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Demand for fossil fuels will not grow indefinitely, but it will probably be more resilient than most may expect.

The staying power of oil and gas pipelines

Most would probably agree that pipelines have long useful lives. If you live in the Deep South or on the East Coast, there is a good chance your gasoline comes from the massive Colonial Pipeline system, which was built 60 years ago. Often, investors ask us about the remaining useful life for pipelines and whether these assets will become stranded as renewable energy and electric vehicles gain traction. Today’s note addresses that question.

Replacing Energy Sources Takes Time

Without digressing into a full energy transition discussion, replacing energy sources takes time. Coal is the most vilified fossil fuel, yet global coal demand is expected to have reached a new all-time high in 2023. The world has needed more and more energy as the global population has grown and economies have developed. Due to the global growth in energy demand, renewables have generally added to the energy mix, instead of displacing fossil fuels to this point (read more).

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Source: ETF Trends

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US Oil Rig Count Rises: The oil rig count was 510 in the week ended Mar 15, increasing from the week-ago figure of 504.

Permian oil rig count increases in 3 of prior 5 weeks

In its weekly release, Baker Hughes Company BKR stated that the U.S. Permian oil rig count was higher than the prior week’s figure. The rotary rig count, issued by BKR, is usually bring out in major newspapers and trade publications.

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.

Rig Count Data in Detail

Total U.S. Rig Count Rises: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 629 in the week ended Mar 15. The figure is higher than theweek-ago count of 622. Although the figure increased in three of the prior five weeks, there has been a slowdown in drilling activities. Many analysts believe that shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is, however, lower than the year-ago level of 754.

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Source: yahoo!finance

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ExxonMobil has been able to grow reliable, affordable, low-carbon production while reducing emissions, which Cahir said is vital.

ExxonMobil: Permian Basin vital to corporate growth, sustainability

ExxonMobil is banking on its Permian Basin assets to fuel corporate growth in the coming years.

The multinational giant has targeted producing at least 1 million barrels per day from its Permian assets by 2027. In 2023 the company averaged 612,000 barrels a day and is forecasting a 10% average growth rate, according to Bart Cahir, the company’s senior vice president, upstream unconventional.

In Midland to address the Permian Basin Water in Energy Conference, Cahir sat for an interview at the offices of ExxonMobil’s subsidiary XTO Energy in northwest Midland.

In keeping with the purpose of his visit, Cahir said sustainability is as important to the company as its oil and natural gas output.

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Source: mrt

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Mr. Paul believes that without future exploration, we will continue to tap into proven reserves, causing oil prices to increase.

Oil and gas politics signal market growth acccording to industry insider Jeremy A. Paul

Oil and Gas Politics signal market growth. Crude oil, often referred to as petroleum, is a liquid fossil fuel distinct from its refined counterpart, gasoline. Similarly, natural gas, colloquially known as ‘gas,’ is more precisely point out as fossil gas or methane. Despite their colloquial names, oil and gas are classified as fossil fuels, originating deep underground over millions of years from the fossilized remains of ancient organisms, including plants and animals. Furthermore, these energy resources share a common hydrocarbon composition, characterized by molecules comprising carbon and hydrogen atoms. This chemical congruence underscores their classification as hydrocarbons and shows the interrelated nature of these pivotal energy commodities.

The United States has been one of the world’s energy giants since its first oil well was inculate in Pennsylvania in 1859. Oil production peaked in the 1970s, then waned for decades, and saw a resurgence through the fracking boom that started in the early 2000s. The United States has begun to reclaim its position as the world’s largest oil and gas producer. It is estimated that the US now produces 90% of its own natural gas supply and 75% of the crude oil it needs domestically. In 2021, it produced around eleven million barrels of crude oil and one hundred billion cubic feet of gas daily.

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Source: USA Today

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Crude oil futures rose Wednesday as Federal Reserve Chair Jerome Powell indicated that interest rates will likely come down this year.

Oil prices rise more than 1% on Fed rate cut outlook, signs of rising gasoline demand

Signs of Rising Gasoline Demand

Crude oil futures rose Wednesday. As Federal Reserve Chair Jerome Powell indicated that interest rates and signs of rising gasoline demand will likely come down this year. Though the central bank is moving cautiously.

The West Texas Intermediate contract for April gained 98 cents, or 1.25%, to settle at $79.13 a barrel. May Brent futures added 92 cents, or 1.12%, to settle at $82.96 a barrel.

Powell told the House Financial Services Committee Wednesday. That the Fed needs to see “a little more data” before moving on rates. Though he expects the central bank will begin loosening policy this year. As it gains more confidence that inflation is under control.

In prepared remarks, the Fed chairman said the central bank thinks rates have peaked. Lower interest rates typically stimulate the economy, which leads to more demand for crude.

Tamas Varga, an analyst at oil broker PVM, told clients in a note Tuesday that uncertainty surrounding interest rate cuts is “public enemy No. 1” of a protracted oil rally.

“The Fed chair’s testimony and the ECB interest rate decision on Thursday could revive hopes for a June reduction in borrowing costs,” Varga wrote in a research note.

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Source: CNBC

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US crude oil inventories rose modestly last week as refineries ramped up capacity use, according to data released Wednesday by the US EIA.

US crude oil stocks rise by 1.4M barrels in week ended March 1

Rose Modestly

U.S. crude oil stocks rose modestly last week. As refineries ramped up capacity use, according to data released Wednesday by the U.S. Energy Information Administration.

Commercial crude-oil stocks–excluding the Strategic Petroleum Reserve–were up by 1.4 million barrels, to 448.5 million barrels, in the week ended March 1, and were about 1% below the five-year average for the time of year, the EIA said.

Analysts surveyed by The Wall Street Journal had predicted crude stockpiles would rise by 1.3 million barrels.

Oil stored in the SPR increased by 706,000 barrels, to 361 million barrels.

The EIA estimated U.S. crude oil production at 13.2 million barrels a day, down by 100,000 from the previous week. Crude imports rose by 837,000 barrels a day, to 7.2 million barrels a day, while exports slipped by 91,000 barrels a day, to 4.6 billion barrels a day.

U.S. refineries ran at 84.9% of capacity, up from 81.5% the previous week.

Decreased More than Expected

Stocks of gasoline and distillate fuels decreased more than expected as demand rose. Gasoline stocks were down by 4.5 million barrels, at 239.7 million barrels, and were 2% below the five-year average, the EIA said. Demand for gasoline rose by 547,000 barrels a day, to 9 million barrels a day. Gasoline stocks were expected to decline by 1.4 million barrels, according to the Journal survey.

The EIA estimated U.S. crude oil production at 13.2 million barrels a day, down by 100,000 from the previous week. Crude imports rose by 837,000 barrels a day, to 7.2 million barrels a day, while exports slipped by 91,000 barrels a day, to 4.6 billion barrels a day.

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Source: Market Watch

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Crude oil price settles around 80.00$ barrier and keeps its stability above it to support the chances of continuing the expected bullish trend on the intraday and short-term basis.

Crude oil price awaits more rise amid bullish trend

Keeps its Stability Above It

Crude oil price settles around 80.00$ barrier and keeps its stability above it. To support he chances of continuing the expected bullish trend on the intraday and short-term basis. Organized inside the bullish channel that appears on the chart. Noting that our next targets begin at 81.55 and extend to 82.70.

The current market dynamics suggest that there is a potential for further upward movement in the upcoming trading sessions. It is crucial to keep a close eye on the price levels, particularly the minor support at 79.70. A break below this support level could trigger a temporary decline in the price. Leading to a test of key support areas starting from 78.70 and potentially extending to 78.25 before any significant attempt at a resurgence.

Investors and traders should monitor these support levels closely. As they can provide important cues about the market sentiment and future price movements. Testing key support areas is a common occurrence in trading patterns and often precedes a new attempt at upward movement. By staying informed and vigilant, market participants can make well-informed decisions and capitalize on potential opportunities that may arise as the price fluctuates in response to changing market dynamics.

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Source: economies.com

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The US oil & gas industry's recent success underscores its resilience and ability to thrive in the face of political, environmental challenges

US oil and gas companies profits skyrocket as the US becomes the energy supplier of choice

US Oil and Gas Companies

Despite the Biden administration’s ambitious climate goals. The US oil and gas companies in the United States has seen unprecedented growth and profitability. The top 10 listed oil and gas producers in the US have reported a combined net income of $313 billion in the first three years of President Biden’s term (Financial Times). This is three times the $112 billion generated during the same period under President Trump.

This surge in profitability can be attributed to several factors. Including record-high production levels as well as significant cost reduction particularly in the oil rich Gulf of Mexico. In December 2023, US oil production reached 13.5 million barrels per day, surpassing all previous records. According to the US Energy Administration. By 2024 the US will reach the daily production of 14 million barrels per day. Additionally, natural gas production exceeded 105 billion cubic feet per day for the first time. These achievements have solidified the US as a global energy leader, with the country now ranking as the second-largest exporter of crude oil and the largest exporter of liquefied natural gas (LNG), overtaking Qatar.

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Source: BENZINGA

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Pipeline operators are also embarking on a merger spree in a quest to add scale, optimize assets, and gain more exposure to export markets.

US oil and gas merger mania extends to the midstream

  • The merger mania in U.S. oil has spread to midstream. 
  • Occidental Petroleum, which has recently announced a $12-billion deal to buy CrownRock, is now considering a sale of its $20 billion natural gas pipeline operator Western Midstream Partners.
  • Last year, ONEOK said it would buy Magellan Midstream Partners in a cash-and-stock deal valued at $18.8 billion, creating a combined U.S. oil and gas pipeline giant with a total enterprise value of $60 billion.

While the upstream mega deals in the U.S. shale patch have been drawing the most market attention, pipeline operators are also embarking on a merger spree in a quest to add scale, optimize assets, and gain more exposure to export markets.

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Source: Oil Price

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In the latest U.S. oil and gas merger, Chord Energy and Enerplus have agreed to combine in an approximately $11B stock and cash transaction

Chord Energy and Enerplus agree to $11 billion merger

An Approximately $11 Billion

In the latest U.S. oil and gas merger. Chord Energy and Enerplus have agreed to combine in an approximately $11 billion stock and cash transaction. Which will create a premier Williston basin-focused exploration and production company.

The combined firm will have a premier position. In the Williston Basin in North Dakota and Montana with deep, low-cost inventory. Around 1.3 million net acres, combined Q4 23 production of 287,000 barrels of oil equivalent per day (boepd). And enhanced free cash flow generation to return capital to shareholders, the two companies said in a joint statement.

Chord Energy and Enerplus have announced their merger, creating a combined company poised to significantly enhance its financial performance. The consolidation of these two entities is look forward to result in a synergistic effect, leading to the generation of substantial free cash flow.

Improved Efficiencies

Leveraging their low-cost asset base, the newly set up company anticipates better efficiencies in its operations, which will be further maintain by a disciplined approach towards capital spending. This strategic move aims to position the company favorably in navigating a dynamic market environment characterized by fluctuating commodity prices.

By combining their resources and expertise, Chord Energy and Enerplus are well-equipped to navigate a wide range of commodity price scenarios, ensuring sustainability and resilience in their future endeavors.

Furthermore, the merger is set to bring about operational enhancements that will drive value creation for the company and its stakeholders. The consolidation of capabilities and resources from both Chord Energy and Enerplus paves the way for a more robust and competitive entity in the energy sector.

The Merge Company Is At Ease

By aligning their strategic objectives and leveraging complementary strengths. The merge company is at ease to tap into new growth opportunities and optimize its asset portfolio. Through a shared commitment to maximizing operational efficiency and prudent financial management. The affiliate entity is advantageous to deliver long-term value and sustainable growth.

The merger represents a strategic milestone for both Chord Energy and Enerplus. Setting the stage for a promising future built on a solid foundation of operational excellence and financial discipline.

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Source: Oil Price

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