Oil prices ended the final trading session of 2015 by posting an annual drop of 31%. On the other hand, natural gas continued its rebound from multi-year lows but was still down 19% in 2015.

On the news front, ConocoPhillips COP and NuStar Energy L.P. NS claimed to have loaded the first export cargo of domestic crude oil following recent lifting of the 40-year federal ban. 

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures slumped 23% to close at $37.04 per barrel, natural gas prices soared 12% to $2.337 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Shell Cuts 2016 Budget, Chevron Axes 1200 Jobs.)

Oil prices fell in reaction to the U.S. Energy Department's latest inventory release that showed a surprise increase in stockpiles. Crude received a further jolt after Saudi Arabia said that it won’t limit oil production and is ready to meet any additional demand.

Natural gas, however, fared much better after an inventory report showed a bigger-than-expected withdrawal. The heating fuel was also buoyed by predictions of strong demand due to cooler weather forecasts over the next two weeks.

Recap of the Week’s Most Important Stories

1.    Following the lifting of the four-decade long U.S. oil export ban last month, the first crude tanker departed from Texas for export.

The light crude – loaded in the tanker by oil and gas finder ConocoPhillips and midstream firm NuStar Energy L.P. – was pumped from South Texas-based Eagle Ford Shale.

As per NuStar, Switzerland-based crude trading player Vitol Group – which also has interests in the refineries − will purchase the crude cargo. Vitol Group is also expected to be the buyer of the second light oil cargo that may be exported from Houston this week. (See More: U.S. Light Crude Sails Overseas After 40 Years.)

2.    Canada’s largest energy firm Suncor Energy Inc. SU may not close the door on its Canadian Oil Sands Ltd. buyout even if shareholders of the latter reject the deal.

Shareholders of Canadian Oil Sands have until Jan 8, 2016 to decide on whether to accept Suncor Energy’s offer of 0.25 share for every share of Canadian Oil Sand. For Suncor Energy, this would be a winning deal if and only if 67% of Canadian Oil Sands shares get tendered. Most importantly, Suncor Energy believes its offer is quite acceptable especially when oil price has been weak for more than a year now with almost no chance of any near-term recovery.

But Canadian Oil Sands has considered Suncor Energy’s bid significantly undervalued and is mulling over remaining an independent player. In fact, billionaire Seymour Schulich, having a 5.2% stake in Canadian Oil Sands, has considered the bid totally unacceptable.

3.    Norway’s Statoil ASA STO has concluded two deals involving farm in and farm out of fields, which are likely to increase the company’s operatorship in priority areas. These transactions will also enhance its control over asset development and costs.

To begin with, Statoil has divested a 15% interest in the Gudrun field on the Norwegian Continental Shelf to Spain-based Repsol. Even after shedding the stake, Statoil remains the operator and largest equity holder with an interest of 36%. Statoil has also acquired a 13% stake in their Eagle Ford joint venture from Repsol. With this purchase the company will become the field’s sole operator. This will facilitate Statoil to optimize field development along with driving efficiency in operations and cost savings.

Both the Gudrun and Eagle Ford transactions, effective Jan 1, 2016, were valued at the same amount. The deals, which were first announced on Dec 11, 2015, were concluded at year's end following the receipt of government approvals.

4.    ConocoPhillips, the operator of Eldfisk and Embla oilfields in the North Sea, announced that both these fields have restarted production. Both the fields were shutdown on New Year’s Eve following concerns that the installations could be hit by a drifting barge.

Located in the middle of the North Sea between Norway and Britain, BP plc's Valhall platform and ConocoPhillips's Eldfisk and Embla, lay on the way of the drifting vessel, instigating staff evacuations.

Ekofisk crude oil stream represents one of four North Sea crudes supporting the global Brent oil benchmark. ConocoPhillips' Embla and Eldfisk fields form a part of the Ekofisk crude oil stream. (See More: ConocoPhillips' Eldfisk and Embla Oilfields Restart Production.)

5.    With the sale of its stake in natural gas distribution unit, Brazil’s Petrobras PBR has ultimately reached its 2015 asset sale goal of $700 million. Raising cash through divesting properties has been a prime way for the company to pay off its massive debt load after it got involved in a money laundering scam.

In details, Petrobras announced the closure of sale of its 49% interest in Petrobras Gas S.A., or Gaspetro – primarily involved in the transportation and storage of natural gas and natural gas liquid – for $501 million to Mitsui & Co Ltd. of Japan. After fulfilling its 2015 asset sale program, the largest integrated energy firm in Brazil is on its way to fetch as high as $15 billion from its asset disposal program spread over 2015-2016. (See More: Petrobras Closes $700 Million Asset Sale Program for 2015.)

Price Performance

The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.

Over the course of last week, ‘The Energy Select Sector SPDR’ suffered a loss of 0.25% as investors witnessed a bout of selling in major companies. The worst performer was U.S. energy behemoth Chevron Corp. CVX whose stock shed 3.4%.

Longer-term, over the last 6 months, ‘The Energy Select Sector SPDR’ lost 19.1% of its value. Houston-based energy major ConocoPhillips was the main laggard, as it witnessed a 20.6% price decline. However, refiner Tesoro Corp. TSO was able to buck the trend and was the chief beneficiary on the bourses with its shares advancing 17% during this period.

What’s Next in the Energy World?

Apart from the usual releases in this week – the U.S. government data on oil and natural gas – market participants will be closely tracking a series of top-tier economic readings, including those on factory orders, jobless claims and nonfarm payrolls.

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