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Jumat, 02 Agustus 2019

Gas Glut Weighs on Oil Giants - The Wall Street Journal

Natural-gas prices have fallen due to concerns about a glut, driven by booming production in... — Natural-gas prices have fallen due to concerns about a glut, driven by booming production in the Permian Basin. Natural-gas flare near Pecos, Texas. Photo: James Durbin for The Wall Street Journal

Bradley Olson

The Wall Street Journal

Biography
@bradnews
bradley.olson@wsj.com

Updated Aug. 2, 2019 11:50 am ET

The world’s largest oil companies are feeling the financial pressure of a global decline in natural-gas prices.

Exxon Mobil Corp. XOM -1.27% second-quarter profits fell 21% as diminished returns for gas and petrochemicals offset production growth in America’s hottest oilfield, the Permian Basin of Texas and New Mexico.

Chevron Corp. CVX -0.41% ’s net income rose 26% to $4.3 billion due in part to its receipt of a breakup fee from a scuttled deal to buy Anadarko Petroleum Corp. APC -0.78% , but the company saw the prices it fetches for its U.S. natural gas fall by more than half.

Exxon’s lower returns Friday mirrored similar results earlier this week from European counterparts, including Royal Dutch Shell PLC. Profits from the company’s global natural-gas segment fell by about half to $1.34 billion, as prices declined abroad due to abundant new supply from projects around the world. Shell said its quarterly profit fell by half to about $3 billion.

Natural-gas prices have been falling due to concerns about a glut of the cleaner-burning fuel, driven in part by booming production in the Permian Basin and new export projects ranging from the Texas Gulf Coast to Papua New Guinea. The abundance of the fuel has pushed down prices for liquefied natural gas, as more companies seek to sell cargoes around the world.

Oil prices also continue to be volatile due to demand and geopolitical worries. The U.S. benchmark for crude fell 7.9% to $53.95 a barrel Thursday, but was bouncing back somewhat Friday morning, up 3%.

Exxon, one of the largest natural-gas producers in the U.S., warned on July 1 that second-quarter profits would fall by as much as $600 million due to price declines. Shale companies also have suffered due to the price decrease.

Shares in Whiting Petroleum Corp. plunged 39% on Thursday after the company disclosed a production slowdown. It said it took in just 47 cents per thousand cubic feet of gas during the second quarter, down 64% from the same period last year. Whiting had to throttle its production growth as North Dakota limited how much natural-gas companies can burn off, a process known as flaring.

“Infrastructure constraints were more severe than anticipated and we did not have enough cushion for associated operating delays,” Chief Executive Brad Holly told investors. The company said this week that it was slashing its workforce by 33%, joining other shale companies such as Pioneer Natural Resources Co. PXD 0.71% in paring back to limit costs.

Other shale companies are experiencing operations-related problems. Concho Resources Inc. shares fell 22% Thursday after it disclosed disappointing output from wells it had drilled too close together, a growing problem in the shale-drilling sector.

Here's Why Aphria Is Surging Today - Market Realist

Aphria (APHA) surged almost 30% in the early morning session after the company reported better-than-expected results. It beat both top and bottom line expectations. It also became one of the few cannabis companies to turn a profit in the current quarter. This performance was great news for cannabis investors, who had been waiting for positive signs. Read Aphria Stock Rises on Earnings Beat to learn more.

Improving corporate governance

Aphria’s chair and CEO, Irwin D. Simon, appears to have put the company on the right path after taking over. On Aphria’s earnings call, Simon stated that the company’s strategic initiatives and growth plans had established a sustainable long-term growth path for the company. It appears Aphria’s management and corporate governance have strengthened under Simon, which is a huge win for investors.

Most importantly, Aphria’s fiscal 2019 fourth-quarter performance marks the return of the company to a promising position among its major cannabis peers. It also shows that with the right talent, cannabis companies embroiled in scandals can become profitable again.

What moved in the fourth quarter?

In the fourth quarter, the biggest improvement Aphria was looking for was underlying demand in the cannabis sector. The company sold almost double the cannabis it sold in the previous quarter. This improvement goes to show that the demand for cannabis has remained healthy and may be growing.

Improvements in the company’s cash costs for cannabis products helped it out in the fourth quarter. Its cash costs decreased to 1.35 Canadian dollars per gram from 1.48 Canadian dollars per gram in the third quarter. However, the company’s average price per gram in the fourth quarter decreased to 7.66 Canadian dollars per gram from 8.03 Canadian dollars per gram in the previous quarter, indicating pressure on prices.

During its earnings call, the company indicated that its average selling prices would remain at this level and increase slightly due to pricing pressure. However, like its peers, Aphria is also moving toward higher-margin products. For more analysis, read Investing in the Cannabis Industry.

How the market reacted?

The market seemed positive after Aphria’s results. Canopy Growth (WEED) (CGC) rose 4% in early morning trading. Aurora Cannabis (ACB) and Tilray (TLRY) were also up 4% in early morning trading. The Horizons Marijuana Life Sciences ETF (HMMJ) was also up 4%.

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August 02, 2019 at 10:15PM

Enbridge CEO 'deeply saddened' by death in Kentucky pipeline blast - BNNBloomberg.ca

CALGARY -- The CEO of Enbridge Inc. (ENB.TO) says he is "deeply saddened" by the death of a woman in central Kentucky in an explosion on Thursday involving the company's Texas Eastern natural gas pipeline.

Al Monaco promised that the line will not go back into service until it is "absolutely safe to do so," noting that the Calgary-based company has a team on site working with members of the U.S. National Transportation Safety Board to discover the cause.

"Our hearts go out to the community and the family," said Monaco on a conference call.

The pipeline rupture caused a massive explosion that killed one person, hospitalized five others, destroyed railroad tracks and forced the evacuation of a nearby mobile home park, authorities said.

Kentucky State Police said at least five homes were completely destroyed and structures within 457 metres had damage. He said a handful of people who were missing after the blast have now been accounted for.

Enbridge spokesman Jim McGuffey said two other nearby gas lines don't appear to be affected but will be inspected. He said there's no indication of what might have caused the explosion.

Also Friday, Enbridge announced the beginning of an open season on its Canadian Mainline pipeline system, with bids to be accepted until Oct. 2.

The company wants to change from a common carrier model, where all of the system's capacity is available on a month-to-month basis, to one where shippers can lock into contracts of up to 20 years, starting on July 1, 2021.

Mainline capacity would be 3.225 million barrels per day, assuming the delayed Line 3 replacement project is completed, of which up to 2.9 million bpd would be contracted and 10 per cent, or 325,000 bpd, remaining in spot service.

The change is subject to regulatory approval.

Enbridge says a number of unusual factors boosted its second-quarter profit to $1.74 billion, while operations also performed well amid strong demand for transporting crude oil through its pipeline systems.

Net income attributable to common shares of the Calgary-based company was 86 cents per share.

That was up from $1.07 billion or 63 cents per share in last year's second-quarter, which also included unusual items.

Enbridge's adjusted earnings and revenue were also up, beating analysts' expectations.

Adjusted earnings rose to $1.35 billion or 67 cents per share, from $1.09 billion or 65 cents per share, while revenue was $13.26 billion, up from $10.74 billion.

Analysts had estimated $11.06 billion of revenue and 59 cents per share of adjusted income, according to financial markets data firm Refinitiv.

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August 02, 2019 at 09:07PM

U.S. Federal Reserve cuts rate for first time in decade, leaves door open for more - Financial Post

WASHINGTON — The Federal Reserve cut interest rates on Wednesday for the first time since 2008, citing concerns about the global economy and muted U.S. inflation, and signalled a readiness to lower borrowing costs further if needed.
Financial markets had widely expected the quarter-percentage-point rate cut, which lowered the U.S. central bank’s benchmark overnight lending rate to a target range of 2.00 per cent to 2.25 per cent.

In a statement at the end of its latest two-day policy meeting, the Fed said it had decided to cut rates “in light of the implications of global developments for the economic outlook as well as muted inflation pressures.”

The Fed said it will “continue to monitor” how incoming information will affect the economy, adding that it “will act as appropriate to sustain” a record-long U.S. economic expansion.

“It’s smart of them to go ahead and take out some insurance here. It’s better than none at all,” said Brett Ewing, chief market strategist at First Franklin Financial Services in Tallahassee, Florida.
U.S. stock prices, which had largely drifted sideways earlier Wednesday as investors awaited the meeting’s outcome, dipped after the Fed’s statement. The benchmark S&P 500 Index was down fractionally after briefly falling to the day’s low.

Heading into Wednesday, the index was up about 3 per cent since June 19, when the Fed first signaled a rate cut was likely as it pledged then to act as appropriate to sustain the expansion.”

Yields on U.S. Treasury securities rose as the bonds’ prices, which move in the opposite direction, fell. Ten-year note yields edged up to about 2.04 per cent, while yields on 2-year notes, a proxy for Fed policy rates, rose to 1.86 per cent.

The U.S. dollar index gained ground to touch its highest in more than two years. The index, which measures the greenback against a basket of currencies, was up about 0.20 per cent on the day.

Two ‘No’ Votes

The decision drew dissents from Boston Fed President Eric Rosengren and Kansas City Fed President Esther George who argued for leaving rates unchanged.

Both have raised doubts about a rate cut in the face of the current expansion, an unemployment rate that is near a 50-year-low, and robust household spending.

On the opposite flank, U.S. President Donald Trump is likely to be disappointed the Fed did not deliver the large rate cut he had demanded. Trump has repeatedly harangued the central bank and Fed Chairman Jerome Powell for not doing enough to help his administration’s efforts to boost economic growth.

Powell and other Fed officials in recent weeks have walked a middle ground, flagging risks like continued uncertainty on the global trade front, low inflation and a weakening world economy, but repeating the view the United States is fundamentally in a good spot.

Powell is expected to elaborate on the Fed’s thinking in a news conference at 2:30 p.m. EDT (1830 GMT).
The Fed said in its statement that it continued to regard the labor market as “strong” and added that household spending had “picked up.” But it noted business spending was “soft” and that measures of inflation compensation remain low.

The Fed said the rate cut should help return inflation to its 2 per cent target but that uncertainties about that outlook remain. Sustained expansion of economic activity and a strong labor market are also the most likely outcomes, the Fed said.

Underscoring its decision to ease policy across the board, the Fed also said it would stop shrinking its massive holdings of bonds starting Aug. 1, two months ahead of schedule.

“I think ending the quantitative tightening right here was also a good call,” First Franklin’s Ewing said.

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August 01, 2019 at 02:07AM

Bombardier asks Export Development Canada to select investigator to review overseas practices - The Globe and Mail

Dow drops 300 points as trade war escalates - CNN

Stocks are bracing for a dramatic finish this week, after President Donald Trump announced new tariffs on Chinese imports Thursday.

Starting September 1, $300 billion worth of goods from China, including toys and iPhones, will be hit with a 10% tariff. That's on top of the existing 25% tariff on $250 billion worth of imports.

US stocks and global markets are flashing red in response.

The Dow (INDU) shed 305 points late in the morning on Friday. The S&P 500 (SPX) and the Nasdaq Composite (COMP) slid 1.2% and 1.8% respectively.

The S&P and Nasdaq are on track for its worst week since December. For the Dow, it is shaping up to be the worst week since late May, according to Refinitiv.

The July jobs report did little to change the narrative. The US economy added 164,000 jobs in July, in line with the Refinitiv consensus estimate. The unemployment rate was unchanged at 3.7%.

More drama on the trade front adds to the odds that the Federal Reserve will make a deeper interest rate cut in September, according to Goldman Sachs economists led by Jan Hatzius. That said, with one month left until the new tariffs are implemented and on-going talks with Beijing, there is a chance they will never actually come into effect.

The Goldman economists anticipate the new tariffs will shave up to 0.2 percentage points off of US GDP growth. That will rise to a 0.5- to 0.6-percentage point cut if the tariffs rise to 25%, they said.

The risk of US tariffs on European auto imports has risen with Thursday's tariff announcement, they said.

It has been a volatile week for stocks.

On Wednesday, the Fed cut rates by a quarter percentage point, as widely anticipated. But comments from Fed Chairman Jerome Powell that the cut wasn't ushering in an extended period of loser monetary policy disappointed markets. Stocks sold off.

On Thursday, equities recovered and the weakest ISM manufacturing survey in three years added to the narrative that the US economy will need another boost after this week's rate cut.

Then Trump announced the new tariffs, and stocks dropped sharply. The Dow swung 600 points over the course of the day, the biggest one-day point move since January.

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https://www.cnn.com/2019/08/02/investing/dow-stock-market-today/index.html

2019-08-02 15:01:00Z
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Wall St. drops at open on Trump's tariff threat, slow job growth - Investing.com

(Reuters) - U.S. stock indexes fell at open on Friday, weighed by tariff-sensitive technology stocks following a sharp escalation in U.S.-China trade tensions, while a tepid domestic jobs growth in July reinforced fears of an economic slowdown.

The fell 54.76 points, or 0.21%, at the open to 26,528.66. The S&P 500 opened lower by 9.66 points, or 0.33%, at 2,943.90. The dropped 54.70 points, or 0.67%, to 8,056.42 at the opening bell.

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