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Msg  139014 of 140620  at  9/24/2022 5:27:07 AM  by


The following message was updated on 9/24/2022 5:27:07 AM.

Energy & Utilities Roundup: Market Talk

Dow Jones Institutional News; New York [New York]. 22 Sep 2022. 
 The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
1508 ET - Natural gas drops 8.9% to a two-month-low $7.089/mmBtu after a large weekly storage injection that reflected milder weather and record-high production. The EIA report showed inventories rose by 103B cubic feet last week, topping both the forecasts in a WSJ survey for a 95-bcf rise and an average 81-bcf increase. "I surely don't count bulls out as bears have been pretty frustrated on pops," says The Early Edition's Allen Rather in a research note shortly after the data was released. "But by all rights, on a chart basis this is pretty much the lick log for bulls. They seem to have 9 lives this year, but I think they are on about life number 13th at this point." (
1453 ET - WTI oil prices finish 0.7% higher at $83.49 a barrel, but are down about $2 for the week heading into Friday. "For the second day in a row, spot ripped higher early in the session, but faded badly in the face of the dollar index printing new 20 year highs," says Bob Yawger at Mizuho in a research note. "Also, for the second day in a row, the crude oil rally never had the support of the front of the curve spread in both WTI and Brent." Fed rate hikes and ongoing US sales of crude from the nation's Strategic Petroleum Reserve are making any bullish rallies difficult, he adds. (
1340 ET - In a challenging economic environment, Tidewater Renewables will benefit from the clean-fuel regulations credit market, CIBC's Robert Catellier says in a research note. The company expects to generate C$30M of incremental run-rate Ebitda from its diesel and renewable hydrogen complex and the revenue that it generates from the credits. "While financial market conditions are currently challenging, we continue to see potential for significant investor returns if the company executes the HDRD project as envisioned," Catellier says, adding that this makes Tidewater Renewables a worthwhile investment through current market volatility. Shares are down 4.8% at C$10.57. (
1210 ET - General Motors is putting more weight in the lithium battery game with a strategic investment and partnership with Lithion Recycling. GM said its venture branch made an investment in the lithium-battery recycling company's Series A financing round in efforts to further integrate its battery ecosystem, which Wedbush analysts said is a step in the right direction for GM as it aggressively scales out its electric vehicle footprint. It also speaks to the rapid acceleration of EVs in the US, analysts said. "GM's strategic move is yet another example to the transformation actively underway in the industry as the EV arms race continues and companies battle it out to vertically integrate and keep costs lower in this environment," Daniel Ives and John Katsingris said in a note. It was reported earlier this month that Tesla is looking into constructing a battery-grade lithium hydroxide refining facility to support its EV-battery production. (; @knhardison)
1210 ET - Investor confidence hits a 27-year low as soaring energy prices and the cost-of-living crisis weigh, Hargreaves Lansdown says. HL's monthly investor-confidence index, based on a survey of 6,000 of the financial-services firm's clients, hit its lowest this month since it began in May 1995, falling by 27 points to 44--lower than the 52 it hit in December 2018. "Despite periods of under-performance often being some of the best opportunities to buy into markets, Investment Association fund flows show 2022 has seen some of the worst outflows on record," HL's Emma Wall writes. "All eyes will be on central banks and governments to provide a measured response to the crisis--particularly the new U.K. government as it announces a mini-Budget Friday." (
1123 ET - While Exxon is still largely an oil and refining company -- its shares hit an all-time high on June 8, the same day WTI crude hit a summer peak of $122 a barrel -- Goldman Sachs says Exxon also plays an important role in energy transition and low-carbon emissions projects. And with shares now 13% below those all-time highs, a buying opportunity may be at hand. "XOM sees biofuels, hydrogen, and CCS as areas of focus where they have differentiated capabilities," Goldman says after meetings in Texas with management, noting it rates Exxon shares a buy. "Its refineries over time can be repurposed for biofuels production, chemicals/lubricants production, or plastic recycling." Shares are little changed at $90.87. (
1040 ET - Talos Energy's planned $1.1B acquisition of EnVen Energy finds a fan in Stephens, which says it supports deal and reiterates its overweight rating on the stock. In a research note, Stephens analysts led by Cameron Lochridge say the move furthers Talos's strategy as a top Gulf of Mexico operator while adding six highly complementary production facilities. Stephens also notes the deal's majority stock consideration helps Talos maintain a conservative capital structure, positioning it to initiate a shareholder-return program in the future. Talos falls 5.6% to $17.81. (
0727 ET - The nationalization of Fortum's Uniper subsidiary de-risks its investment case, Bank of America Global Research analysts Ekaterina Smyk and Peter Bisztyga say in a note, double-upgrading the Finnish utility to buy from underperform. The agreement guarantees repayment of Fortum's EUR4 billion loan, releases the EUR4 billion guarantee and gives it EUR500 million from Uniper's distressed equity, de-risking the exposure that has weighed greatly on its share price, they say. In addition, Fortum should now be able to maintain its dividend, and following its planned exit from both Uniper and Russia, it will essentially become a pure play green power generator positioned to benefit from higher-for-longer Nordic power prices, they add. BofA cuts target price to EUR20 from EUR24.50. (
0654 ET - U.K.-based fuel-cell manufacturer Ceres Power could see material upside to earnings if its royalties model succeeds and its electrolyzer business takes off, analysts at RBC Capital Markets say in a research note. The bank sees Ceres reaching EBIT breakeven in 2025 and growing revenues at a more than 50% compound annual growth rate between 2022 and 2030 provided that the company's partners successfully scale their solutions in China and that it develops further partnerships in the electrolyzer space. The bank initiates coverage at sector perform on the stock, for which it has a price target of 600 pence. (
0539 ET - Petro Matad has made substantial progress getting its production capability ready to ensure rapid completion of Heron-1 ahead of a resolution to land access issues, Shore Capital says. The Mongolian oil company has made it clear that it is pressing hard to achieve a satisfactory resolution, Shore analyst Craig Howie says in a research note. "We continue to believe that successful project execution offers the potential to create significant shareholder value in the months ahead, as Petro Matad prioritizes Heron-1 completion and production and with the company clearly ready to commence field operations as soon as the land access issue is resolved," the investment group says. Shore is a nominated adviser and broker to Petro Matad. Shares are down 13% at 2.28 pence. (
0423 ET - The FTSE 100 Index falls 0.4%, or 27 points to 7210 as losses for JD Sports Fashion and property stocks offset gains for oil and financial shares. JD Sports drops 4% after the retailer reported lower first-half pretax profit and sounded caution about second-half trading. Land Securities, British Land, Segro and house-builders also fall. Still, BP and Shell gain as Brent crude increases 1.1% to $90.79 a barrel and Admiral, Lloyds Banking, Standard Chartered and Aviva rise ahead of the Bank of England's interest-rate decision later. "In our view, BoE will raise its policy rate by "only" 50bp, as it weighs in a looming recession against still high inflation," Danske Bank analyst Antti Ilvonen writes. "However, we recognize it's a close call between 50bp and 75bp." (
2231 ET - Oil prices are higher, reversing from earlier losses in the morning Asian session, in a likely technical rebound after prices settled at their lowest level in two weeks on Wednesday. There's also been a repricing of Russian risk overnight, say TD Securities strategists in a research report. The energy market's narrative is turning back toward structural tightness as the market reprices war risks with the Northern Hemisphere winter looming on the horizon, the strategists add. Front-month WTI crude oil futures are 0.3% higher at $83.17/bbl and Brent crude oil futures rise 0.3% to $90.10/bbl. (
September 22, 2022 16:50 ET (20:50 GMT)

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