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Energy Summary for July 20, 2020

2020-07-20 20:41 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for August delivery added 22 cents to $40.81 on the New York Merc, while Brent for September added 14 cents to $43.28 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9.45 to WTI, unchanged. Natural gas for August lost eight cents to $1.64. The TSX energy index lost 1.34 points to close at 75.21.

A busy week is getting off to a busy start. Quarterly earnings season is about to begin in earnest, with Suncor Energy Inc. (SU: $22.64) and Cenovus Energy Inc. (CVE: $5.94) kicking things off for the Canadian oil patch later this week. Meanwhile, south of the border, a major takeover proposal could mark the start of a wave of consolidation. Chevron has agreed to buy Noble Energy for $5-billion (U.S.) in shares. This is the upstream energy industry's first significant deal since the pandemic-triggered collapse in oil prices.

The deal will expand Chevron's holdings in the Permian shale basin, while boosting its Eastern Mediterranean position by adding the Leviathan gas field off the coast of Israel. Chevron is valuing Noble at $10.38 (U.S.) a share. This represents a small premium to Noble's closing price on Friday of $9.65 (U.S.). Just six weeks ago, however, Noble traded at $12.71 (U.S.), and at the beginning of the year it was worth around $25 (U.S.) -- not to mention its 2014 high of nearly $80 (U.S.). Noble's chief executive officer, Dave Stover, defended the deal during a conference call this morning. "It maintains the upside exposure and minimizes the downside risk. Scale really matters here," he said. Chevron CEO Michael Worth added his opinion that the price is "very fair."

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