

Oil & Gas Roundup: Successions, Acquisitions and More

It was a week when both oil and natural gas prices continued their decline.

On the news front, Europe’s largest oil company Shell plc announced the departure of chief executive officer (CEO) Ben van Beurden next year, while energy infrastructure operator The Williams Companies closed the buyout of natural gas storage firm NorTex Midstream. Developments associated with Cheniere Energy, APA Corp. and TechnipFMC also made it to the headlines.

Overall, it was another bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures lost 1.9% to close at $85.11 per barrel, while natural gas prices decreased 2.9% to end at $7.764 per million British thermal units (MMBtu).

U.S. oil prices moved lower as the Energy Information Administration ("EIA") showed a build in stockpiles in its latest weekly release. As it is, crude remained under pressure from familiar fears revolving around high inflation and slowing growth. A stronger greenback, which can weaken dollar-denominated commodities like crude, also contributed to the downside.

Natural gas notched a bigger weekly loss, primarily due to a bearish inventory report. Unfavorable weather forecasts and a spurt in production have also been blamed for pushing prices lower.

Recap of the Week’s Most-Important Stories

1. Shell has declared that the incumbent CEO of the company — Ben van Beurden — will step down from his position by the end of 2022. Wael Sawan, SHEL’s head of gas and renewables, will succeed Ben van Beurden and take charge as the CEO, starting Jan 1, 2023.

Ben van Beurden, however, will continue working as an adviser to the board till Jun 30, 2023, after which he will leave the group. He has been serving as the CEO of the British energy major since January 2014. Prior to this, Ben van Beurden served as the downstream director and as the executive vice president of chemicals before that. During his tenure, Shell acquired the British multinational oil and gas company — BG Group plc — which turned out to be one of SHEL’s largest acquisitions in decades.

Presently serving as the director of integrated gas, renewables and energy solutions, Wael Sawan is expected to help continue Shell’s green transition strategy, which aims at cutting down the firm’s greenhouse-gas emissions and its transformational strategy initiated by Ben van Beurden. Having previously worked as the director of upstream, Sawan has been part of the organization for more than 25 years. (Shell to Replace Current CEO With Wael Sawan in 2023)

2. The Williams Companies recently announced that it has concluded the $423-million deal to acquire Houston-based NorTex Midstream, a fully contracted natural gas pipeline and storage asset, from the private equity firm Tailwater Capital’s affiliate.

As part of the contract, the Tulsa, OK-based pipeline operator will take over NorTex assets. These include roughly about 80 miles of natural gas transmission pipelines along with 36 billion cubic feet of natural gas storage in the Dallas-Fort Worth market.

Per WMB, NorTex assets offer crucial service to almost 4 GW of gas-fired power generation, allowing Texas energy providers to meet peak demand effectively. The assets also enable Williams to provide storage services for the Permian gas directed toward the rising Gulf Coast LNG demand. (Williams Acquires NorTex Midstream Assets for $423M)

3. Cheniere Energy, the Houston, TX-based liquefied natural gas exporter, recently announced its intention to pay higher dividends and augment share buybacks while adding to its production units.

This comes at a time when Zacks Rank #2 (Buy) Cheniere’s profits are up due to mounting energy prices and liquefied natural gas demand as a result of Europe trying to find alternatives to Russian gas over Moscow’s military action in Ukraine.

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

LNG will hike its annual dividend by 20% to $1.58 per share from the $1.32 payout initiated last year. Moreover, the firm projects more than $20 billion of available cash through 2026 and more than $20 per share of run-rate distributable cash flow. The full-year 2022 distributable cash flow forecast was increased to the range of $8.1 billion-$8.6 billion from the earlier guidance range of $6.9-$7.4 billion. (Cheniere to Increase Repurchase, Raises Earnings Forecast)

4   APA Corp. recently got approval from the board of directors to increase the quarterly dividend by 12.5 cents to 25 cents per share. The new payout will be on Nov 22 to its common shareholders of record on Oct 21. Following the 100% hike this quarter, APA’s annual dividend of $1 per share yields 2.41%, which is better than the S&P 500’s 1.54%.

The macro environment for U.S. Exploration & Production operators like APA remains robust, thanks to high commodity prices and improved fundamentals that should aid long-term growth. This positive backdrop, together with APA’s significant debt profile improvement and healthy cash flows, allows the company to reward investors with a dividend hike.

APA management sees the dividend hike as part of its commitment to return a minimum of 60% of free cash flow to shareholders each year. However, stock buyback continues to be the company’s preferred tool to distribute cash, with APA adding another 40 million shares to its buyback authorization. (APA Ups Shareholder Returns: Hikes Dividend, Expands Buyback)

5   TechnipFMC declared that it was awarded a “significant” engineering, procurement, construction and installation contract by TotalEnergies for its Lapa North East field situated in the pre-salt Santos Basin offshore Brazil. Located in the pre-salt Santos Basin, the Lapa field commenced oil production in 2016 via the MODEC-supplied FPSO Cidade de Caraguatatuba MV27.

Per the contract, the French-American, U.K.-domiciled oilfield services major will reconfigure and set up umbilicals and flexible pipes in a new configuration that will further secure the production of the field. Per TechnipFMC’s definition of a significant contract, the deal is worth between $75 million and $250 million.

President, Subsea, at TechnipFMC, Jonathan Landes, mentioned that the Brazilian offshore market is becoming more diverse concerning the scope of work as well as customer opportunity. “On Lapa North East, we are working with a valued client with whom we have built a trusted relationship. By offering the flexibility of a phased campaign, we are helping TotalEnergies accelerate its schedule and begin production sooner," he added. (TechnipFMC Gets EPCI Contract From TTE Offshore Brazil)

Price Performance

With oil being in red for the week, stocks were down too. The Energy Select Sector SPDR — a popular way to track energy companies — was down 2.7% last week. But over the past six months, the sector tracker has increased 8.5%.

What’s Next in the Energy World?

Following last week’s sliding 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 potential demand boost from the easing of coronavirus lockdowns in China will be the other factors that will dictate the near-term price movement of the commodities.

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Williams Companies, Inc. The (WMB) : Free Stock Analysis Report
 
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