Oil & Gas Stock Roundup: ExxonMobil's Q4 Update, Core Labs' Dividend Cut & More
Zacks Investment Research | Jan 06, 2020 09:07PM ET
It was a week where It was a week where oil futures rose to levels not seen since May but natural gas futures settled lower.
On the news front, supermajor ExxonMobil (NYSE:XOM) issued an update on its upcoming fourth-quarter earnings. Meanwhile, Core Labs (NYSE:CLB) slashed its dividend by 55% and lowered fourth-quarter guidance.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures climbed 2.2% to close at $63.05 per barrel, natural gas prices fell 4.5% for the week to finish at 2.13 per million Btu (MMBtu).
The U.S. crude benchmark rallied to multi-month highs, pushed up by concerns that escalating U.S. - Iran tensions in the Middle East could lead to supply disruptions. A large decline in domestic inventories and news of Chinese economic stimulus that could propel demand, lent additional support to the oil market.
Meanwhile, natural gas prices moved southward following a smaller-than-expected decrease in supplies and expectations of warmer weather in January that could jeopardize power sector demand for the heating fuel.
Recap of the Week’s Most Important Stories
1. ExxonMobil expects a gain of $3.4-$3.6 billion from the divestment of Norwegian assets. This will likely give a boost to its fourth-quarter 2019 results. The company’s recent regulatory filing showed that the gains from this divestment can offset lower margins from chemicals and refining businesses.
The Norway divestment deal of September included ownership interests in more than 20 producing fields, with total production of around 150,000 barrels of oil equivalent per day in 2019.
The recent regulatory filing reflected the largest publicly-traded energy company’s decline in profits from the chemicals business. It is further expected to take a hit from a global glut in polyethylene. Similarly, the downstream business — which generated $1.2 billion in profits in third-quarter 2019 — is expected to take a $800-$600 million hit in the fourth quarter. (Read more Zacks Investment Research
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