PCE Inflation; Gulf of Mexico Oil Lease Sales; Lithium Americas Earnings

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Before U.S. markets opened on Friday, the U.S. Bureau of Economic Analysis (BEA) released its personal income and expenditures (PCE) report for February. Personal income rose by 0.3%, half the January rate, and personal spending rose 0.2%, down from an increase of 1.8% in January. The PCE index rose 0.3%, half as much as the January increase, and the core PCE index, which excludes food and energy, rose 0.3%, down from a rise of 0.5% in January.

Overall, the report came in pretty much as expected: inflation is falling, sending stocks higher and bonds lower. If the disinflation continues, the Fed may end its interest rate hikes sooner rather than later. Markets opened higher following the BEA report.

Lithium miner Lithium Americas Corp. (NYSE: LAC) released its fiscal 2022 full-year earnings report early Friday morning. As expected, the company reported no revenue and a net loss for the year of $93.57 million. The company burned through $65. 22 million in cash, leaving cash and equivalents at $356.1 million as of December 31.

Since then, the company has benefited from an investment of $320 million from General Motors Co. (NYSE: GM), as a first infusion of what will be a total of $650 million in Lithium Americas. The second part of the transaction is expected to close in the second half of this year.

Lithium Americas began construction on its Thacker Pass mine in Nevada earlier this month. The Thacker pass location has a measured and indicated resource of an estimated 16.1 million metric tons and proven and probable reserves of 3.7 million metric tons of lithium carbonate equivalent.

Shares of Lithium Americas traded up about 0.5% to $21.53 early Friday, in a 52-week range of $17.58 to $40.39.

On Wednesday, the U.S. Bureau of Ocean Energy Management (BOEM) reported the results of its recent oil and gas lease sale in the U.S. Gulf of Mexico. The sale generated bids totaling $309.8 million and high bids totaling $263.8 million on 353 total bids. About 1.68 million acres were available, and about 235,000 acres received bids. The royalty rate on production is 18.75%.

If BOEM accepts all the high bids, the total dollar amount would exceed the $189.9 million raised in the September 2022 auction by nearly 39%. These totals are a far cry from those accepted in a June 2012 auction when the BOEM received bids totaling more than $2.6 billion for leases on 2.4 million acres.

Chevron Corp. (NYSE: CVX) submitted seven of the 10 highest bids, offering a total of $107.96 million to acquire leasing rights to five deepwater (about 2,500 to 5,000 feet deep) and two ultra-deepwater (more than 5,000 feet) blocks.

BP PLC (NYSE: BP) made the second-highest sum of bids with $46.61 million, and Shell PLC (NYSE: SHEL) entered bids totaling $20.15 million to post the third-highest total.

For more details, see the BOEM announcement of the sale results.

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