17th January 2025

Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air. Here’s what hit the wires today:

• 🔨 BP swings the axe

• 🎯 Trump sharpens the axe

• ⏬ Crude stocks-a-shrinking

• 🥐 French to the rescue

• ➕ plus bright spots in China’s economy; Flowco makes it rain; no Namibian luck for Chevron; Talos hits pay in GoM; Red Sea still off-limits; Exxon’s Egyptian excitement; South Korea kisses the ring; and barrels more.

Have a top weekend. See you Monday.

📈 THE NUMBERS

Oil prices are holding firm as crude stocks fell, while US gas prices hit 2-year highs as temperatures plummeted.

🗞️ WELL-HEADLINES

 🗽 North America

• US crude stock near 3-year lows - commercial crude inventories fell by 2 mmbbls last week to 413 mmbbls, surpassing analyst expectations of a 1 mmbbls draw. Meanwhile, gasoline stocks jumped by 5.9 mmbbls.

• Flowco makes it rain - the oil service provider raised ~$430m at its IPO, selling its shares at $24 each, above the marketed range of $21-23. Good signs for O&G equity markets.

• Talos strikes gold at Katmai West - the company said the well at the Ewing Bank area of the U.S GoM has helped double the estimated recoverable reserves at Kamai West to ~50 mmboe.

• TXO’s game changer - TXO Partners said it has identified gas reserves of 3 tcf in the Mancos Shale of the San Juan Basin. The find represents ~5x the company’s current reserve base, said the CEO.

🏰 Europe

• BP swings the axe - under pressure to rebuild investor confidence and boost a flailing share price, new CEO Murray Auchincloss has announced 4,700 employees (5% of global total) and 3,000 contractor positions will be cut this year to reduce costs. BP hasn’t disclosed which divisions are taking the brunt of the job losses. Hoping none of the BB crew have been affected.

🕌 The Middle East

• No quick return of oil tankers to the Red Sea - despite signs of peace in the Middle East, the head of tanker giant Frontline has said that “to expect owners to put their seafarers at risk passing through the Red Sea anytime soon is a bit naive”. Them Houthis have really done some lasting damage.

⛩️ Asia & Oceania

• South Korea kisses the ring - the energy import-dependent nation has said that it’s planning to import more oil and gas from the US to help reduce its trade deficit with the US and avoid the ire of Trump tariffs.

• Total and Petronas join forces for deepwater PNG well - the JV is aiming to drill Papua New Guinea’s first deepwater well in the second half of 2025.

🦁 Africa

• More bad news for Namibia - Chevron’s debut exploration well in the offshore hotspot has hit dust. Last week Shell said it was writing off a discovery offshore Namibia that it deemed non-commercial.

• Exxon’s Egyptian excitement - rumours are that a recent exploration well in Egypt’s Herodotus basin has firmed up a prospect estimated to hold up to 5 tcf of natural gas.

• Milestone at Congo LNG - Eni announced it reached a major milestone at the 2.4 mtpa floating LNG project offshore Congo by completing the installation of a wellhead platform.

🗿 Central & South America

• Creditors take control of Seacrest Petroleo - the Brazil-based indy had been struggling with liquidity problems and the lenders of a $300m credit agreement have immediately enforced a pledge of shares. The company produces ~ 7kboe/d.

• Pemex suspends three drilling rigs - the Mexican IOC has told Borr Drilling it no longer needs a trio of its jack-ups. Heavily indebted Pemex is struggling to pay service providers.

🌍 GEOPOLITICS & MACRO

• Trump lining up Iran & Russia sanctions overhaul - reports suggest that the incoming President is ready to ease energy sanctions on Russia as part of a deal to end the war in Ukraine. On the flipside, expectations are that he’ll look to squeeze Iranian oil production in the same way he did in his first term. With Iran, the president needs to strike a delicate balance between advancing his geopolitical aims with his desire to keep oil prices down.

• Gaza peace in reach - after news broke that a ceasefire has been agreed, Israel accused Hamas of seeking last minute changes. The deal also needs to be approved by Israel’s government before it can be implemented. Not there yet.

• Signs of light in China’s economy - China’s GDP grew by the targeted 5% last year, and by 5.4% in Q4. But, with a febrile real estate sector, stuttering consumption, and Trump trade tensions looming, the world’s second largest economy is far from out of the woods.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• French nuclear coming to the rescue - output from France’s large nuclear fleet has hit a six year high, just as low winds in Europe and frigid temperatures put a strain on the continent’s power grid. Some of this power is heading across the border to help out struggling neighbors in Germany.

• Masdar’s $15bn Philippines entry - the UAE clean energy company has promised investments of up to $15bn in the southeast Asian country, involving up to 10GW of wind, solar, and battery capacity in the coming decade.

🛢️ BOTTOM OF THE BARREL

The incoming head of the US Energy Department, Chris Wright, is also founder and CEO of Liberty Energy, a large fraccing company.

Last year, Liberty released a slick document called Bettering Human Lives, which is basically a manifesto on the importance of hydrocarbons and energy more broadly.

I’ve taken the below from the intro of that doc.

Inscribe these onto my tombstone:

Having an energy literate Energy Secretary is going to be a huge boon for the entire US economy.

Over here in Europe, we look on with equal parts admiration and envy.

👋 BEFORE YOU GO

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

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