31st January 2025

Hello ladies and gents. Here’s what I’ve got for you today in all things oil, gas, and energy:

• 🤡 “Energy Delusions”

• 💸 When $2.1 trillion isn’t enough

• ❌ Rosebank under threat

• 🤝 Bumper year for US M&A

• ➕ plus Camino up for sale; US economy in rude health; Canada and Mexico brace for tariffs; Norwegian government in tatters; EU mulling Russian gas restart; Petrobras keeps growing; Orsted CEO gets the boot; and barrels more.

Have a cracking weekend.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Camino Natural Resources up for sale - its private equity owner, NGP, is hoping the Anadarko basin-focused gas producer could fetch up to $2bn. Camino produces ~81 kboe/d across 135,000 net acres.

• Another bumper year in US M&A - dealmaking in US upstream hit a total of $105bn in 2024, its third highest ever, but well below the huge sum of $192bn in 2023. Happy days for investment bankers and lawyers. Drinks on you guys.

• Shell exits Albian oil sands - it is swapping its remaining 10% interest in the Alberta project with Canadian Natural Resources in return for a stake in the Scotford upgrader and Quest CCS facility.

• Baker Hughes and Venture Global team up - the services company announced it had signed two major contracts with the LNG developer for building systems at Venture’s LNG terminals and for other services.

• Infinity Natural Resources raises $265m with IPO - it sold its shares at $20 a piece, within the marketed range of $18-$21. The listing values the West Virginia O&G company at ~$1.2bn.

• Crude stocks rise - US commercial inventories rose by 3.5 mmbbls last week to 415 mmbbls. Crude stocks tend to rise in late January and February as many refineries go offline (and so reduce their demand for crude) at this time of the year to conduct maintenance.

• Some earnings highlights: Exxon reports strong results on rising output, Chevron under performs thanks to refining losses, Hess profits surge thanks to Guyana ramp up, Shell profits sink but raises dividends and buybacks, Valero beats estimates thanks to lower costs, Baker Hughes beats estimates, Murphy falls short.

🏰 Europe

• Rosebank and Jackdaw under threat - a UK judge has ruled that the previous government acted “unlawfully” when it granted permission for the two offshore developments to go ahead. The new UK government, which is notably anti oil and gas, must now review the projects on environmental grounds. Rosebank holds the largest untapped reserves in the UK with 300-500 mmboe and would provide billions in investment and taxes to the UK. Madness.

• EU debating a restart to Russian gas - the FT has reported that various officials are discussing restarting Russian piped gas to Europe to help tackle high energy prices and as part of a Ukraine peace deal. I can’t see that happening any time soon, not least because the US, which will broker any peace deal, sees Russian gas as the major competition for its LNG in the European gas market.

• UK anti trust investigating SLB ChampionX deal - the regulator thinks that the $8bn takeover could limit competition in UK markets. SLB still expects the deal to close in Q1 of this year.

🕌 The Middle East

• Not much going down over here.

⛩️ Asia & Oceania

• Nor here.

🦁 Africa

• 20 oil workers perish in South Sudan plane crash - the plane was mostly carrying engineers and technical staff of the Greater Pioneer Operating Company (GPOC) when it tragically came down three minutes after take off.

• ReconAfrica’ shares rocket after Namibia wildcat - the company’s share initially price rose by 41% after results from its closely watched Naingopo well revealed “indications” of oil.

• Shell not giving up on Namibia - despite recently taking a $400m writedown on an exploration prospect in the country, Shell’s CEO has reiterated that it is on the lookout for more opportunities in Namibia.

🗿 Central & South America

• Petrobras ramps up reserves - the Brazilian giant increased proven reserves last year to 11.4 bnbbls, up from 10.9 bnbbls, despite producing 0.9 bnbbls. The national oil company, which produces ~2.7 mmb/d, keeps getting bigger and bigger.

• EOG bulking up in Trinidad & Tobago - the US indy has been awarded two new shallow water exploration contracts offshore the Caribbean Island.

• Mexico bolstering gas storage - the US southern neighbor is concerned about its reliance on US gas imports - and whether Trump could use it as leverage - and so is looking to double its gas storage capacity. The country currently has just 2.4 days of gas storage capacity.

🌍 GEOPOLITICS & MACRO

• “Energy Delusions” - a report by that title, written by former head of the IEA’s oil market division, has ripped into the IEA, saying that the global agency, which strongly influences politicians and investors around the world, has a “preoccupation with promoting an energy transition”. He wrote that the IEA gives “future possibilities that are, at best, distorted and, at worst, dangerously wrong”. Amen to that! The IEA has long ceased to be an impartial, fact-based body and has strayed far from its founding purpose of promoting global energy stability.

• US economy in rude health - GDP in the world’s largest economy grew by 2.8% in 2024, a slight slowdown from the 2.9% in 2023, but higher than analysts had predicted. Compare that to Europe where expectations are that the EU grew by 0.8% last year…

• Canada and Mexico brace for Trump tariffs - the White House is expected to slap 25% tariffs on imports from its neighbours over the weekend, but crude oil could be excluded. Both countries have said they would respond with measures of their own.

• Norway government in tatters over energy policy - one of the parties in the country’s coalition government quit over plans for Norway to adopt EU directives on renewable energy consumption and energy efficiency measures. Norway isn’t a member of the EU.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• $2.1 trillion isn’t enough - this is how much the world spent on “green” energy last year but, according to Bloomberg New Energy Finance, it still falls well short of the $5.6 trillion needed every year to hit net zero. Can anyone tell me what that $2.1 trillion achieved (apart from making some people wealthy and enabling a whole load of virtue signalling)? Think of all the schools, hospitals, and roads that could be built with that money…I sincerely believe that the current incarnation of the energy transition is one of the greatest misallocations of capital in human history.

• Orsted CEO gets the boot - Mads Nipper is being replaced as the giant wind power developer company tries to arrest an 83% decline in its share price since its peak in 2021. Poor bloke, trying to make a needless technology work is an impossible job.

🛢️ BOTTOM OF THE BARREL

For those who might not know, that gentleman in the bottom right hand corner is the UK’s hapless Energy Secretary.

👋 BEFORE YOU GO

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

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