23rd February 2024

The stalling EV convoy | Israel plans Gaza occupation | Young people shunning O&G jobs | Chord and Enerplus tie the knot

February 23, 2024

Sorry team. Dropped the ball yesterday and didn’t send a Both Barrels. The day job can get in the way sometimes…Have a top weekend.

🚘 The stalling EV convoy
🇮🇱 Israel plans Gaza occupation
🚫 Young people shunning O&G jobs
👰 Chord and Enerplus tie the knot
➕ plus Japan going global; Shell abandons more offshore wind; Pemex starts paying debts; Iraqi refinery’s 10 year hibernation; demand surging for drillships.

As of 08:15 ET on 23/02/2024. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

EU natural gas prices are now back to pre-Ukraine war levels. Woop woop.

Chord and Enerplus tie the knot - aaaand another big US O&G merger. Chord is snapping up Enerplus for ~$3.7bn in a cash and stock deal. The combined company will have 1.3 million net acres and 287 kboe/d of production in the Williston Basin in North Dakota. Wall Street must be loving all these M&A fees.
Rock bottom gas prices hitting jobs - with US nat gas prices near decade-lows, ~5,000 jobs have already been lost since December, and more cuts are likely as large producers announce reductions to drilling plans.
A quick decision on Venture Global’s extension request - US regulators will decide in April whether they’ll grant Venture Global another year for a construction permit for its Calcasieu Pass LNG plant in Louisiana. Venture’s irate major customers, including Shell, Repsol, and BP, who have filled legal cases against Venture for lack of LNG cargoes, are strongly opposing the request.
Some earnings highlights - EOG posts lower profits but predicts output growth; Pioneer misses profits but boosts supply; Chesapeake beats estimates but plans production cuts; Coterra missed expectations and forecasts declining gas production; Suncor beats estimates and hits record high oil sands output; Cheniere cuts 2024 profit expectations on low gas prices.
Crude inventories build - they climbed by 3.5 mmbbls last week, compared with expectations of a 3.8 mmbbls build, while gasoline stocks fell by 0.3 mmbbls, according to the EIA.

Half of UK young people rule out oil & gas - a new survey of young workers has found that nearly half of the population would rule out working in oil & gas. Given how lucrative, exciting, and vital the sector is, this shows just how widespread and intense the misinformed anti-O&G rhetoric has become. I wonder if all those people would also rule out using oil and gas…?
BP managers’ snooping husband busted for insider trading - he made $1.8m by trading off the back of information he overheard in a work conversation his wife was having about an upcoming takeover by BP! Rumbled.

ADNOC OMV petchem merger stalling - the $30bn deal has hit some snags, including disagreements over what to call the new company. Negotiations have been halted as the parties can’t find common ground on issues related to job guarantees in Austria, a requirement for a Vienna listing, and an Austrian chairman of the new company.
Asleep for a decade - Iraq is reopening the 150kb/d North Refinery that was closed back in 2014 when ISIS took over large parts of the country. That was really 10 years ago?! Jesus.

Japan takes $1.4bn stake in Aussie LNG - JERA, Japans largest power generator, is buying a 15.1% stake in the Scarborough LNG project in Australia from Woodside. Resource-poor Japan is on the hunt for long term gas supplies and has recently been making a series of international investments to secure its supply. LNG Japan bought a 10% interest in the same project last year.

Pemex starts paying off debts - the Mexican IOC has started paying down its large dues to oilfield services companies. International suppliers to Pemex are owed tens of billions by the heavily indebted company and the delayed payments may disrupt Pemex’s operations if the suppliers decide to stop working.

Israel reveals plans for “indefinite” Gaza occupation - after the war, Israel plans to occupy the territory to ensure “complete demilitarization”, and to overhaul Gaza’s civil administration and education systems. Settle in for a long, long slog then. This intractable conflict has no end in sight.
US ramping up sanctions on Iran for Russia support - after rumors that Iran has sent Russia ~400 ballistic missiles in recent months, the US has said it will be slapping more sanctions on the Islamic Republic. Iran claims to be neutral in the war in Ukraine but it’s the worst kept secret that Iran has been sending plenty of drone equipment and weapons to Russia.
Drillship and semisub dayrates hitting 10 year highs - demand for the offshore vessels is growing at a fair clip but supply is struggling to keep up. With expectations that US shale output may soon flatten out, we could be entering a golden era for offshore oil and gas.

Mercedes joins the EV reversal - the car maker has become the latest to back pedal on its EV plans by announcing it will delay its electrification targets by 5 years and keep investing in its internal combustion engine models. The market liked the news: Mercs’ shares popped 6%. The trouble is that EV demand on the ground is not keeping up with all the media and industry hype. Meanwhile, VW has made similar warnings about the market.
Shell abandons South Korea offshore wind farm - the company is selling its 80% stake in the 1.25GW MunmuBaram project for $5m, and in doing so adds to the long list of big exits from offshore wind projects over the past year.

Hardly speeding ahead. Consumer concerns around cost, range, and infrastructure are preventing faster uptake in EVs.

The world is awash with energy resources. The fact that electricity prices have climbed so much are entirely a result of woeful politics:

Markets make stuff cheaper and governments make it more expensive

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