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Chart of the Week
- New debt and equity issuance from U.S. E&P companies totaled $4.4 billion in March 2021, the most since August 2020.
- In fact, new financing has been on the rise steadily for each month since September 2020. Low interest rates and higher oil prices have improved access to capital.
- The EIA forecasts U.S. oil production rising from 10.7 mb/d in 2Q2021 to 12.2 mb/d in 4Q2022.
Market Movers
- The California Public Employees’ Retirement System (CalPERS) said on Monday it plans to vote for Engine No. 1′s four director nominees to ExxonMobil’s (NYSE: XOM)board.
- Saudi Aramco (TADAWUL: 2222) is considering a sale of a stake in its natural gas pipeline network to free up cash.
- Range Resources (NYSE: RRC) beat earnings consensus.
Tuesday Aril 27, 2021
Oil prices posted some modest gains on Tuesday, despite the worsening conditions in India. “If the grim trend continues, the oil demand loss India will experience could be the single largest reduction in absolute terms that any country has suffered since the beginning of the pandemic,” Rystad Energy said in a note. The firm added that there is some optimism around the plans by OPEC+. “Should OPEC+ turn a blind eye to India though, the gains may quickly evaporate,” Rystad added.
Oil prices up on OPEC+ cuts. The OPEC+ group will not hold a full ministerial meeting on Wednesday as planned, delegates at the Joint Ministerial Monitoring Committee (JMMC) agreed at their meeting on Tuesday, signaling confidence in the current plans to ease the production cuts as of May despite surging COVID cases in major oil importer India.
White House wants 80% clean energy standard. The Biden administration is pressing to include a clean energy standard in the infrastructure bill, which would require the U.S. electricity grid to source 80% of its electricity from carbon-free sources by 2030. That would be up from 40% today. A recent report finds that such a target can be reached at no added cost. But it will require a lot more long-distance transmission and energy storage.
Exxon makes new Guyana discovery. ExxonMobil (NYSE: XOM) announced a new oil discovery at its Stabroek Block in offshore Guyana.
BP profits up, to resume share buybacks. BP’s (NYSE: BP) profit more than tripled to $2.6 billion in the first quarter due to higher oil prices. The company said it would buy back $500 million in shares.
Oil majors expected to post strong cash. The oil majors are expected to post strong first-quarter earnings, but much of the increased cash flow will go to servicing debt.
DAPL decision soon. Judge James Boasberg of the U.S. District Court for the District of Columbia on Monday gave the Army Corps of Engineers until May 3 to update him on the status of the Dakota Access Pipeline’s new environmental impact statement. The judge asked the Army Corps one last time to decide whether or not the pipeline should be shut down before he makes a decision himself. Related: Many European Refiners May Not Survive COVID
Tesla posts record profit. Tesla (NASDAQ: TSLA) reported a $438 million profit in the first quarter, its highest ever. “We’ve seen a real shift in customer perception of electric vehicles, and our demand is the best we’ve ever seen,” Elon Musk said Monday on an investor call. Vehicle sales doubled from the same quarter a year earlier.
Washington State passes cap-and-trade. Washington State will become the second state after California to implement a cap-and-trade program, which will go into effect in 2023. Revenue raised will go to renewable energy projects. The state also passed a new clean-fuels standard.
California to phase out oil, ban new fracking in 2024. California Governor Gavin Newsom announced last week that the state would phase out oil production by 2045, and would ban new fracking permits beginning in 2024.
Libya targets 1.45 mb/d by end of year. News that Libya is now targeting 1.45 mb/d of oil output by the end of this year, 1.6 mb/d within two years and 2.1 mb/d within three to four years will compound a negative price sentiment on oil pricing for many traders.
Suriname aims to become an oil exporter. As Guyana prepares to become a major oil-producing nation, the spotlight is firmly on the Guyana-Suriname Basin and the former British colony’s neighbor Suriname.
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Pembina “pauses” Jordan Cove LNG. Pembina has been beset by permit denials for its proposed Jordan Cove LNG project in Oregon and is now hoping to hit the “pause” button on a legal process over its FERC permit, another negative sign for the project’s viability.
Total declares force majeure on Mozambique LNG. Total (NYSE: TOT) declared force majeure on its $20 billion LNG project in Mozambique due to an insurgency.
Biden explores carbon tariff. The Biden administration is exploring the use of a carbon tariff, a duty on imported goods from countries with weak climate policies. The European Union is a little further along, looking at the policy more deeply.
Saudi Arabia to join new climate forum. Saudi Arabia will join the United States, Canada, Norway, and Qatar in forming a new platform for oil and gas producers to discuss how they can support the implementation of the Paris Agreement on climate change.
Department of Energy aims to cut costs for hydrogen. The U.S. Department of Energy said it would seek to cut the costs of hydrogen and batteries.
Samsung to develop $673 million solar plant in Texas. A unit of Samsung is aiming to build a $673 million solar project in Texas, according to Reuters.
Norway’s Hammerfest LNG outage extended. Norway’s Hammerfest LNG could be offline until March 2022 following damage from a September 2020 fire.
By Tom Kool for Oilprice.com
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