Daily Brief Energy/Materials: Crude Oil, APA , Nickel Industries , Eog Resources, Cheniere Energy, Pioneer Natural Resources, Pulsar Helium, Rayonier Advanced Materials, Seadrill and more

• US crude oil inventories buildup outpaces gasoline and distillate withdrawal for the week ending on 23/Feb.
• Refinery utilisation rates rose by 0.9 percentage points on a weekly basis to 81.5%, for the first time in 2024.
• Disparity between crude oil and refined petroleum inventories to remain in the near term as refinery utilisation rates are yet to recover completely after the maintenance season.

• Cheniere Energy, Inc.
• has reported substantial operational and financial attainments for Q4 and the entire year of 2023.
• The company produced a record 637 LNG cargoes, with a total production amounting to 45 million tons, in line with their forecast.

Nickel Industries Limited has released sound FY 2023 numbers, driven by a series of capital-raising initiatives that have strengthened the company’s balance sheet. The operating results were satisfactory, with capacity growth and competitive first-quartile cash costs more than offsetting lower nickel prices (down c. 50% in the past year). NIC is also making good progress in the transition away from nickel pig iron (NPI) production to Class 1 nickel production.

Group EBITDA increased 19% y-o-y to USD 403 mn, due to robust production volume growth. Net debt fell to USD 66 mn from USD 415 mn, thanks to material cash proceeds from the capital-raising initiatives. Gross Debt/EBITDA and Net Debt/EBITDA were 2.2x and 0.2x, respectively, at FYE 2023. EBITDA/Interest stood at 5.7x. Liquidity is adequate, with USD 779 mn cash and c. USD 200 mn available credit lines (vs. USD 845 mn total debt).

We continue to expect robust double-digit EBITDA growth of c. 20% in FY 2024 and c. 2x Gross Debt/EBITDA. This will likely be supported by capacity expansion.

• EOG Resources had an impressive financial performance in Q4 and 2023, primarily characterized by strong volume growth, the delivery of their production milestone, and the generation of significant free cash flow.
• EOG achieved their production milestone, producing more than 1 million barrels of oil equivalent per day, beating their volume targets.
• Their adjusted net income was $6.8 billion, a return on capital employed of 31%.

• Cheniere Energy, Inc.
• has reported substantial operational and financial attainments for Q4 and the entire year of 2023.
• The company produced a record 637 LNG cargoes, with a total production amounting to 45 million tons, in line with their forecast.

• Pioneer Natural Resources attained strong results in its second quarter with oil production near the top end of its guidance range thanks to improved well performance and efficient operations.
• The increased production and concurrent lowering of full year 2023 capital guidance suggests an enduring strength in Pioneer’s capital efficiency.
• In addition, the company also successfully returned 75% of its free cash flow to shareholders through dividends and opportunistic share repurchases, signaling strong financial management and a focus on shareholder value.

• The Jetstream #1 appraisal well at the Topaz helium project in Minnesota encountered helium shows while drilling, with helium concentration of up to 12.4% according to the on-site spectrometer.
• The helium shows were encountered at depths of 1,750 – 2,200 feet (TD: 2,200 feet).
• The helium mudlog gas composition increased from 3.7% to 5.1% over the period.

• 4Q23 disappoints but headwinds subsiding. RYAM reported 4Q23, which included solid revenue of $422 million, ahead of our estimate of $373 million.
• However, adjusted EBITDA of $37 million fell well short of Street expectations and our $48 million forecast on weaker-than-expected paperboard demand and lower-than-anticipated pulp prices.
• Right-sized inventory suggests modest growth. With customer channel destocking largely completed in 4Q23, RYAM’s businesses should see a more stable demand environment throughout 2024 and, combined with modest share-driven volume growth and lower input costs, improved gross and EBITDA margins.

• SDRL ended 2023 with in line results as the Company readies for a year filled with maintenance. The commentary surrounding market conditions has not changed greatly since third quarter results.
• There is still a lack of new supply but being able to match available supply to operators’ demand calendar has become challenging
• SDRL reported fourth quarter 2023 revenue of $408 million and operating income of $52 million, which were both in line with our estimate.