Refiners

Last call for today’s Zooms with PSX CEO and Par Pacific CEO, 11am & 12pm Eastern Time TODAY. Email me if you want to join. ~ Yesterday was a pure pain trade. How so? The market has turned into a wild casino of “on the day” options expiry. Pull-call skew on the S&P500 is around 2:1 towards puts. But yesterday, as we noted on Wednesday in “Sal the Deli Guy says CPI coming in light”, …

Phillips 66 is “Wellhead-To-Market”, or, perhaps “Everything But Upstream”. Not designed for splashy press releases, but a more thoughtful play on global energy markets, especially those opaque segments that drive the overall headline growth; we tend to see it like XOM, as a play on global GDP, with PSX having a greater US weighting. Embedded within PSX is a large refining business in need of improvement to match peers’ performance, a well-integrated midstream business, and …

Refining conference tomorrow! Register here, the excitement is overflowing,… I made it back from Mexico without incident and am ready to go. Go! sankeyresearch.com/2023-refining-conference/ Last preview DINO: When DINO Chief Financial Officer, my former associate Rich Voliva, unquestionably one of the smartest people I have had the privilege to work with, was abruptly taken out as CFO of DINO on an 8K announcement on a random Tuesday earlier this year, I knew there was no …

“You’ll get a kick out of Uzi” they told me as I headed to Memphis to meet the CEO of an unlisted company called Delek USA, that Wall Street banks were circling to launch an initial public offering (IPO) in around 2006. As I came out of the elevator of a modest Memphis suburban office building, mildly disorientated, the CEO Uzi – for it was clearly Uzi – flew up in my face and started …

Listen and Learn No company sits more at the bleeding edge of US refining than PBF, a pure play merchant refiner with some 1m/bd of capacity across all geographies: East Coast, MidCon, Gulf Coast, California. The company has a long history of buying into refining, and specifically individual major refineries, at ostensibly rock-bottom prices. Certainly, buying Toledo from Sunoco in 2010 was described at a 4x EBITDA deal… revised in the “Diamond Age of Refining” …

Over a decade ago, I upgraded a stock with the unfortunate & ironic line: “We are putting together two uncomfortable words for sellside analysts: `Buy Marathon`” Again, it was more than a decade ago, when Marathon Oil’s head of downstream, Gary Heminger, based in Finlay Ohio, would complain to me bitterly (off the record) that his US-leading massive free cashflow-generating downstream business was being pillaged by the Marathon Oil upstream management based in Houston, to …

CVR Energy ($CVI) we are delighted to host CEO Dave Lamp and crew (e.g. Richard Roberts “VP FP&A & IR”) as the opening speaker on our virtual refining conference next Tuesday, 3rd January, because Mr Lamp says it as he sees it. Register here: www.sankeyresearch.com/2022-refining-conference/ Well might Dave Lamp be relaxed with shooting from the hip, with massive independent refining experience, his major shareholder Carl Icahn (71% owner of CVI) has described Coffeyville as his …

Complementing our fast-approaching January 3rd Annual Refining Conference, featuring six independent refiners on Monday January 3rd alone, we send you this evening a thematic update on the work we did earlier this year on US biomass-based diesel. The refining conference full invitation and sign up is here: www.sankeyresearch.com/2023-refining-conference/ Thematic research continues below to provide refining conference “food for thought”, and “food for oil“. The EPA’s recently released 2023-2025 proposed Renewable Volume Obligation announcement was the …

“This job is easy, all you have to do is forecast the oil price right.” In this note we argue that the most expensive group among the oils will run here, based on the recent market “Quantquake” that we outline in this note. What was the Quantquake? Last week saw an extraordinary move in markets. And from this we derive a trading recommendation into year end. There is more to short- and medium-term investing than […]

The mood on Wall Street is suddenly, that the market will have a traditional post-Midterm bull run into Christmas. Buy them all. There might be some threat from the major turn in the Chinese market, sucking money back into China, and of course the FTX Crypto collapse is widely reported to involve a $30bn personal net worth loss for the now-notorious Sam Bankman Fried, and an $8bn black hole. Will that negatively affect markets? Well […]

Tonight on Happy Hour, Ira Joseph, Senior Research Scholar, Center on Energy Policy, Columbia University. Former Head of Global Generating Fuels & Electric Power Pricing and Research at S&P Global Platts. Former Head of Global Gas and Power PIRA Energy Group. Former Editor in Chief Energy Intelligence. The man has 30 years form in energy expertise. Ira was recommended by Sankey Research friend Jay Saunders, long term natural resource Portfolio Manager at Jennison, and connoisseur […]

Well hello, We sent a note last evening on Coterra and Pioneer reserves/inventory reporting which email already has 1,060 opens in less than 24 hours. That is, in line with our best-read note of the past two months being “Ethane Rejection”. This is a very limited email blast list (paying subscribers only), so the readership is impressive. Please email if you wish to re-receive either. With that said, you are here for your Sunday Sankey […]

Week ahead: Fed decision and plenty of earnings. Last week was a big one for markets, to say the least. Mega-cap tech bombing the tape. Worked out great for the oils and energy. A client said my chart of oils’ share of market earnings are too low: I have the group at 5% of the S&P500, but 10% of the earnings of the market, he is getting energy earnings at 15% of the market, which […]

Happy Hour Long BP Short Meta on ESG – BP’s is better, we explain why Propane problems, Long ET Short EQT We could not have a better-timed, more informed guest on Happy Hour tonight than Robert Raymond, a major player in private equity oil & gas investment, and our axe (US  translation: ax) on Antero, which reported last night. Strong views on EQT, which reported last night. Hey, strong views on everything that we follow. […]

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 […]

Greetings from London Town, The Giants and Packers fans were out in numbers around the West End – I can’t believe the Giants won! My daughter Honor is the expert – her line was that the Giants might be the best-coached team in football. She is deeply cynical about the team, so, powerful words. By the way her life ambition is to be a CEO, and a Giants Season ticket holder. Meanwhile in the pub […]

Your correspondent is flying tomorrow at 7am La Guardia to Houston for Steve Chazen’s Memorial at 2pm assuming flights co-operate, and so this week’s Sunday is here on a Saturday; a brief highlight reel, or should that be “bloopers” “fails”, and “cringe” in this tape. From the UK pound, to Japanese Yen, to Credit Suisse credit default swaps (CDS) this is a market at war with itself, quite literally. The incredible sabotage to the Nordstream […]

This evening! Premium Event! Steve Levine on Happy Hour tonight at 5pm ET re: batteries and electric vehicles, he is a world expert. Biography was emailed to you yesterday, impressive. Steve is now Editor of The Electric, a new, exclusive premium publication at The Information on batteries and EVs. Steve Levine 5pm Thursday 29th Sept: https://us02web.zoom.us/meeting/register/tZwtduuvrDMqEta4M3eKkusntGrE1nVV2HoK ~ Watching the NASDAQ below its 200 weekly moving average for the first time in 13 years “The West” […]

With markets in flames like something out of a Naked Gun movie, Central Bankers the inept cops, rioting traders burning and looting, we continue our post Labor Day theme of advising on fire prevention and avoiding arrest. So: it is sadly time for another negative earnings revision cycle.  We rolled up over 60 US-based energy companies covering upstream, midstream, downstream, integrateds, and oilfield service to see get the booking mugshot for the group. After chasing […]

Brooklyn Cop at 844th Precinct accuses innocent Sankey of being “weird-looking” “They” got caught speeding yesterday: fast unwind of long natgas / short refining trade Terrific Happy Hour with Jay Saunders and a couple of other hitters last night; introducing Scope 4 Jennison portfolio manager (PM) Jay Saunders is very popular in the market, you can tell that by the players that dialled in to participate in his call yesterday. He co-runs the Jennison Natural […]

“I, Russia” Putin desperation rising Oil markets: would you rather have weak China demand with low oil product exports, or post lockdown China with high product exports? Yet another inventory release threat: China An inventory release threat, Iran, was highlighted by us as likely to go into instability given reports of the serious illness of the aging Supreme Leader. Say her name: “Mahsa Amini”. Protests raging, rightly. “Morality Police” murdering women. As the Fed raises, […]

Hate to keep going with our infuriating “bearish short term, bullish long term” call (eg refining. We had a conversation with Battery Guru Steve Levine today about how badly future electric vehicle sales are going to fail to meet expectations over the coming years, and he is confirmed on Happy Hour for next week, 29th September, 5pm ET save the date. This week: Jay Saunders, Senior Co-Portfolio Manager, Jennison (Natural Resources). Jay has been running […]

Fed decision this week. TINA is dead. Nothing big in earnings this week, Fedex reporting Friday has warned, in case you totally missed last week; if you did, you missed the largest stock market move on an economic data point, in history Rules of Wall St series: Always short the new CEO of a highly rated stock. Not in the news: Iran’s Supreme Leader said to be gravely ill – watch for upheaval ~ Fed […]

Refining getting worse LNG export developer Tellurian whacked as it struggles to finance “by mid-2022”. It’s Q3 2022. As the share price falls, financing from the at the money issuance facility becomes even more problematic. Macro influencer Luke Gromen on Happy Hour Fedex profit warning Fiscal 2Q23 guide $2.75 vs cons $5.46 (!!!) Xi-Putin As we feared refining is getting worse. China export quotas as we highlighted yesterday have further pressured weak Asian margins that […]

PREMIUM EVENT TONIGHT Luke Gromen, high profile strategist, is on Happy Hour this week, Thursday 5pm. Big guest, big views, big themes, Main Event Gromen vs Sankey HH 53. Tonight Sep 15, 2022 05:00 PM ET Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZMkcemrqDIvHtyqA85Av3APXBad-aTjuSBR Another great call from our Washington DC guru and Happy Hour regular Frank Kelly, who weeks ago said that he did not believe that a rail strike would be tolerable to the […]

It was a week that started with the Queen accepting a new British Prime Minister, and ended a new King Charles III and the always-somber 9-11. It is a miserable late summer day in New York, drizzle from a windless grey sky. With due respect, there is not a lot in those events directly relevant to oil/energy, and no doubt the last thing you need is more coverage from me. Rather, there is lots of […]

Rest in Peace, Queen Elizabeth II. Long live the King! The rainbows were just amazing. One US media outlet described the Queen as the last human link to Great Britain, the Britain of Empire, such as it was when she became Queen in the 1950s. This resonated with me, the Queen with Churchill in photos, for example. Her passing bought back memories of my father, another link to Empire, who left this mortal coil last […]

Last call for the Sankey Research Party at the Hard Rock Penthouse tonight. If you are in NYC and around Times Square, we have a glittering panoply of oil market experts, CEOs, investors, and some hangers on, all welcome. Kathleen Kelley “OPEC whisperer” will comment on the symbolic cut, and we are highlighting the new CEO of refiner Delek USA Avigal Soreq. RSVP if you want to join, there is plenty of space and we […]

Labor Day outlook for oil and energy markets into year end; there is plenty more research to be done. You could make a big call on oil today for the next four months, and be wrong by Tuesday this week, with OPEC+ meeting Monday. If they cut and crank oil prices, you could make a bear call today, reverse your view on Tuesday and be wrong by Thursday when the ECB may be pushed towards […]

One of our favoured, relatively unmined seams of research, pertains to gas station companies, oil retail, helped by their eccentric reporting schedule. Under its frankly weird fiscal calendar, Alimentation Couche-Tard ($ATD) reported earnings at the close yesterday for fiscal 1Q23, a period ending July 12, 2022.  In a world of energy ignorance, it is widely perceived that high gasoline pump prices are prima facie evidence of gouging by gas station companies, which politicians somehow think […]

Expecting a recession. Most market participants worry about a recession. No less than Goldman Sachs is clearly concerned: Bloomberg 8/29/22 Goldman Says Buy Commodities, ‘Worry About Recession Later’ •             Slowdown risks outside Europe seen ‘relatively low,’ bank says •             Equities could suffer as raw materials gain, analysts forecast We are all aware of the obvious mega-problems, that Putin is pushing Europe into a depression, China is straight-up missing in action, and the rapid expansion of […]

We have spoken about the structural shortage of US refining capacity repeatedly. We have warned that the US refining system has been running very hard, but has been unable to keep inventories from all time lows relative to demand, particularly for distillate. And we have underlined that distillate (think diesel for my newbie readers) is the default “convenience premium” fuel when natgas and coal get short. It is easier to transport, and generally directly substitutable. […]

So I am back in Brooklyn after vacation (Nizuc Resort, Cancun), needless to say muttering and grumbling to myself. We left some calls hanging before the week away, updated in this note. It was a week this past week where performance reverted to year-to-date performance (see first chart);  we are still bullish US natgas, led by AR, bullish Oxy led by Warren Buffett, bullish the US oil sector on the structural improvement in the companies […]

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 […]

Delighted to say that Dr James Henderson is on Happy Hour Strategy Session tonight, A PREMIUM EVENT. Jim is currently Senior Research Fellow at the Oxford Institute for Energy Studies, alongside his consultancy work and professorships. When: this evening, Aug 11, 2022 05:00 PM ET, Zoom, Register in advance: https://us02web.zoom.us/meeting/register/tZ0sd-CtpjsrGdVM0p-MsG1P4WU0dr3hBWq3 ~ One of my favourite concepts on Wall St (or should I say hated?), is the “pain trade.” I first heard of it 20 years ago and […]

We are looking for a big fat gasoline demand bounceback number this week in the DOE data, seeing as this morning my Deli guy told me the DOE gasoline numbers are understated. Thanking him, I noted that DINO management (HollyFrontier) confirmed on their results call yesterday that gasoline demand is at worst around 5% below 2019 (not 2020, as appears in the DOE) levels, and in some of their markets – and they have a […]

The two weeks, mid-earnings, when we pull together company results transcript comments, are not a science, they are an impressionistic art; a colour to our themes. Basically these are comments that caught our eye over the past week. Like sellside analysts, the companies tend to all present the same more-or-less generic message, but occasionally, as we strive with Sankey Research, a comment stands out, is differentiated, or so wild that it is worthy of note. […]

Tonight Happy Hour: Kathleen Kelley on OPEC. Frank Kelly (invited) on Washington DC – lots of action there. View share on results on what happens next. Today Thursday 4th August 5pm Eastern. Register for this meeting: https://us02web.zoom.us/meeting/register/tZUkc-qvqjgrH9NWL5mVuMMR2AyR3q1cZrtm I was on Bloomberg TV bright and early this morning and… I used the “B” word. Just to note, we are long natgas over oil into the coming economic slowdown, and playing for winter. The announcement that Freeport […]

Tomorrow KelleyKelly Hour: Kathleen Kelley on OPEC. Frank Kelly on Washington DC – lots of action there. View share from clients on results and what they expect next. Tomorrow Thursday 4th August 5pm Eastern. Register for this meeting: https://us02web.zoom.us/meeting/register/tZUkc-qvqjgrH9NWL5mVuMMR2AyR3q1cZrtm We increasingly think that we will favour buyback-heavy oils going into the second half, with our year starting, as always, day after Labor Day. What happens next? The Big Oils are all singing from the same […]

Big week for what should be terrific oil earnings this week. Watching Iraq Highlight charts – market rebounding, oils catching a bid ~ Week ahead: It’s good to see that oil earnings have worked back onto generalist earnings calendars, as shown from “Earnings Whispers” below. Devon aftermarket Monday sure, BP, Marathon Petroleum and Oxy Tuesday, etc, but believe me, a year ago Berry and Callon did not make these lists (see Wednesday below). Marathon Oil […]

This note outlines the mega-themes that are emerging mid-way through oils’ reporting season. We listened to a lot of calls, read A LOT of transcripts, and distill it here, for your Saturday afternoon reading by the pool on your yacht. Last evening I reflected that this weekend I was as likely to bit hit by a massive piece of falling Chinese space debris, as to win the mega-millions and get my own yacht with pool. […]

Greetings fellow earthlings, (Dow Jones WSJ 7/17/22) — Investors hoping a strong start to earnings season would jolt the stock market from its slump haven’t gotten much satisfaction. Early reports from U.S. companies have refocused attention on some of the biggest challenges facing businesses, from the threat of an economic slowdown to the pressure that rising costs are putting on corporate profits. JPMorgan Chase, Delta Air Lines and industrial supplier Fastenal are among those last […]

Good Day! You only get so many summers in life – a beautiful Sunday in mid-July, we should be at the beach or pondering the Wimbledon final. Hopefully you are on a yacht or at a swim-up bar as you read this. Here in Brooklyn Heights/Brooklyn Bridge Park they have recreated The Hill at Wimbledon with a big screen to watch tennis. Packed today. Tourists are returning en masse to New York. Week past: the […]

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 […]

Back in Brooklyn, Happy July 4th weekend, insert my annual joke about my not recognising US independence, or Make America Great Britain Again. Harry and Meghan’s second kid is eligible to be a female US President, being born in California. Based on the recent candidates, not just the winning ones but the primaries, just about anybody will do better than the current political class. Enough, let’s take a quick look at the first half. As […]

Briefly noted: Gazprom shares plummet -25% as shareholders reject record dividend plan Uniper, largest German buyer of Russian gas, shares plummet -18% as it says it is receiving just 40% of volumes ordered from Gazprom After two weeks in the dark, with no weekly oil data published, the US Department of Energy released the backlog yesterday. The DOE was keen to stress the “systems outage” was not a hack. Better not be, DOE manages emergency […]

Good to see the oils stabilising and bouncing this week, with Brent crude prices holding the bottom of our $110-$150/bbl range for summer. It is clear that to get past the $130/bbl peak Ukraine fear price we hit in early March 2022, will more likely be a squeezing grind higher on strong demand and weak supply, than another spike shock, although these are always possible in oil. With that said, let’s face it, just about […]

Greetings from Hyde Park, We are back in London, Paris was controversial; Patricia considers it the greatest most wonderful place on earth, I get into arguments with Parisians, Selloff dynamics Hess reminder Phillips 66 Comments Morocco? Algeria It’s only rock ‘n’ and I’m 80 On the selloff: To me, the charts are not broken, but we nibbled 5% of the S&P500, then collapsed back to just over 4.1%. It is actually barely visible on the […]