It was a week where oil prices again ended below $60-a-barrel, but natural gas edged up towards the psychologically important $3 threshold. On the news front, the top story came from midstream giant Williams Companies Inc.’s WMB rejection of a $48 billion takeover bid by Energy Transfer Equity L.P. ETE.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures edged down 0.6% to close at $59.61 per barrel, natural gas prices rose 2.4% to $2.82 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Shell Exits Ukraine, Hess Creates Bakken JV.)

Oil prices fell for the second time in 3 weeks, the backdrop being the ongoing Greek debt impasse, concerns over a further rise in Saudi crude production and news about the impending Iranian nuclear deal that has the potential to release more oil into the already oversupplied market. Moreover, a stronger dollar has made the greenback-priced crude more valuable for investors holding foreign currency.

To a large extent, the bears were offset by the Baker Hughes report that showed another drop in oil-directed rigs and the U.S. Energy Department's latest inventory release with news of seventh straight decline in crude stockpiles.

Meanwhile, natural gas fared much better amid predictions of robust summer cooling demand with forecasts of warmer-than-average weather across majority of the country over the next few days. A lower-than-expected supply build also helped matters.

Recap of the Week’s Most Important Stories

1.    Pipeline giant Williams Companies Inc. has declined an unsolicited buyout offer worth $48 billion. Though Williams did not mention the name of the bidder, media sources believe that the firm is Energy Transfer Equity L.P.

The proposal involved an all-equity deal of $64 per Williams share, a 32% premium to Friday, Jun 19, closing price of $48.34. However, the company feels that the proposal would undervalue its business and hence, rejected the offer.

Williams’ believes that it can achieve higher growth on a stand-alone basis and through the recently proposed Williams Partners L.P. merger. Williams also mentioned that the proposal was contingent on it terminating the proposed Williams Partners acquisition. (See More: Williams Rejects Buyout Offer, Evaluates Strategic Alternatives)

2.    The largest U.S. oil company by market value Exxon Mobil Corp. XOM announced the commissioning of its Kearl oil sands expansion project in Alberta, Canada before the stipulated time.

The production from the project is estimated to double the total capacity to 220,000 barrels of bitumen per day. The expansion project is anticipated to eventually produce 110,000 barrels per day. Kearl is expected to yield about 4.6 billion barrels of resource for over the next four decades. (See More: Exxon Mobil Commissions Kearl Oil Sands Prior to Schedule)

3.    Integrated energy major Royal Dutch Shell plc RDS.A has received approval from the environment ministry of Canada to carry on with its liquefied natural gas (LNG) project in British Columbia. In spite of receiving permission, Shell needs to comply with 50 legal bindings imposed by the federal ministry during the entire span of the development.

The project will likely cost around $32.7 billion and is meant for exporting cheap natural gas from Canada to Asia. Upon completion, the development would produce and transport 13 million tons of LNG, every year. If needed, the project’s capacity can also be doubled in the future. (See More: Shell Gets Environmental Nod to its Canada LNG Development)

4.    U.S. energy giant Chevron Corp. CVX has completed the divestment of its entire stake in Vietnamese properties – both upstream and midstream assets − to PetroVietnam also known as Vietnam Oil and Gas Group.

The upstream resources include 42.4% ownership in Blocks B and 48/95, along with 43.4% interest in Block 52/97. The midstream assets comprise 28.7% non-operated working interest in a pipeline development which would primarily distribute natural gas to southern Vietnam-based utilities. It is to be noted that Chevron was in a production sharing agreement in the three exploratory blocks. (See More: Chevron Divests Entire Stake in Vietnamese Properties)

5.    British oil and gas producer BP plc BP and Russia’s Rosneft inked multiple agreements at the St. Petersburg International Economic Forum to strengthen their long-term strategic relationship. Rosneft and BP also signed a final binding agreement. Per this deal, BP will purchase a 20% share of Taas-YuryakhNeftegazodobycha (“Taas”) from Rosneft, which will form a new joint venture in East Siberia.

One of the largest fields in eastern Siberia – the Srednebotuobinskoye oil and gas condensate field – will also be developed by the venture. The field currently yields about 20,000 barrels of oil per day. (See More: BP and Rosneft Ink Multiple Deals to Boost Strategic Alliance)

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 best performer was U.S. energy explorer Occidental Petroleum Corp. OXY that added 2.5% to its stock price, while the biggest loser was offshore driller Transocean Ltd., which fell 4% during the period.

Over the last 6 months, refiner Valero Energy Corp. has been the chief beneficiary on the bourses with its shares advancing 21.4%. On the other hand, oil behemoth Chevron Corp. was the laggard, as it witnessed a 12% price decline over the same time frame.

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 crucial economic reports, including those on home sales, durable orders, personal spending as well as the key GDP report.

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