1st November 2024

Ready for the weekend? Here’s all that went down today in oil, gas, and energy:

• 😬 Iran reloads

• 🐮 Exxon’s done with Vaca Muerta

• 💼 Earnings season in full swing

• 🔥 US shale is getting gassier

• ➕ plus EU emissions sink by 8% (don’t celebrate too soon); Petrobras denied in equatorial margin; Iraq’s gas ambitions; “mass layoffs” at Marathon; Shell makes UK discovery; and barrels more.

Have a good one.

📈 THE NUMBERS

Crude prices jumped after some more sabre rattling from Iran which said it’s not done yet with attacks on Israel…

🗞️ WELL-HEADLINES

 🗽 North America

• US shale getting gassier - back in 2014, natural gas comprised of 29% of total output from the Permian, Eagle Ford, and Bakken. Today that number is up to 40% and growing. This explains the gas glut in the Permian and the struggles E&Ps are having with gas export capacity.

• “Mass layoffs” at Marathon Oil - at least 500 employees will lose their jobs in the coming year after the completion of the $22.5bn merger with ConocoPhillips. That’s a huge chunk of Marathon’s reported workforce of ~1,600.

• Conoco mulling $1bn Permian sale - in an attempt to reduce the debt burden it picked up from the Marathon acquisition, Conoco is looking to sell non-core assets in the Delaware basin. The assets, which Conoco tried and failed to sell in 2022, include 55,000 net acres and 17 kboe/d of production.

• Tokyo Gas fancies Woodside’s new LNG plant - the Japanese utility wants to buy a stake in the under-development Louisiana LNG project that Woodside recently acquired when it took over Tellurian.

• Earnings season in full swing - Exxon beats Wall Street estimates on high production, similar story for Chevron; Conoco beats expectations on solid US production; Hess surpasses estimates thanks to strong Guyana output; Cheniere profits dip on weaker gas prices; CNR blames weaker commodity prices for falling profits; Cenovus profits hit hard by lower production.

• Crude stocks edge down - US oil inventories fell by 0.5 mmbbls last week, compared with analyst expectations of 2.3 mmbbls increase. Meanwhile, gasoline stocks fell by 2.7 mmbbls. US crude stocks are still right at the bottom end of the 5-year range for this time of year.

🏰 Europe

• Shell makes first UK discovery in 2024 - an exploration well at the Selene prospect in the UKCS has confirmed resources of 131 bcf of gas - not as large as expected but enough to form the basis of new development. A rare win in the UK O&G patch these days.

• UK O&G tax hikes confirmed - the new left wing government has raised taxes for the UK O&G sector (to a total rate of 78%!) and cut investment incentives, as expected. Share prices of UK players actually rose on the news though as some of the measures weren’t quite as bad as expected. Dead cat bounce?

• Some earnings highlights -Shell smashes forecasts thanks to strong LNG sales; Total Q3 earnings at 3-year low on poor refining margins and upstream outages; Repsol also misses expectations on reduced output and refining struggles.

🕌 The Middle East

• Chinese contractor lands mega Iraqi gas gig - Jereh is partnering with Petro Iraq to develop Iraq’s second largest gas field, Mansuriya. Iraq is hoping the field will boost domestic output by 300 mmcf/d and reduce reliance on gas imports from Iran.

⛩️ Asia & Oceania

• Trafi facing $1.1bn hit from Mongolia oil fraud - data and document manipulation and inflated payments by some of its employees over 5 years have been discovered in the commodity trader’s Mongolian petroleum products supply business. Ooof, someone’s in big trouble.

• No luck for Eni in Kazakhstan - the Abay-1 wildcat in the Caspian Sea was a dud. IOCs have generally been retreating from Kazakhstan in recent years so this latest failure is the last thing the country’s E&P sector needs.

🦁 Africa

• Look like an early weekend in Africa…

🗿 Central & South America

• Exxon tires of Vaca Muerta - the supermajor is rumoured to be selling most of its assets in the giant shale basin in Argentina to Pluspetrol, for an undisclosed price, as it focuses on core assets in the Permian and Guyana. The deal consists of five blocks in the Neuquen province as well as its stake in pipeline operator Oldelval.

• First oil at new Mero FPSO - Petrobras is celebrating first oil at the Marechal Duque de Caxias FPSO at the Mero field, offshore Brazil. The ultra-deepwater unit, which has oil capacity of 180 kb/d, was built by MISC and is now the third in operation at the huge field.

• Petrobras again denied equatorial margin licence - the company has been trying to persuade the regulator it can safely drill a “high impact” exploration well in the prospective region that the country sees as its new O&G frontier, but which is considered environmentally sensitive.

🌍 GEOPOLITICS & MACRO

• Iran reloading? - reports are suggesting that Iran is preparing another attack on Israel “within days” using drones and ballistic missiles from Iraq. Surely not after Israel went relatively easy on them last time to avoid an escalation…? Settle down guys, no one wins in war.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• EU’s record drop in emissions - greenhouse gas emissions fell by 8.3% in 2023 vs 2023, the largest on record for decades other than the 9.8% drop during Covid. Much of the decline has been driven by increased renewable penetration but also worryingly by declining demand in a stagnating economy. Europe is mistaking de-industrialization for decarbonisation. Anyone can reduce their emissions if they make energy prices un-affordbale and shutter their factories…

🛢️ BOTTOM OF THE BARREL

Trust the data, not headlines:

👋 BEFORE YOU GO

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

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