What to Watch

Big Oil Is Rewarding Investors Again

French oil giant Total SA capped off a choppy earnings season for major oil companies with some big news: it will raised dividends by 10% over the next three years and buy back $5 billion-worth of shares, writes The Wall Street Journal’s Sara Kent.

 

It is the clearest sign yet that oil companies are turning the page on a painful three-year slump in oil prices that forced tough cost-cutting measures and sounded a clear note of confidence after earnings from Exxon Mobil Corp. and Chevron Corp. disappointed.

 

Statoil ASA, Anadarko Petroleum Corp. and ConocoPhillips have all announced higher investor payouts this year.

 

They followed British oil giant BP PLC’s share buyback announced in October, a program of purchasing its own  stock that generally makes the remaining shares more valuable.

 

The companies are rewarding shareholders as profits return to the industry after a three-year slump in oil prices.

 

Energy News

Oil Edges Down Amid U.S. Output Surge

Oil prices continued to fall on Thursday on the back of surging U.S. production and rising inventories.

 

Brent crude, the global benchmark, was down 0.70%, at $65.09 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.73% at $61.34 a barrel. In late January, Brent had climbed over $70 a barrel for the first time since 2014.

California Vows Roadblocks to Trump’s Oil Offshore Drilling Plan

California says it may block oil transports from offshore rigs through its state, in a bid to block the Trump administration’s plan to greatly expand U.S. offshore drilling.

 

Authorities in other states such as Florida, North and South Carolina, Delaware and Washington, have also pushed back against the Trump administration’s move, warning that drilling could ruin the environment and hurt their tourism industries.

 

“I am resolved that not a single drop from Trump’s new oil plan ever makes landfall in California”

– Lt. Gov. Gavin Newsom of California

 

Tesla Says It Is Making Progress on Model 3 Production Issues

Despite its sizable losses in 2017, Tesla Inc. on Wednesday signaled it is making progress in overcoming production troubles building its latest electric-vehicle line.

 

Despite its sizable losses in 2017, Tesla Inc. on Wednesday signaled it is making progress in overcoming production troubles building its latest electric-vehicle line.

 

The auto maker said in its quarterly financial report that it is on track to reach a milestone of making 5,000 Model 3 sedans a week by the end of the second quarter of 2018. In another coup for Tesla’s Chief Executive Elon Musk, his side venture Space Exploration Technologies Corp. successfully launched a space rocket on Tuesday.

 

Big Number

40.64 million

China¸the world’s largest energy user, imported a record amount of crude oil in January to meet a spike in heating demand. Crude imports rose 20 % from the same period in 2017 to a record 40.64 million tonnes, or 9.57 million barrels per day, according to official data.

 

FutureCurve

Friday: Baker Hughes releases weekly data on the number of rigs drilling for oil in the U.S.

February 20-22, 2018: the Energy Institute hosts the International Petroleum Week, conference in London. The speakers at the event include BP Chief Executive Bob Dudley and Dr. Faith Birol, executive director of the International Energy Agency.

March 9: Cambridge Energy Research Associates hosts the CERAWeek energy conference, in Houston. The speakers include the IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

 

Reporter’s Notebook

WSJ Reporter Neanda Salvaterra on dividends. Oil explorer Tullow Oil said it will have more flexibility to reward its investors this year. The firm posted an operating profit of $22 million for 2017 on strong sales, despite paper losses that resulted in a narrowed pretax loss for the same period. The firm also generated free cash flow of $543 million last year, up from a loss of $792 million for 2016. Although the company won’t pay a dividend for 2017, it may share its future earnings with investors.

 

WSJ Correspondent Costas Paris on oil’s effect on shipping.Higher U.S. oil and natural gas production is set to benefit crude and product tankers as exports are expected to grow, according to the Energy Information Administration’s annual report. U.S. crude production this year is expected to be a record 10.6 million barrels per day, one million barrels more than the previous record, set back in 1970. Liquefied-natural-gas production will grow to 86.4 billion cubic feet per day this year from 78.9 billion in 2017.