14th December 2023

Morning ladies and gents. Happy COP is done? Yep, me too.

Here’s what we’ve got for you today:

• 😬 Looney’s expensive liaisons

• 💸 Buffet buys more Oxy shares

• 🛍️ EQT shedding $3bn of assets

• 💪 OPEC resolute on demand 

• ➕ plus Saudi’s flying falcons; nuclear powered cargo ships; Shell takes over Kaikas; big ambition in PNG.

Let’s go.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Buffet buys another $590m of Oxy stock - in a vote of approval for Oxy’s CrownRock buy, the Oracle of Omaha has increased his position in Oxy this week to just over 27%.

• EQT trimming $3bn of fat - the US gas producer is looking to sell down a large portfolio of non-operated minority stakes in assets in the Marcellus with combined production of ~700 mmcf/d. EQT inherited much of this position when it acquired Alta in 2021 and is looking to raise some cash to pay down its $5.9bn debt load.

• Enbridge cashes in $3.1bn for midstream assets - it sold a 50% interest in the Alliance Pipeline (which delivers gas from the Bakken, B.C. and Alberta to Chicago) and a 42.7% stake in Aux Sable, which operates NGL extraction and fractionation facilities in both Canada and the US, to Pembina Pipeline Corporation.

• Shell takes over 100% of Kaikas field - it acquired the 20% stake that it didn’t already own in the GoM field from MOEX for an undisclosed sum.

• EIA confirms crude draw - commercial oil inventories fell by 4.3 mmbbls in the US last week. Gasoline stocks edged up slightly. After a torrid few weeks, the market will be relieved to have received some small bullish news. Inventories are more of less in line with the recent average for this time of the year.

• Canada’s first LNG export terminal nearly ready - the mega LNG Canada plant, which will eventually have a capacity of 26 mtpa, and cost a total ~$40bn (including pipelines and upstream investments), will begin “safe start-up” activity next year. Welcome to the LNG exporters club, Canada.

🏰 Europe

• Looney’s expensive liaisons - former BP CEO Bernard Looney is set to forfeit ~$40m in remuneration (lost stock options and bonuses) following his resignation earlier this year for misleading the board about personal relationships with colleagues. Ouch. I hope for his sake those were some fantastic…err….’relationships’.

• Petrofac shedding assets to stay afloat - the struggling firm is looking to sell upstream and vessel assets to raise $450m to support its balance sheet and pay off debt. Its share price is down ~95% since 2020.

🕌 The Middle East

• Egypt and Yemen working together on oil initiatives - poor Yemen somehow missed out on most of the bonanza of hydrocarbon riches enjoyed by its Middle Eastern neighbors but is hoping a new pact with Egypt might help it make the most of what it’s got.

⛩️ Asia & Oceania

• Peak Oil makes big gas discovery in PNG - the strangely-named Australian company estimates the offshore Exotica North gas prospect could hold up to 3.6 tcf in gas resources and represents the first offshore discovery in Papua New Guinea in 50 years. A PNG minister said the discovery strengthens the country’s “goal to become the biggest oil & gas producing nation in the world over the next 40 years.” Can’t fault the ambition!

🗿 Central & South America

• Newbie wins big in Brazil’s latest offshore round - Elysian (ever heard of them?) won 122 of the 192 E&P licences awarded in Brazil’s latest offshore oil auction. The usual heavyweights like Petrobras, Chevron, BP, CNOOC, picked up the rest. Elysian is based in Brazil and was founded only a couple of months ago specifically to take part in this auction.

🌍 GEOPOLITICS & MACRO

• OPEC sticks to its guns on demand - in its latest oil market report, the group kept its oil demand growth forecasts for 2023 and 2024 steady at ~2.5 mmb/d and 2.3 mmb/d, respectively. The report blames “exaggerated concerns” about demand for the recent drop off in prices and maintained “cautious optimism” that fundamentals are solid. Hmm, sounds likes their confidence is waning somewhat…

• Fed holds rates, expects cuts next year - equity markets rallied as the US Central Bank indicated it would cut interest rates next year if inflation continued to fall. Fed Chair Jerome Power said rates are “likely at or near its peak for this tightening cycle” but that “it is far too early to declare victory”.

• Another day, another attack in the Red Sea - this time a Marshall Islands-flagged chemical tanker was fired upon by machine guns from a speedboat and also targeted with missiles, which missed. The ship is now safe and there were no injuries thanks to “military assistance”. Where’s Captain Phillips when you need him?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Nuclear-powered cargo ships - China has revealed designs for the world’s largest nuclear powered container ship. The ship, if built, will be powered by a thorium reactor rather than uranium which is abundant and inexpensive in China and doesn’t need much water to cool down. Nuclear power is already used to fuel warships and submarines, so doing the same with large cargo ships seems feasible if costs can be kept low enough.

• “ESG” funds upping their exposure to O&G - Lol. ESG funds with over $5 trillion in assets have increased the share of O&G companies in their holdings from 1.4% in 2021 to 2.3% today. Hard to ignore those juicy returns, I suppose. I’d classify many O&G companies as “ESG” anyway, but I’m pretty sure most of these funds investors certainly wouldn’t.

🛢️ BOTTOM OF THE BARREL

In today’s edition of crazy stuff the Saudi’s spend all their oil money on:

Well played, sir:

👋 BEFORE YOU GO 

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