Politics, Geopolitics & Conflict
The conflict in the Red Sea continued unabated this week, with the Houthis targeting Maersk vessels and their U.S. Navy warship escorts through the Bab el-Mandeb Strait off the coast of Yemen. The Houthis, looking to score some additional credibility, claimed to have directly hit the U.S. warship escorts - a claim that was denied by U.S. Central Command. The vessels were targeted, but there were no direct hits. Maersk has been rerouting most vessels to avoid the Red Sea, with a single remaining class of vessel being the only ones that were still braving the passage until this week. All Maersk vessels are now being rerouted following this latest attack. Prior to this, data showed that tanker volume in the Suez Canal had fallen by over 50% in the week starting January 15 compared to the previous week (Reuters, citing AXSMarine).
The winter season has seen the Russia-Ukraine conflict take on new aspects, with Ukraine launching some particularly bold attacks on Russian targets. Earlier this week, Ukraine launched a drone attack on a Russian Baltic Sea terminal (Novatek), taking some 20,000 bpd offline temporarily.
Turkey signed off on Sweden’s NATO accession this week, with a clear signal that the U.S. would provide Erdogan with those long-awaited F-16s. That leaves Hungary as the outlier. Hungary’s pro-Russian Orban is still holding out.
The deal Washington made with Venezuela to ease oil sanctions was conditioned on…
Politics, Geopolitics & Conflict
The conflict in the Red Sea continued unabated this week, with the Houthis targeting Maersk vessels and their U.S. Navy warship escorts through the Bab el-Mandeb Strait off the coast of Yemen. The Houthis, looking to score some additional credibility, claimed to have directly hit the U.S. warship escorts - a claim that was denied by U.S. Central Command. The vessels were targeted, but there were no direct hits. Maersk has been rerouting most vessels to avoid the Red Sea, with a single remaining class of vessel being the only ones that were still braving the passage until this week. All Maersk vessels are now being rerouted following this latest attack. Prior to this, data showed that tanker volume in the Suez Canal had fallen by over 50% in the week starting January 15 compared to the previous week (Reuters, citing AXSMarine).
The winter season has seen the Russia-Ukraine conflict take on new aspects, with Ukraine launching some particularly bold attacks on Russian targets. Earlier this week, Ukraine launched a drone attack on a Russian Baltic Sea terminal (Novatek), taking some 20,000 bpd offline temporarily.
Turkey signed off on Sweden’s NATO accession this week, with a clear signal that the U.S. would provide Erdogan with those long-awaited F-16s. That leaves Hungary as the outlier. Hungary’s pro-Russian Orban is still holding out.
The deal Washington made with Venezuela to ease oil sanctions was conditioned on Maduro’s willingness to cut a deal with the opposition to hold free and fair elections this year. That deal is now on the brink of collapsing. Maduro’s gambit to annex Essequibo in order to create an international incident and cancel elections has failed (so far), likely because the U.S. resisted taking the bait and stepping in. In other words, no international incident was created that would have given Maduro what he needed to declare a state of emergency. Instead, this week brought news of an alleged assassination plot targeting Maduro, which has led to the arrest of 32 individuals (both soldiers and civilians), with new warrants issued for another 11 people. It smacks of the alleged coup that solidified Erdogan’s power in Turkey. Maduro also accused the U.S. of working with the opposition to force a regime change. All of this puts the deal to ease oil sanctions into question, and the market should be watching developments here closely.
Deals, Mergers & Acquisitions
UAE’s TAQA will sell its 47.4% stake in Atrush oilfield in Iraqi Kurdistan to Canada’s ShaMaran Petroleum. The move represents a complete exit for TAQA from the Kurdistan region of Iraq, following the complete stoppage of oil exports from the Kurdistan region nearly a year ago. ShaMaran already holds a 27.6% stake in the Atrush oilfield. It has plans to sell 25% of its total stake and operatorship to US-based HKN Energy. The deal is subject to approval by the KRG, which owns the last 25%.
Iran and Russia have finalized a 20-year deal that will replace the 10-year deal signed in 2001. The deal gives Russia the first right of extraction in the Iranian section of the Caspian Sea–including the Chalous field, and in major oil and gas fields in the Khorramshahr and Ilam provinces that border Iraq.
Sunoco will purchase fuels storage and pipeline operator NuStar Energy in a deal valued at $7.3B, including the assumption of debt, creating a more vertically integrated company. The deal is expected to close next quarter.
Woodside said earlier this week that the $52B merger talks with Santos were still in an early stage and that there was still no certainty that a deal would be had.
Energy Earnings
Siemens Energy Q4 results beat analyst expectations as it recovered from an onshore wind turbine quality crisis. Q1 revenues were up 12.6% to $8.29B, while profit margins before special items landed at 2.7%. Order intake, meanwhile, was up 23.6%.
Baker Hughes beat estimates for Q4 as well on the back of strong demand from LNG producers and offshore and international markets. International revenue for OFS segment rose 15%, although its North America revenue was down 1%. Industrial and energy technology segment revenues were up 24% to $2.88B.
Halliburton's Q4 earnings also beat estimates, with EPS at $0.86. Profit came in at $661 million or $0.74 per share. Revenues were $5.74B for the quarter, missing analyst forecasts. Total 2023 profit came in at $2.64B, or $2.92 per share. Full year revenue was $23.02B.
Rounding out the OFS providers, Schlumberger booked Q4 revenue of $8.99B–up 8% from the previous quarter and 14% year over year. GAAP EPS of $.77 was 1% down for the quarter. Full-year revenue was $33.14B, up 18% year over year.
Woodside’s sales revenue fell 35% year over year in Q4 to $3.35B, but up 3% compared to Q3. Sales volume for the quarter was 49.5 MMboe, compared to 53.3 MMboe in Q3 and 52.2 MMboe in Q4 2022. The company’s average LNG produced price hit $11.5/MMBtu in Q4–up from $10.3/MMBtu in the quarter prior–but down from $20.3/MMBtu in Q4 2022.
