Aramco

Greetings from Texas, The world’s biggest mangrove company kindly invited Paty & me to the Austin Formula One Grand Prix (F1). Cars running E10 are screaming behind me on four source power trains; (V6 1.8 liter, one electric exhaust powered, one electric latent braking powered, and a turbocharger). The world’s biggest mangrove company is Aramco, F1 primary sponsors for this race. I think the sponsorship is genius in increasing the popularity of the world’s greatest […]

Yo, Noted, French refining strike seems to be drawing to a close, with ExxonMobil’s Fos returning to normal. Continued issues with the most extreme of the unions, the CGT, for TotalEnergies. Around 30% of French gas stations reported short of product. We perceive the refining workers strike in Iran to be a domestic issue – for now. History of the Iranian Revolution was driven by strikes by Iranian oil workers. The 1979 Iran revolution directly […]

Gossip from dinner with my London lawyer friend who is familiar with, let’s say, “emerging markets law”: Russia’s power rests between the Oligarchs who have the money, vs the military, that have the weapons. The single crossover oligarch, who controls the military, is Putin alone. Can the oligarch class form an ex-Putin alliance with the military? Difficult. Rational analysis of Nordstream pipeline explosions, which logically would conclude that Poland done it, with NATO deep state […]

“The Saudi Put is back” wrote a client yesterday Could well be related to softening in Iran negotiations Certainly, it implies that Saudi wants, enjoys, needs, $100/bbl+ Brent Part of their calculus is a belief in strong demand despite $100/bbl+ this summer, with winter coming That is, the Saudis optimal price is as high as demand can take, and not so high as to cause demand destruction. This summer’s demand strength strongly suggests that range […]

One of the many lessons of Wall Street, is “don’t expect any sympathy”. This is more sharply put: “If you want a friend, buy a f#^@*# dog.” I’ve got two dogs. As I have been proclaiming, this is a long summer. We don’t have Labor Day until September 5th, and with me stewing nicely in Brooklyn with the dogs, thinking of what fun the run is from Labor Day to Christmas, to be in NYC […]

Good to see oil holding, we have broken the bottom of our $110/bbl-$150/bbl range for Brent this summer, but news out of China is positive both in terms of higher oil demand and re-iterated low oil product export quotas. These product export quotas are some 40% below last year levels and underline that Beijing is moving away from energy-intense processing and exports, prioritizing its own air quality and environmental issues. Quotas are cut from 37Mt […]

How did we get murdered? Murdered? CHK took out 3.5% of their share count in just over a month.  Why am I in Paris, writing from St Germain des Pres? Where did it all go wrong? George Best used to tell the story of winning in a casino, while dating Miss World, and lying in a hotel room with her, empty champagne bottles spread across the room. The service guy entered, looked at the scene, […]

Happy Sunday in May, Never a bad thing. Fog this morning has lifted. Aramco results this morning rounded out a week when it became the largest stock in the world by market capitalization, surpassing Apple (not by free float, the Saudi government owns 94%). It  generated an enormous profit in a quarter when Brent averaged just about $100/bbl (actually $99.53/bbl Q1 average).   Refining earnings, as well as continued huge upstream earnings, will be even […]

PREMIUM EVENT TONIGHT Sankey Strategy Session: Kaes Van’t Hof – President and CFO, Diamondback Energy May 12, 2022 05:00 AM Eastern Time (US and Canada) https://us02web.zoom.us/meeting/register/tZ0rcuyorD8rEtFYFdOdB79bWBSDY7MFzYzP Quote of the week: “I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman (AbS), who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the recent surge in prices for refined products. “The […]

Tonight PBF management on Strategy Session, 5pm for a tight hour. RSVP. I was at the Knicks vs Nets game last night with a global oil executive; combined with conversations with ConocoPhillips management Tuesday, some brief points. First, Shell profit warning this morning. Break it up. We would like to see a global LNG & gas and power trading powerhouse, a downstream “high carbon” operation with refining, chemicals and retail, a deepwater company. We don’t […]

Aramco’s full year 2021 results released Sunday (3/20/22) were more historic than perhaps the market appreciated. First, an announcement of a major increase in capex did not yield a major boost in oil supply, from a global perspective. Saudi capacity will rise just 1.5mb/d, exports 2.5mb/d by 2027. Second, an extraordinary statement from Saudi’s foreign ministry should give any observer of global markets pause for thought: Saudi Arabia said on Monday it would not bear […]

Extremely busy this weekend, juggling Patricia wanting to go spring-time walking dogs and window shopping in (packed) SoHo, and me wanting to solidly sit in front of the TV watching March Madness while making bets online. Somehow she does not see the appeal of watching seven games of college basketball back-to-back over seven hours. Of course, she wins. I did snag North Carolina to win it all at 50-1 BEFORE they beat #1 seed and […]

Strategy Session Tonight, Mark Viviano & Megan Hays of activist Kimmeridge. A former Portfolio Manager at mega-player Wellington Management, Mark leads the first public/private active funds at Kimmeridge, one of the top activist managers in the oil space. Megan Hays has joined Kimmeridge after 15 years of IR experience including Concho and Cimarex, and even allowing for that length of experience, still recently rated as one of Hart Energy’s “40 under 40.” Please click this […]

Extraordinary times: In the great energy regression that has massively further regressed with the Russian invasion of Ukraine, it was somewhat surreal to watch Chevron’s Colin Parfitt (VP Midstream) conclude at the company’s analyst meeting yesterday at the NYSE, that we need more export capacity in the US, particularly for natural gas, and for the company then to confirm $10bn of spending on New Energy Ventures over the next decade, on hydrogen, carbon capture, and […]

Not talking about COVID, just to say I am feeling 100% fine. This Omicron will hopefully be the largest and fast mass vaccination programme in history, whether by God or Government. Nice chart this morning from Greg Wachsteter, who kindly said I could publish. No more comment on COVID, I think the conclusion here is pretty obvious; this chart is therefore bullish S&P Energy. Sankey-Laffer curves. The presentation attached today, made me think what a […]

Busted flat in Baton Rouge, waiting for a train… ExxonMobil has called a historic snap analyst meeting for this Wednesday 1st December. The first meeting under a new, externally appointed, CFO, former Diageo executive, Kathryn Mikells. She is now in charge of finance, strategy, communication, and investor relations (IR). Kathy already refreshed her first earnings call, Q3 2021, interjecting, freely commenting, communicating; the company also gave clear guidance over what to expect from this update […]

Saturday: there’s an unrelenting element to being a stock analyst. “You are only as good as your last note.” The need to constantly publish is relentless. With that in mind, it has been my intention to write an oil book. Something that can sit on a shelf. One of my favourite oil books is Anthony Sampson’s “The Seven Sisters”, which provides a brilliant, and concise, history of the seven major oil companies that formed the […]

Jolly Halloween, Halloween is one of America’s greatest stealth exports. Now huge in UK, for example. In today’s presentation – Suncor strong Q4 to date in big catch up trade; oils outperform during inflation per Fidelity; growth won the past couple of weeks over value, even after Amazon and Apple missed; Big Oils have the highest free cashflow yields and dividend yields of the S&P500 Titans – by far; massive week of oil earnings ahead, […]

Huge week for earnings on deck this week, just about 50% of the market cap of the S&P500 reports,  and to celebrate, the traditional Sunday Sankey is back with a full presentation attached. Sample slide: Bloomberg lists Kuwait’s oil production capacity as 3.08mb/d. In the slide shown in the Sunday Sankey presentation today from the authoritative MEES, Kuwait’s production capacity has dropped by more than 500,000 b/d over the past three years to just 2.63mn […]

Key points: Clients are focused on OPEC spare capacity and demand growth, but also, rightly, North American supply growth, which is the most price elastic component of global oil supply. Halliburton results yesterday naturally raise questions over US production growth; the company stated that it sees 20% rise next year in North American revenues, which includes “solid pricing gains”. This would imply Halliburton expects US E&P capex to be ~10% higher next year; not a […]

We are moving into earnings season, with financials reporting this week, starting with JPM and BlackRock on Wednesday, rounded out Friday by Goldman Sachs. These are dynamic times in global geopolitics. This month, as oils report earnings, we finish the month with: G20 30th October in Rome, we noted to watch Xi-Biden, but Xi continues to stay home Right after, 1st November the climate summit COP26 takes place in Glasgow. We are in a new […]

Jolly Sunday to you, Global energy crisis: Having written at length about this eight days ago in the note “Germany & UK vs the USA”, all week I have been reading about the global energy crisis led by the UK and Germany. Everyone makes the same points, last year cold global winter leading to low natgas storage, lack of wind in Europe, nuclear shutdowns, Asia squeeze, Russia squeeze etc. The one I talked about in […]

August is upon us, with results effectively over, I am back in Brooklyn having dropped Harry for pre-season college soccer in Boston, trip review from a gasoline perspective closes this note. Speaking on sons and August, yesterday Max, who is yet to go back to college in Atlanta, was on CNBC. That is him ludicrously stationed in shot in the background of my Fast Money segment, pretending to work. You can see the clip here. […]

Friday, jokes: Breaking news: Robinhood halts trading in Robinhood. Trevor Milton’s career is rolling downhill. How do you make a bomb out of an apple? Puncture the battery. What do ducks say in Mexico? Guac. My son started dating a girl who plays soccer. He says she’s a keeper. Brian Sullivan does a great job on CNBC and is probably the best TV anchor on oil. Alix Steel on Bloomberg is also great. I first […]

Overview: we hosted Tellurian Chairman Charif Souki on Happy Hour. Key conclusion: we are, like Souki, past and future mega-bulls on long-term LNG demand and US LNG supply. As such, Tellurian provides an excellent high-risk/return play on the mega-theme. However there are major risks regarding contracts (2 are signed, 5 are needed), project capital cost and execution (the claimed $550/tonne of gasification capacity cost needs to be sealed), and financing/level of shareholder dilution. Compared to […]

I’ve just had my vaccine, but they administered it in my leg. My Pfizer hurting. I got my first shot. I’ll get my second one as soon as I get the bartender’s attention. Why do gay people have parades in June? Because Pride comes before the Fall. What do you call an Englishman at the Euro 2021 soccer final? Referee. Surgeon: “Don’t be nervous Jeff, you should be able to handle this operation easily.” Patient: […]

OIL RISK HIGH. We have an OPEC meeting tomorrow, and the word is that Iran is pumping into storage on anticipation of successful negotiations with the Biden administration, which, for reasons I do not fully understand, is very keen to make a nuclear deal. This will allow Iran back into global oil markets. We understand that OPEC is warning Iran not to flood the market, and Iran is saying “we are going to flood the […]

Watching Iran, but 1mb/d of oil exports are already in the market. Huge week ahead for ExxonMobil, with the Shareholder Meeting and board vote on Wednesday this week. We wrote about it on Thursday, see the note on www.sankeyresearch.com or emailed. Noted that Halliburton shareholders rejected the company’s pay proposal last week, which is encouraging. The pay of oil executives relative to shareholder returns has been an abomination for years. Executives should try a few […]

As we hoped, oils’ results are going great. The sector is powering higher, with the overall steady outperformance grind that has resumed in value over growth. The oil price for Q2 is tracking well ahead of these results, further boosting the EPS upgrade cycle. Huge result from Suncor; great commentary on cash return from COP, a surprise beat from Marathon Petroleum with major disposal and buyback coming… good results from head-to-head rivals Diamondback and Aramco, […]

The first slide considered at the Chevron virtual analyst meeting 2021 was pretty depressing. The company showed an adjusted ROCE of 2.9% and a plan to get this to 10% by 2025. On a day when Tesla had the biggest single move by any stock in history (20% up move added $140bn, or more than the entire value of TOTAL in one day) the investment merits of a major oil taking its ROCE from 3% […]

Enjoyed making the slides today, take a look. Slide 1: John Hopkins Professor expects US herd immunity by April. Remember how quickly SARS disappeared? Fingers crossed. This past week we have highlighted QuantumScape $QS the solid state battery play, and did so again Thursday, and we “found the short” as they say. The heated email from a client arrived in response with 10 minutes. “It’s a joke.” He was referring to valuation. But in this […]

The current energy crisis is much bigger than most people realize. This is a global crisis. The largest energy outage in US history. In the middle of a brutal winter, globally. Stay tuned, this crisis is just starting. An outage of this scale in Texas is world scale. The entire US and Atlantic Basin energy market is based on a core of Texas/US Gulf Coast. A lot of the debate currently is, as so often […]

Shell results, meh. We argue that to out-perform, Big Euro Oils need major US fund managers buying at the margin. For ever, Euro oils have looked cheap relative to US. It never changes. See chart below, the same at the most extreme applies to Russian oils. Right now, Big US buyers are either not buying any oil, buying oil leverage, or buying ExxonMobil. The Supermajor Euro oils are not attractive, ex TOTAL. The track record […]

Thoughts and sympathy for the victims of terrorism in historic and noble Vienna yesterday. A city close to the heart of anyone involved in global oil. We are many; terrorists are few. Rest in Peace. A momentous day, and I am not referring to the fact that November 3rd is National Sandwich Day. Yesterday on Twitter Arjun Murti, former Goldman Sachs legendary lead oil analyst, now Warburg Pincus adviser and ConocoPhillips board member, pointed out […]

Yesterday was tricky to publish a worthy note, until conference calls were complete. So this is the Friday Sankey on a Saturday. Happy Halloween! If life gives you melons you may be dyslexic What’s Sherlock Holmes’ favourite tree? A lemon tree Daddy, do all fairy tales start with “Once upon a time”? “No kid, there’s a whole series of fairly tales that start with “If elected, I promise…”” There were two key takeaways from ExxonMobil’s […]

In this week’s edition of the Sunday Sankey we bring you the mega-bear argument for tech (it’s a commodity business), comments on BP’s remarkable transition which coincided with continuing remarkable transition among US E&Ps – mostly. Tomorrow Oxy reports and there is a group that is now in the debt service zombie mode, which will fight to maintain production levels… to pay debt service. But on the positive side, PXD Pioneer took leadership on what Cimarex tagged “Shale 3.0”, see within. We were critical of EOG in this regard in a note published yesterday and linked within. Great stuff on China from Oilx, our favourite oil intelligence consultancy/data provider, and Saudi Arabia cuts production… in Iraq… in Iran? Amazing. Continue reading

BP sensationally announced further details of a major strategy shift this morning. The company has absolutely committed to the energy transition, certainly relative to the other big oils, above all relatively to the US big oils. Reminder: Aramco has the lowest carbon intensity per barrel produced by far of any major oil producers. Note: ExxonMobil just committed to no new debt and sustained dividend, where by extension if oil prices do not rise, they will […]