Recent Posts

Sunday Sankey 10/25/20

The Sankey Research website was down this morning, and there is absolutely no truth in the rumour that this is somehow related to Hunter Biden. Rather, the website may have crashed on ANOTHER BIG OIL DEAL, this one a bit of a shock. Years ago, ConocoPhillips announced a massive deal to buy Burlington Resources, a $36bn deal that was announced on 13th December 2005, literally the day before US natgas prices hit their all-time record […]

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2:02 PM

Debate Sankey 10/23/20

It is Friday in Fall, a great time of year in the US. The guy who stole my diary has died. My thoughts are with his family. My wife is kicking me out because she’s fed up with my South American animal puns… ‘OK,’ I said, ‘Alpaca my bags.’ I once met someone who refused to talk to people unless the conversation was about fashion. He was very clothed-minded. Happy hour yesterday evening we were […]

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9:43 AM

Morning Sanknews 10/22/20

News: France quashes a major US LNG export contract on US methane emissions/fracking. Quite where this leaves Russia and Algeria has not been specified by the French. Story broke on Politico Pro. In 2016 a French minister had highlighted that US LNG contained fracked gas, so to speak, and that France bans fracking. We all remember Hess and the Paris Basin, seen to be one of the great fracking opportunities in the world, it will […]

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9:17 AM

Morning Sankey 10/21/20

I am thinking on a long refining short airlines trade. Not least because all my clients are complaining that you cannot make money in the E&P tape. I have a few who say they have been the right side of all four major deals year to date; and barely made money. While you get a 10% pop “this is not why you owned them.” In fact the latest disappointment was definitely Pioneer-Parsley, with an investment […]

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8:39 AM

Pioneer-Parsley & History

Breaking news: WSJ October 18th 2020 Pioneer Natural Resources is in talks to buy Parsley Energy, according to people familiar with the matter, as a wave of consolidation takes hold in the beleaguered oil patch. Word from the oil field is the deal was due to be announced last week and got sidelined by COP-CXO. (Twitter). M&A stories in the WSJ are considered the most reliable of any business new source. Last week they were […]

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8:11 AM

Sunday Fall Sankey

Good Day The Sunday Sankey is macro heavy but starts with the micro oil story of the past week and quite possibly next week: Conoco-Concho. The rumored (Bloomberg) takeover was covered in three consecutive notes last week, and is now rumoured (Bloomberg) to be imminent. We shall see. That starts, but there is a ton of macro stuff in the Sunday Sankey ppt. Take a look. As the market closed Friday, $EOG spiked, and the […]

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11:57 AM

“Happy” Hour & Friday

When Kasparov beat Carlsen I cheered so much I lost my voice. Now I am a hoarse chess nut. Kermit the Frog playing Hamlet got great reviews. It was a ribbeting performance. My friend wants to dress as an island off the coast of Italy for Halloween. I told him not to be Sicily. Happy Hour Comments and Why is Concho selling itself? We had a real live oil trader to start Happy Hour last […]

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9:10 AM

Conoco Poncho

$EOG was the name most speculated about as likely to MAKE a takeover in the wake of the Conoco-Concho story yesterday; the stock that reacted most was $XEC, perceived as the most likely next TAKE over company. Continental CLR is seen as needing to deal, $MRO too, $OVV potentially to offer a blizzard of stock, $FANG and Parsley $PE potentially to join the consolidation fray one way or the other; $CDEV is due to be […]

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9:22 AM

ConocoConcho

ConocoPhillips $COP for Concho $CXO does not generate the “why oh why” outrage of the seemingly ludicrous rumours at the time of Occidental for Anadarko, by any means. Last evening, just as we pondered a solidly in-line-with-expectations Q3 guidance from Diamondback $FANG, Bloomberg published a story claiming that ConocoPhillips is taking over Concho, which was a whole lot more exciting for a Tuesday evening, notwithstanding my wife Patricia getting liquidized chilli directly in her eye, […]

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9:23 AM

Sunday Sankey 10/11/20

Good Day, Guess what, we are back to results. In the week ahead Q3 EPS starts. Crazy to think, Schlumberger reports Friday; nothing much on Monday but watch JP Morgan report massive trading results on Tuesday – work from home right – starting off the week. Also Citi reports Tuesday, and important for Bail Out, Delta Airlines too, with United Airlines Wednesday alongside some bank called Goldman. Could be a bullish week for the market, […]

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1:40 PM

Morning Bullish Sankey

Very interesting Happy Hour yesterday… and an overwhelming sense of bullishness swept over me! How can this be when the oil market is still struggling so badly? Well… a couple of things. But first, it’s Friday, and this is the Friday Sankey, so its JOKE TIME. What’s the biggest lie in American politics in 2020? You have 2 minutes uninterrupted.Please respond to your opponent’s total ignoring of the question. You have two minutes.A fly on […]

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8:27 AM

Chevron for ExxonMobil?

Chevron for ExxonMobil merger? The numbers and strategy make sense. Reduced costs, reduced capex, get through the dividend mess, and upgrade the overall player in ESG terms (mega-company suggested new name: “Chevron”). All year XOM has been breaking bad levels, and the latest is that its market cap fell below Chevron’s yesterday. Just a reminder on scale, with market caps equal at ~$140bn: XOM Capital employed $236bn and a feeble 6% ROCE in 2019. $31bn […]

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9:15 AM

Mega-Theme: Standard Oil vs Big Tech

Client email: Paul, a question to you as a student of history. My recollection is that Rockefeller got even richer when US government broke up his monopoly? Copying my tech colleague who may be pondering what happens if US government attempts to break up their monopolies… Sankey: From recollection the quick answer is yes, the sum of the parts was greater than the whole. I’ll check now but it certainly happened at a time of […]

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8:48 AM

Tesla vs ExxonMobil Porcupine Battle I

Looking at the future of US gasoline demand, I got sucked into the history of Tesla’s SEC filings essentially with a view to replicating my notorious chart of ExxonMobil’s volumes since 2000, vs their annual analyst meeting target for volumes. The dreaded porcupine chart, which has no more inappropriate quill than the last, which was repeated at the March 2020 analyst meeting at peak COVID in NYC. ExxonMobil’s volumes vs their analyst meeting targets As […]

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10:25 AM

Sunday Sankey 10/4/20

Obviously, the week ahead will be dominated by the twin horsemen of COVID and bailout. We are making history. In this note, XOM is now worth less than Jeff Bezos, even after his divorce. Nextera has become the largest energy stock in the US. We also show XOM compared to Big Tobacco, to show this is not all ESG. The oil market looks rough, as we had warned all summer, it would be post Labor […]

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11:24 AM

Friday Air Sankey

Well indeed, there are a lot of jokes out there this morning… you can say the news has gone viral. However, given our self-imposed standards of taste and decency, we will limit the news jokes to non-Presidential. If you’re driving a stolen Tesla… Would it be called an Edison? Mark Zuckerberg is in a car accident. Guy : “Let’s exchange personal details” Mark : “You are Scott Thomas, you have 237 friends out of which […]

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10:23 AM

EU sure about that?

With so many long term forecasts being thrown around over the past month on energy demand and emissions, this analyst has been deeply cynical after 30 years of following long term energy modelling. The worst long term forecasts are already wrong when they are made. That is close to being the case currently as companies use a 2018 or 2019 base year, skipping the little matter of 2020, which has seen, for example, an enormous […]

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8:29 AM

Total Podium End Quarter

It was an especial pleasure to see a leader speaking at a podium with a TOTAL command of the current complex situation, with a complete grasp of facts and figures, a near-term and long-term vision that is both pragmatic and exciting. The fact that the entire presentation was delivered with charm and wit in the speaker’s second language, made it all-the-more impressive. I am of course speaking of TOTAL’s CEO Patrick Patrick Pouyanné , at the […]

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5:45 PM

Propane Sankey

Yet another bull point on propane. The Morning Sankey goes down the rabbit hole. New York City has made outdoor dining permanent, and the City has lifted the post-911 ban on propane canisters in Manhattan (welders were excepted). With indoor dining limited to 25% capacity, operating restaurants are dependent on outdoor dining, and there has been a scramble to buy propane heaters. My neighbour manages three restaurants and said he was about to buy 15 […]

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10:02 AM

Morning Renaissance

Good news for the industry. Rationalisation. Where does it leave Cimarex and Marathon? We first outlined our “Renaissance of US E&P” thesis in 2017, arguing that the problem with US oil stocks was not the industrial opportunity, led by the greatest oil field in the world – the Permian, securely located in Texas adjacent to the world’s largest refining center. The problem at the time it was not the oil price, which was $50/bbl and […]

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8:41 AM

Sunday Sankey 9/27/20

Back in the day, the Sunday Sankey had to go through a Big Bank approval process, and that effectively met the deadline for submission was Friday evening at 6pm. There was always a concern that something big would happen after 6pm on Friday and before the automatic release at 10am Sunday. On the Friday of the first Sunday Sankey in May 2016, we put the thing to bed, went home, and the newswires flashed “Saudi […]

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11:57 AM

Morning Titanic Sankey

Three analyst meetings in two weeks: BP, Apple, Tesla. Confirmed by Tesla Battery Day: the Big Oils need to pursue a strategy of “orderly liquidation” in line with our “Renaissance of US E&P” thesis. Cut capex, reduce growth, return cash to shareholders. Orderly liquidation. Shrink to grow value. We are advising a refiner to go private, we have been for years, arguably we have been for all refiners. No growth capex, buy back stock until […]

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9:17 AM

Sunday Sankey 9/20/20

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 […]

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11:37 AM

Morning Sankey Wainscott

The US government Bureau of Ocean Energy Management (BOEM) has projected that some 2,000 offshore wind turbines will generate 22GW of power by 2030 for the US. Its hardly surprising that BP has bought into this spectacular growth, which fits right into their low carbon shift in the 2030 timeframe. Reminder, in a September 10th press release, BP announced it would pay $1.1bn for a 50% stake in Equinor’s 2 GW Empire Wind, located off […]

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8:25 AM

Morning WKHS Sankey

Spoke to a top Portfolio Manager yesterday who summed it up, “Why buy a company with a dubious track record, in transition, and that could be Shell as much as BP? Service is dead – have you seen BP and Shell’s deepwater plans? They cancelled. E&P looks bad with the current oil market, look at EOG re-valuing to be in line with the group; we only get strong oil balances by end 2021. Refining margins […]

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9:19 AM

Morning Sankey 9/14/20

Start your engines, or rather, share your computers as part of our future, for the longest analyst meeting in history starting this morning at 8:30am Eastern Time, as BP commences “BP Week.” We have five hours today, followed by three hours each on Tuesday and Wednesday. To kick things off, BP has released its World Energy Outlook. One of these outcomes fits our world view for energy to 2050. Can you guess which one it […]

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7:54 AM

Sunday Sankey 9/13/20

“One thing I know for sure, In the battle between humans and the environment, the environment will win.” This has been one of my standard lines for more than a decade. It sits alongside “environmentalism is a luxury” in terms of the parameters for considering the subject of alternative energy. Another an old line: “the only barrier of entry to being an oil analyst is units.” In this edition of the Sunday Sankey we lay […]

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10:50 AM

Afternoon Sankey

There is a conspiracy theory, totally unsubstantiated, that Nikola Tesla was in New York the day the Hindenburg airship crashed in 1937, and that had been asked to use an ion gun to bring down the airship and preserve the US helium monopoly, while denigrating flammable hydrogen, that the Hindenburg was forced to use, owing to the US monopoly. This of course is a wild, somewhat meaningless and certainly unsubstantiated conspiracy theory, but it fits […]

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2:19 PM

Synthetic XOM

A client pointed out that DOW stock has been on a bit of a tear recently, while XOM cannot catch a bid. This is a reasonable point, and the same could be said of Phillips 66 PSX, which has also been languishing, despite its chemicals exposure. That stock shrugged off a bad 2019 for chemicals margins, which then got truly abysmal with COVID. Subsequently controversy/risk around the Dakota Access Pipeline has ailed PSX, with the […]

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6:39 PM

Sunday Sankey 8/30/20

Good day, welcome to the week of summer shut down on Wall Street, The usual variety of great slides in the  Sunday Sankey this week, and an entreaty to “play the game” this week of taking vacation. If we all do it, we can overcome. The personal story is a lot longer this week, because as regular clients will remember, “the only person who talks more than me, is my mother.” After I noted that […]

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11:36 AM

Morning Sankey 8/28/20

A photographer was killed in a freak accident today. When trying to take a group photo, a giant wheel of cheddar rolled down behind him and crushed him. Witnesses said people did try to warn him. Sherlock Holmes was reading when Watson came in looking confused. “I say Holmes! Why have you painted our front door bright yellow?” “Lemon entry, my dear Watson,” “Knock knock” ‘Get a warrant’ A couple of thoughts to end the […]

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9:14 AM

Where is oil as Laura hits? Morning Sankey 8/27/20

Corporate newsflow remains quiet, with the market awaiting more details on the historic announcement from BP on its climate change plans, due September 14th-16th. Several major US oil investors consider this BP move a 100-year strategy shift for big oil. Notably the stunning -40% oil and gas production reduction, as a strategy pillar. US investors remain cynical, the most negative seeing the announcement as a smokescreen for the dividend cut. Elsewhere re-injection issues for ExxonMobil/Hess […]

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8:35 AM

Sunday Sankey 8/23/20

This week we can hardly avoid the elevated market levels, the all-time record of growth over value, and the general unease on Wall Street at the nature of current markets. I had the privilege and pleasure of chatting to a favourite client and senior world-famous investor yesterday, quarantined as he is in the Hamptons, and he said in his long career he has never seen anything like this, but that you have to assume that […]

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12:14 PM

ESG Monster Problems: Gorgon and Three Gorges

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 […]

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9:39 AM

Morning COVID Crimes 8/20/20

The demand recovery is flopping around. Our contention is that we modelled COVID really well, by using the Diamond Princess model (published still on my Linkedin in March and now clipping 14.000 views), but we should have realised that in an election year, the Democrats would be incentivised to make COVID run into the election, and by the same token Republicans would be furiously trying to deny COVID is a big deal. Yesterday in NYC […]

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7:35 AM

Sunday Sankey 8/16/20

With several “suburban stocks” reporting next week, Home Depot, Walmart, Lowes, Target, this week our “New 1950s” theme gets a run, with additional slides on derivatives such as lumber and copper. Notably lumber prices are skyrocketing, and we once again highlight that wood produces more electricity than wind in the US, and that wood with biomass is the largest part of of US “renewable” electricty generation (see slides within). Continue reading

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9:57 AM

The Net Debt Free Cash Acid Test

Good thing that Oxy reporting tonight “exceeded guidance and continued to deliver operational excellence” otherwise they might have reported an even more epically abysmal result. Even with the aforementioned exceeding and excelling, the company reported a net loss attributable to shareholders for Q2 2020 of $8.4bn, or $9.12/share. Excluding writedowns (why? they happen on a recurring basis), the adjusted loss was $1.6bn, or $1.76 per diluted share. Anyway, with Oxy having reported, Sankey Research can […]

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8:18 AM

Sunday Sankey 8/9/20

In this week’s edition of the Sunday Sankey we bring you the mega-bear argument for tech (it’s a commodity business), comments on BP’s remarkable transition which coincided with continuing remarkable transition among US E&Ps – mostly. Tomorrow Oxy reports and there is a group that is now in the debt service zombie mode, which will fight to maintain production levels… to pay debt service. But on the positive side, PXD Pioneer took leadership on what Cimarex tagged “Shale 3.0”, see within. We were critical of EOG in this regard in a note published yesterday and linked within. Great stuff on China from Oilx, our favourite oil intelligence consultancy/data provider, and Saudi Arabia cuts production… in Iraq… in Iran? Amazing. Continue reading

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9:51 AM

EOG: tomorrow never comes

The tone of EOG’s management on their Q2 earnings call came across all wrong, as did several of the strategic statements. CEO Bill Thomas opened with language such as “delivering more oil” “significant free cashflow in the quarter” ($200m on a $40bn stock) “exceeded expectations”; “rose to the challenge”; “testament to return focus culture”; “premium returns”; “most excited”; “increasing production”. Towards the end of the opening we got: “Our goal each year is to spend […]

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2:16 PM

Morning Sankey 8/6/20

Yesterday ExxonMobil slipped a 20% reserves writedown warning into the 10Q. Didn’t mention it on the earnings call last Friday. Were they assuming nobody reads a 10Q? It was almost as bad as Oxy re-raising executive pay in an 8K last Friday evening after the market closed after a long week of earnings. Continue reading

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8:57 AM

Morning Sankey 8/5/20

Q2 2020 will be remembered as a hugely historic quarter for the oil sector, not because it was massively bearish, with record losses, but because it was massively bullish. Particularly for the oil equities at historic lows. Mark my words. Continue reading

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8:40 AM

Morning BP wow

BP sensationally announced further details of a major strategy shift this morning. The company has absolutely committed to the energy transition, certainly relative to the other big oils, above all relatively to the US big oils. Reminder: Aramco has the lowest carbon intensity per barrel produced by far of any major oil producers. Note: ExxonMobil just committed to no new debt and sustained dividend, where by extension if oil prices do not rise, they will […]

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7:45 AM

Morning Speedway

Huge deal from XOM on Friday, committing to no more debt and paying its dividend. The revelation that the company is 70% retail owned was an update to a number we have spoken about many times, that XOM was 50% retail held. Our number was stale! The imperative to pay dividend is clear, the commitment highly meaningful. Arguably XOM may now need to liquidate to pay dividend, which is actually what the market wants. We […]

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8:55 AM

Sunday Sankey 8/2/20

Our usual round up of the continuing power of growth stocks over value stocks, concerns about the US$, the fact that the oil market is weakening again, watching hurricane season into seasonal slowdown. We cover XOM, CVX, refining, markets, “The New 1950s” and much more besides within! Continue reading

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10:21 AM

Morning Sankey 7/31/20

If you ever wanted a sense of what it would be like to have your house in foreclosure, and have the neighbour tell you in passing they are moving permanently to a $200m yacht, yesterday was that day for oil analysts. Oil specialists’ darling ConocoPhillips surprised the market with its sales… and so did Apple, Amazon, and Facebook. Continue reading

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7:20 AM
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