LNG Balance

What can you do but write an earnings note during earnings? Well, we put out a theme note yesterday on East Med, which had good reviews, but question marks over the materiality to the big winner, Chevron. As the oil space, and its respective components, have settled into a sensible valuation structure and lack of differentiation between themes, the quest is on to look at Kosmos or offshore drillers for some excitement. And we will […]

With attention on a major oil announcement by President Biden today, widely leaked as a further Strategic Petroleum Reserve (SPR) release that amounts to stuffing a leaking dam with non-sustainable paper towels, we have been highly critical of the Biden Administration’s Energy policy. We have also slammed the European Union and UK, notably starting with our 2021 thematic note “Britain & Germany vs the USA” that foresaw a European gas crisis far before Russia ever […]

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” […]

Trading call: all the world is expecting a market bounce today, quite possibly violent this week, as the Fear/Greed index gets into “Extreme Fear” Territory. We see this as a short term bounce, and are waiting until we are nearer towards full winter before looking for the big bull call on oils into 2023. Weather in Brooklyn: chilling in line with winter starting December 5th, our traditional date for first snow in NYC; key question […]

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 […]

We like the long oil trade here, explained Europe is at war. Russian/EU gas expert Jim Henderson was stark on our call: Russia is waging full scale economic war on Europe. Winter is coming. Darling! I never knew you cared Bull trade in oils is back on, in our view. First, we contend that oil equities often predict the next move in oil, the commodity. As shown below, over the past five days E&Ps (and […]

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. […]

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 […]

Rampant inflation globally, underlined by today’s US CPI print has an extraordinary backdrop – China has been dis-inflationary. In certain key markets, notably crude oil and above all LNG, China demand has been negative at the margin in terms of demand growth, with significant roll-overs from previous rampant import growth. Assuming China works through its COVID issues and pursues its 2022 GDP growth plan, a re-acceleration in demand for key commodities seems certain, particularly in […]

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 […]

Last year, Europe rose to a 30 bcfd natural gas deficit between production and consumption (>60% import dependent); with variable power dependence (wind, solar) as the shaky offset, two major swing winter suppliers, namely the massive Gronigen gas field in Holland, and the UK’s dominant gas storage facility, Rough, shut down. The situation is far more extreme in terms of winter shortages, than even the annual deficit shows. In energy security terms, certainly as regards […]

Our main concern about the Freeport LNG export outage is that it inspires some “consumer hero” politician in Washington to justify an export ban on oil & gas. The price impact of a cut to gas exports was dramatic yesterday, -15% on spot Henry Hub; Freeport said it would be out for 90 days, end 2022 full resumption. It is imperative that Washington understands the importance of free trade and the role in US oil […]

The concept of this note is “putting the band back together” in the theme of the Blues Brothers, as we see the potential for Chesapeake to merge with Southwestern. The Blues Brothers (1980): Jake: We’re putting the band back together. Mr. Fabulous: Forget it. No way. Elwood: We’re on a mission from God. We could get into a long and tearful reminiscence about US natgas legend and Chesapeake founder Aubrey McClendon (there is a tribute […]

Happy May Day Sunday, Today in partnership with Greg Bordelon of Isentropic Capital, we publish a note on natural gas markets by way of thesis overview to a theme that we will continue to pursue. The note is long graphics, and particularly interesting on US markets. If you only want to read half, read the second US half. It is as noted graphic intense. European gas markets are fundamentally far more un-analysable than US right […]

This LNG round up with Gordon Shearer (Poten & Partners guru) from Thursday night took longer to write and I got tangled in the SLB results, which came in okay – readers will know I am not pushing service companies but love oils… “to 10% of S&P500!” Chatting to a client with Midstream expertise before Gordon Shearer, LNG expert, came on Strategy Session Thursday evening, the view was that Kinder Morgan results were decent owing […]

The only good number in oil is the oil price The only good demand number in oil is refining margins The only barrier of entry to being an oil analyst is units You are only as good as your last call CNBC want me on this afternoon – unusually they booked me two weeks ago – for the second anniversary of oil prices going negative. Let me go to the grave saying I called for […]

Greetings from Maryland, With limited computing power at my disposal, and having been in thought since watching Elon on Thursday give a TED interview, followed by self-identified philosopher Alex Epstein on our Thursday Strategy Session, a couple of days off, a stroll in Annapolis, this is note is more ideas in 1,000 words, to make a picture, than pictures worth 1,000 words. No demand destruction because there is nowhere to go to substitute Therefore self-compounding […]

This week, a three page thematic overview, followed by supporting charts. First the text, then the charts. ~ Noted refinery explosion last evening, no deaths reported, at ExxonMobil’s small (“only” 60kb/d) Billings Montana niche refinery that is important for local balances. Would drive margins higher for Midcon players such as HollyFrontier, Coffeyville, Delek, and West Coast PBF, and might accelerate ExxonMobil’s long standing attempts to sell the plant (price always said to be too high). […]

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 […]

“Only the dead have seen the end of war” – Plato (Attributed). The Quote is writ large at the entrance of the Imperial War Museum in London, one of London’s great museums, if lesser known. Recommended. Thoughts & prayers with the suffering in Ukraine. Peace in Brooklyn, the weather our worst direct concern. The hard yards, I always say from my First World Wall St perch, are January 1st through to March Madness. And today, […]

Strategy Session this week 2/24, 5PM EST – Arjun Murti, Warburg Pincus, ConocoPhillips board member.  As lead oil analyst and then head of research for Goldman Sachs, Arjun made the greatest oil call in the history of the sellside, predicting $100/bbl oil in the early 2000s at a time when oil traded around $25/bbl and had never traded above $40/bbl. He was right for the right reasons. Now publishing a Substack “Superspiked”, Arjun is one of […]

Yesterday I took on re-modelling the oil market according to the new world order: OPEC+. But I also spoke to a top hedge fund portfolio manager, US mega-player, who is based in Singapore for a couple of months. He made the following points: Strong Singapore economy with staff shortages – he waited an hour for a coffee the other day China cutting back on energy intensity. Brain drain from Hong Kong. Massive capex cycle starting […]

I got up thinking about a quick look at Russia for the Morning Note; ALMATY, Jan 6 (Reuters) – Fresh violence erupted in Kazakhstan’s main city on Thursday after Russia rushed in paratroopers to put down a countrywide uprising in one of Moscow’s closest former Soviet allies. Police in the main city Almaty said they had killed dozens of rioters overnight into the early hours of Thursday morning. The authorities said at least 18 members […]

Thinking about the year ahead, one of my favourite Twitter follows @Raisingthebar47 published the following deliberately non-consensus list of things that will happen energy in 2022. The list is interesting, notably for natgas theorists, but also because it represents what could be considered a list of unexpected events for the year; it was just a quick checklist of things to consider: Natgas back to <$2.50/mcf MVP cancelled/pushed to ’23 (Mountain Valley Pipeline) Oil hits <$50/bbl […]

SPR Releases roiling markets, Biden Administration perfect fodder for Happy Hour. Happy Hour TONIGHT with former FERC Chairman Neal Chatterjee, along with Aaron Cutler, partners at major DC law firm Hogan Lovells. Aaron at 5pm, Neal at 5:30pm. Both have deep Washington energy experience at the highest level – Neal was former Chief of Staff for Senator McConnell, Senate Republican Leader. It is obviously vital to understand the shifting energy landscape in Washington. These are […]

BREAKING Major European gas news, Germany regulator suspends approval of Nordstream 2. Bullish news on Shell Corning glance on high glass prices BREAKING Watchers.News: Natural gas prices in Europe soared again on Tuesday, November 16, 2021, as the German Federal Network Agency — Bundesnetzagentur — suspended the process of certifying the new Russian gas pipeline called Nord Stream 2. The pipeline was completed in September 2021 and is designed to bypass Ukraine and connect Russia […]

Mega-theme: the backlash against the nonsense elements of ESG Mega-theme: LNG Friday, so here’s a longer joke (?): Conspiracy theory: The UK climate protest group Insulate Britain are so completely bone-headed and infuriatingly disruptive (blocking the key London ring road, M25), that I can only assume they are a British Government/MI6 counter-environment group that is working to increase public opposition to the environmental movement in the sensitive run up to COP26 on 1st November in […]

Tonight: Gordon Shearer, world LNG expert, on Happy Hour 5pm ET. Email me for link [email protected] Gordon fits brilliantly with the world energy crisis, discussed at length by Putin yesterday. This morning I took the time – and it took a good while, given simultaneous translation, etc – to transcribe what President Putin said at the Russia Energy Week Summit yesterday. This early morning effort was made: Because Putin is seen as holding a major […]

Key points today: Virtual roadshow with Embark Autonomous Trucks this week Thursday. China has run out of coal.  Can’t say I had that on my 2021 bingo card. Opening question for Sankey quick hit on CNBC Fast Money: China running out of coal (stock mentioned: Peabody Coal $BTU see below). It became a cyclical vs secular quick debate; further to a client comment “if it doesn’t get cold in December this unravels”, we think it […]

Greetings from London, You live in the UK and have avoided death by COVID? FT: In the UK, 4m households were unable to afford to adequately heat their homes even before the latest energy price crisis. Some 10,000 deaths a year are linked to living in a cold home, according to the charity National Energy Action. If that represents around 100 deaths per day over the average of four winter months, high energy prices are […]

In this note, natgas hedging exposure (oops) and a China focus. My S&P500 sentiment Twitter survey yielded a result that is spectacularly unhelpful, lol. Pretty much 50:50 bullish/bearish. All I can say is that it seems I got the categories right, given an almost exact balance between the four choices. One observation made by a major market maker to me this past Friday was that the market absorbed a ton of paper last week, between […]

In this note: the analyst who simply thanked Pioneer, with Devon, Oxy, and ConocoPhillips all cheering battered oil investors, and really strong macro news for Big Integrated Oils (ExxonMobil etc) with their lagging exposure to soaring global natgas prices that are pushing up refining margins. Global demand strength is also bullish for the oils, regardless of the market’s deep reluctance to capitalize OPEC market management. First, Tellurian offers shares: 35,000,000 shares of its common stock […]

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 […]

Cimarex and Cabot to merge as equals, the new company will be called Cimmabon. No, Cabarrot. Only kidding, they have not announced the new name.  Call at 8:30am ET – imminently. Also we mention Tellurian, which is rising in the meme stock world – most mentioned on Reddit (see lists below). Overall, we love LNG plays, but US export competition is fierce, and our key play is Cheniere, $LNG. Years ago under Souki they snagged […]

Covering global oil markets, you can be sailing along peacefully and from nowhere, a new major event leaves you scrambling. And so a vast container ship blocks the Suez canal. Around 10% of world oil trade and 8% of world LNG trade move through the canal. Quite how the captain managed to hit the side of the canal and wedge the ship remains an open question, but we do know that the Suez is a […]

Field trip. Speaking to Devon yesterday after their results, I asked to visit the company in Oklahoma, which seemed somewhat ludicrous in the circumstances. There is an energy emergency in Texas and Oklahoma, in case you have been asleep all week. However a visit is okay to go, so if any clients wish to join me on a Oklahoma/Texas run in the week of March 15th, the plan will be to get through next week’s […]

Hi, We had legendary global gas expert Gordon Shearer on our Happy Hour – every Thursday at 5pm – this week. Writing up the notes for Friday sent me down a couple of rabbit holes, and so I put together a note with graphics on LNG, which is attached. Selected nuggets, there are more within: Natural gas as the key energy transition fuel is logical and imperative. Those that bucket natural gas, oil and coal […]

Snowing again here in Brooklyn Heights. One thing that is very striking in this week’s charts is the 6-10 Day weather forecast for North America. It is freeeeezing. Bluest map I can remember publishing, and we publish it just about every week in mid-winter and high summer. As noted our Happy Hour this past week was very bullish oil, basically the call is that oil just went up 15% in a month and is rising […]

Good morning, The first working week in January is always a crazy week for this analyst, and by Monday afternoon, having run five 1×1 fireside chats with five refining CEOs, I was already joking that I was ready for my year end vacation. Then, from nowhere, Saudi unilaterally cut production on Tuesday 5th January at the now-monthly OPEC+ meeting, the afternoon as we rounded out the conference with a 1×1 with Valero management that morning. […]

New mega-theme: Big Doctor is watching you. See below. Note also that for all the words in this letter, the attached presentation is all pictures. We know you are busy and need the key ideas fast. Thanks for reading. Sankey Research subsists entirely by taking Excel, Word, Powerpoint, a Bloomberg Terminal, leading journal subscriptions, and the internet, and writing research from scratch, for sharing ideas. Please support me, aka PAY. Otherwise you are stealing my […]

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 […]

Good day! A chill September wind is blowing across Brooklyn Heights, as summer officially ends and fall very much starts. The market is feeling chills too, with COVID continuing to present a major challenge to policy-makers globally. We remain extremely frustrated by the excessive lock down requirements in New York despite effectively zero COVID. With massive testing, less than 1% positives are being found, and essentially no deaths (statistically speaking). This past week we quoted […]

This will be the first year our family doesn’t vacation in Hawaii because of COVID. Normally it is because we can’t afford it. What is Britain’s biggest export? Independence days. I was overtaken by a car being driven by a sheep in a swimsuit. I think it was a lamb bikini. We’ve had some impact research this week, based on feedback, but there is an altruistic side to everything we do, and, much as you […]

On soccer management and EQT as winners. Continue reading

Super-high level view of global LNG with final model output chart Continue reading