7th November 2023

Equinor’s 55-day development | Crescent acquires Hammerhead for $1.9bn | China’s economy on the mend | When everything is climate change

November 07, 2023

Morning crew. Here’s Both Barrels with all that matters in oil, gas, and energy.

💨 Equinor’s 55-day development
💰 Crescent acquires Hammerhead for $1.9bn
🇨🇳 China’s economy on the mend
🤡 When everything is climate change
➕ plus smog disrupts Cricket World Cup; more tiny SPR top ups; Britain confuses de-industrialisation for decarbonisation.

Let’s get to it.

As of 04:45 ET on 07/11/2023. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

Crescent Point acquires Hammerhead for $1.9bn - the acquisition will add ~ 56 kboe/d and 800 drilling locations to Crescent’s portfolio in the Montney shale play in Alberta, Canada.
Kinder Morgan bags NextEra’s Texas pipelines - the $1.8bn deal involves gas pipelines with a total capacity of 4.9 bcf/d.
Some more tiny SPR top ups - the White House wants to buy another 3 mmbbls for the SPR to add to the 6 mmbbls it previously said it hoped to buy. For context, the administration has drained ~290 mmbbls from the “emergency” stockpile since 2020 for largely political reasons.
Refiners easing off - after a turbo summer where utilization rates were in the high 90%s, US refineries are expected to reduce rates to the low 90%s as the sector enters maintenance season. It should be enough to keep a lid on gasoline prices.
US investors pushing back against shareholder climate calls - BlackRock, Vanguard, State Street, and JPMorgan, all major shareholders in the top 5 western IOCs, voted against an activist shareholder’s resolution for more climate action at each of the 5 IOCs.

Equinor’s 55-day development - the company announced a discovery of up to 16 mmboe of gas near the Gina Krog field in the North Sea and plans to start production as soon as this year. Yes, really, within the next 55 days. Impressive.
Private equity chasing Rosen - Partners Holding Group, a Swiss PE firm, is in talks to buy Rosen Group, a European company that specializes in testing the integrity of oil and gas assets. Rosen is said to be worth ~$4bn.
OMV shares jump 5% on ADNOC rumors - the long-expected chemicals merger could be announced within weeks.
Lime farms into Brasse - the deal for a 17% WI from OKEA and DNO corresponds to 4 mmboe of net resources. FID on the offshore Norway field is due next year.

Kuwait’s mega borrowing - KPC needs to raise a cool $45 billion from lenders and asset sales to help fund its 5-year spending plan. The country is going on a spending spree as it pushes to increase its oil capacity by 0.3 mmb/d over the next couple of years to 3.2 mmb/d. OPEC really needs high oil prices…
Egypt imports rare LNG cargo - energy shortages and power outages caused by disrupted gas supplies from Israel have pushed Egypt, usually an LNG exporter, to import an LNG cargo.
Iran’s oil exports slipping - the country exported ~1.4 mmb/d of crude and condensate in October, down ~0.2 mmb/d compared with September. Iran keeps its data hush hush to avoid sanctions so exports are estimated by using satellite imagery to track oil tankers.
Aramco’s earnings - the world’s most profitable company reported a 23% decline in net profit in Q3 2023 to just $32.6 billion. Poor Saudis, can anyone spare some change?

Absolutely loaded.

Japan concerned about Arctic 2 LNG - impact to the massive Russian LNG project is “inevitable” after the US imposed sanctions on it, according to Japan which is a 10% owner. The project was set to be an important source of LNG supply for Japan which will now have to “respond appropriately” to protect its energy supply, said the industry minister. Meanwhile, Russia sees the move as a US ploy to push global LNG prices higher for US LNG exporters.
Kazakhstan says nyet to Russian gas this winter - the central Asian country has pushed back to 2024 the signing of a long discussed gas supply deal with Gazprom.

Panoro hits pay in Gabon - the “significant” offshore oil discovery at Hbiscus South contains recoverable reserves of ~6-7 mmboe and Panoro hopes to have it onstream in 2024.

Venezuela courting OFS - the country only has one active drilling rig today, compared with 80 in 2014, so is desperate to hire oilfield firms to ramp up production after the US lifted sanctions. Expectations are that the world’s largest oil reserve holder will only be able to increase output by ~200kb/d over the next couple of years thanks to years of mismanagement and under-investment.

China’s economy on the mend - China’s recent stimulus measures seem to be working: the IMF has upgraded its forecast for the country’s GDP growth in 2023 to 5.4% vs a previous estimate of 5%. Growth is still expected to slow next year though to 4.6% due to “continuing weakness in the property market and subdued external demand.”

British Steel de-industrializing - the company is closing down its blast furnaces as it can’t meet environmental standards. It’s replacing them with electric arc furnaces which are unable to produce “virgin” steel but can repurpose scrap steel. The move will also cost 2,000 jobs and just shift that steel production abroad. Again, Europe confuses deindustrialization for decarbonisation.
Delhi choking on smog - school have been shut, some cars are banned from the road, and training sessions for the Cricket World Cup have been cancelled due to awful air pollution in India’s capital.
A tough year for battery metals - after surging in 2022, prices for battery metals have fallen back sharply this year. Lithium is down ~70%, nickel by 40%, and cobalt by ~15%. Why? Supply has surged and demand, largely driven by EVs, hasn’t kept pace.

If you squint, you can just about make out the Taj Mahal | Source: Hindustan Times

When everything is climate change:

Marxists never waste a crisis.
— Steve Milloy (@JunkScience)
12:37 AM • Nov 5, 2023

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Thanks for reading. Have a day out there. 🛢️🛢️