Recent Posts

US E&P Q3: The Power to Set Oil Prices

Key points: Clients are focused on OPEC spare capacity and demand growth, but also, rightly, North American supply growth, which is the most price elastic component of global oil supply. Halliburton results yesterday naturally raise questions over US production growth; the company stated that it sees 20% rise next year in North American revenues, which includes “solid pricing gains”. This would imply Halliburton expects US E&P capex to be ~10% higher next year; not a […]

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3:07 PM

Friday Sankey 10/15/21

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 […]

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9:37 AM

Morning Putin & Antero 10/14/21

Tonight: Gordon Shearer, world LNG expert, on Happy Hour 5pm ET. Email me for link paul@sankeyresearch.com 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 […]

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9:37 AM

Brooklyn Sankey 10/12/21

Good Morning, Finally back in Brooklyn after some 6 weeks getting my mother set up with full-time 24/7 care. Quite how we managed it, is a complex question, but essentially for free, the UK National Health Service now provides round-the-clock in-home care. Finally achieving that, freed me up to get back to my real desk in Brooklyn, here I am. Main point today is to note Happy Hour this week at 5pm Thursday has Gordon […]

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10:02 AM

Sunday Sankey 10/10/21

We are moving into earnings season, with financials reporting this week, starting with JPM and BlackRock on Wednesday, rounded out Friday by Goldman Sachs. These are dynamic times in global geopolitics. This month, as oils report earnings, we finish the month with: G20 30th October in Rome, we noted to watch Xi-Biden, but Xi continues to stay home Right after, 1st November the climate summit COP26 takes place in Glasgow. We are in a new […]

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12:49 PM

The City Sankey 10/7/21

Marketing in The City – Denbury highlighted by Europe Being long (client) and short (Pioneer $PXD) European natural gas Europeans worried as always about US E&Ps growing – EOG seen as likely to ramp A note on re-repricing options with special dividends Shell profit winning & warning – but no unknown unknowns HAPPY HOUR TONIGHT WITH KATHLEEN KELLEY – OPEC EXPERT. 5PM Eastern. Marketing in The City of London yesterday, I sat down to lunch […]

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8:53 AM

Friday $UAN 10/1/21

Key points: ExxonMobil increased profit guidance As predicted by my BBG TV “it’s a global energy crisis” rant: Chinese government to energy companies: “buy all the energy you can” – link below Positive feedback from “influencer” investors on Embark autonomous trucks $NGAB Small-cap MLP? UAN is a fertilizer producer that uses petcoke feedstock advantage; just the ticket for this macro-environment; almost no coverage on Wall Street. It’s Friday, and in Sankey Research world that means […]

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8:50 AM

Morning Sankey 9/30/21

Key points: CHK new CEO EQT issues stock & hedging status Enbridge Line 3 starts tomorrow delivering oil, good for Canadian oils Emissions intensity of global oil producers Quote of the day: “I just know the the more control there is, the less growth there is. The great lesson of the twentieth century is that central planning doesn’t work” – Rick Warren (Drucker-Warren Dialogue, 2003) after @buckquivas on Twitter Chesapeake raises Domenic “Nick” Dell’Osso Jr […]

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8:30 AM

Morning Wind 9/29/21

Well, your (temporarily) London-based correspondent on the front line of the global energy crisis can report… it’s windy in the UK! Hosting meetings with Embark autonomous trucks tomorrow, RSVP, very interesting, featuring 25-year-old CEO Alex Rodrigues and CFO Richard Hawwa. Two impressive young executives. Join my group meeting if you are shy. Please click this link to submit interest     You in London? I am marketing notably will be in The City next Wednesday 6th […]

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8:21 AM

Parakeet Sankey 9/26/21

Jolly Sunday to you, Global energy crisis: Having written at length about this eight days ago in the note “Germany & UK vs the USA”, all week I have been reading about the global energy crisis led by the UK and Germany. Everyone makes the same points, last year cold global winter leading to low natgas storage, lack of wind in Europe, nuclear shutdowns, Asia squeeze, Russia squeeze etc. The one I talked about in […]

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2:20 PM

Sunday Sankey 9/19/21

Quick Sunday Sankey today. If you want to read more, yesterday there was a long email on Europe vs US energy transition dynamics with a focus on two leaders: UK and Germany. Emailed yesterday on the web at www.sankeyresearch.com It has occurred to me that we may just enter a long, grinding, bear market, as stretched valuations and lack of new marginal buyers slowly erode the market. I mean like a 1970s multi-year market deflation. […]

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1:43 PM

Germany & Britain vs the USA

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 […]

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10:10 AM

London Sankey 9/5/21

Enjoy the last weekend of summer, beautiful day here in London, readying ourselves for next week with a slew of oil corporate oil & energy newsflow in “conference season” starting with this week’s traditional “Lehman Conference”, as we oil old schoolers know it. For my entire career, the Lehman conference has occupied the oil/energy week after Labor Day. Post-Labor Day, for me, as a research analyst, opens the Wall Street year, back when it culminated […]

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12:08 PM

Rouge Deluxe

August is upon us, with results effectively over, I am back in Brooklyn having dropped Harry for pre-season college soccer in Boston, trip review from a gasoline perspective closes this note. Speaking on sons and August, yesterday Max, who is yet to go back to college in Atlanta, was on CNBC. That is him ludicrously stationed in shot in the background of my Fast Money segment, pretending to work. You can see the clip here. […]

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10:43 AM

Sunday Sankey 8/8/21

The US has negative unemployment, by one measure. The confirmation of that on Friday led to an interesting market reaction. The data point on negative unemployment released before the market was that there are 8.6 million people considered out of work in the US and nearly 10 million job openings. This could be a moot point in the EU where movement of labour is much more challenged by language and culture, but in the US, […]

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11:47 AM

Sugar Magnolia 8/6/21

Friday, jokes: Breaking news: Robinhood halts trading in Robinhood. Trevor Milton’s career is rolling downhill. How do you make a bomb out of an apple? Puncture the battery. What do ducks say in Mexico? Guac. My son started dating a girl who plays soccer. He says she’s a keeper. Brian Sullivan does a great job on CNBC and is probably the best TV anchor on oil. Alix Steel on Bloomberg is also great. I first […]

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12:13 PM

Where did it all go wrong?

With EOG rounding out oils’ earning season after the market yesterday, we had the final disappointment as oil prices test downside support levels breaking $70/bbl (Brent, WTI already broke into the upper $60s.) Expectations of an excess cash return special or splashy buyback announcement by EOG were dashed. Nothing. Just good free cashflow in a $70/bbl+ tape and the promise to pay down more debt by 2023. This is not the first disappointing Q2 earnings, […]

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8:52 AM

Rocket Science & Rocket Surgery 8/4/21

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 […]

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9:35 AM

You’re busy let’s keep this brief

Just as your correspondent was pondering the upside surprises in capital discipline and cash return to shareholders from “4P” premium Permian pure-plays Pioneer ($PXD) and Diamondback ($FANG) announced yesterday evening, and waiting for a similar positive result from ConocoPhillips, than my friends at HollyFrontier announce a $1.8bn deal to marry perennial bridesmaid Sinclair Oil, the MidCon refiner that started life in 1916 and has been private since 1976. HollyFrontier is on a roll, completely counter-cyclically […]

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8:38 AM

Sunday Sankey 8/1/21

We found ourselves standing on the North Slope, Alaska, above the Arctic Circle, surveying the endless flat tundra. There there is no sunlight from October to early March; total darkness over half the year. For the rest of the year, the sun does not go down – no darkness. That place, my friend, is Far North. The nearest city is Anchorage, 1,000 miles south, itself as distant as Perth Australia; palpably remote; strange and distant […]

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1:25 PM

Friday Evening Sankey 7/30/21

SAVE the DATE: Sankey/Jan Stuart summit, Vienna, December 2021 OPEC meeting. Likely December 2nd.  World Petroleum Conference in Houston December 5th – 9th forces their hand to an early in-person Vienna meeting early December. I plan on attending both, and Jan and I will host a “thought leadership” drinks party in Vienna on the eve of the meeting. Join please! Save the date. 2nd Spoke to a big player who trades Utilities, and he said […]

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9:06 PM

Morning Sankey 7/29/21

When we wrote The Renaissance Thesis of US E&P in 2017, we argued that oil companies had to stop pursuing growth, reduce capex, increase returns and free cashflow and stop hedging. We also highlighted that management pay relative to performance was an insult to shareholders (those shareholders that remain). The anti-hedging argument was originally made successfully to the refiners. In fact, the overall thesis on E&P was based on success earlier in the decade, changing […]

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9:29 AM

Sunday Sankey 7/25/21

Greetings, It is all about the presentation this week; please click on the attached file for a look at what is in store for the week ahead – earnings; OPEC chat; what to buy when US natgas prices hit $4/mmbtu, which they did this past week; factor performance disconnection; and our only solution since we wrote The Renaissance Thesis of US E&P in 2017, namely hard cash return to shareholders. These oils have to bribe […]

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12:39 PM

Friday Sankey 7/23/21

The “Why we prefer buybacks” note yesterday got a lot of feedback. There was some comment that it had no conclusion, to which my response was 1) it should have been titled Part 1 because this will be a continued theme for us through earnings and beyond because 2) my old line “you don’t buy cheap stocks and sell expensive ones, you buy good management” is the key. The chart on Sankey Stars would indicate […]

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9:12 AM

Why we favour oil buybacks (at this time)

Thesis: there is little differentiation in the market between the merits of individual big oils; factor investing (ie thematic baskets) has rewarded the most levered oil companies, given the surge in oil prices from historic lows. There is a major opportunity with an immediate catalyst of Q2 2021 results for differentiation among oils in terms of the strength of their earnings at $70/bbl Brent (with weak refining). There are two types of leverage, operational and […]

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10:06 AM

Market to Government: “FEED ME SEYMOUR”

In the valuation Little Shop of Horrors environment we live, the monstrous plant of the market needs the government to feed it constantly. It was pointed out yesterday with me in conversation on this government-driven environment, that the recent rollover in value vs growth indexes occurred right when The Parliamentarian – the voice of the Senate – declared a claim by Chuck Schumer that an obscure procedure to allow a second reconciliation to pass an […]

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9:06 AM

Viernes Sankey 7/9/21

It was the optimum Happy Hour last night, with two expert witnesses, Kathleen Kelley and Jan Stuart, both highly tenured oil market experts, and a mix of long-only and long-short investors, mutual fund and hedge fund. We were also spread across the globe from Amsterdam to Mexico, with Kathleen struggling in a New York flash flood situation that resulted in a viral video of a lady wading into waist deep water to the NYC Subway. […]

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12:03 PM

Manana Sankey 7/6/21

Reading back on my Sunday note, I did a horrible job of highlighting the link to the “Oils share of the S&P500 earnings vs oil’s share of the S&P500” presentation that was attached. One key highlight was to buy Pioneer and EOG and to be negative on Oxy. The non-consensus call was bullish Apache. We were also cautious refiners. Here is the note which is a short presentation of all the charts. This is a […]

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9:57 AM

Sunday Sankey 7/4/21

Happy July 4th Here’s to democracy and freedom. Usually, I make some dumb joke about being British and not celebrating any Independence on July 4th, but this weekend marks the first anniversary of Sankey Research. My first note, quoting Public Enemy as a statement on freedom of speech, was sent out the Friday of July 4th weekend 2020, and for long as it may continue, the anniversary of Sankey Research will be Independence Day weekend. […]

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12:30 PM

Morning Sankey 7/1/21

 Having heartily joked that I have been snowed under all week… with soccer… yesterday was absolutely jammed with newsflow, and this morning we got an answer on our question of whether Saudi wants $80/bbl+ oil. The OPEC meeting story seems to be no July  increase, with the market having lowered expectations to 500kb/d. Great call from Goldman on $80/bbl, which we always agreed with as regards demand. Once again yesterday in the US DOE data […]

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12:04 PM

Morning Sankey 6/30/21

ConocoPhillips is hosting a market update call today at 10am ET, and the press release reads great. I hate to repeat a press release, but this one is so pretty, and concise, it bears highlighting. Increasing anticipated Concho transaction-related synergies and savings to $1 billion annually; Reducing 2021 capital expenditures and adjusted operating cost guidance by $200 million and $100 million, respectively, due to stronger-than-projected business execution; Increasing 2021 planned share repurchases by $1 billion, […]

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9:54 AM

Souki Sankey 6/25/21

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 […]

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1:19 PM

Morning Sankey 6/24/21

Tonight 5pm June 24th on Happy Hour we have Charif Souki, Chairman and co-founder of Tellurian, the integrated Haynesville gas-to Driftwood LNG export project play. Should be a great chat! Register here Charif Souki on Sankey Happy Hour Next week, on Thursday July 1st, please attend the Sankey Research 1st anniversary party in Dumbo, Brooklyn. Email me for details on this informal get-together in one of the great destinations in NYC. Guess who is talking […]

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10:15 AM

Morning Sankey 6/23/21

Tomorrow June 24th on Happy Hour we have Charif Souki, Chairman and co-founder of Tellurian, the integrated Haynesville gas-to Driftwood LNG export project play. Should be a great chat! Souki is one of the select legendary executives to be featured in The Frackers, an entertaining book about the key characters in the US unconventional revolution.  Register here Charif Souki on Sankey Happy Hour Next week, on July 1st, please attend the Sankey Research 1st anniversary […]

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9:03 AM

Friday Sankey 6/18/21

Fun fact: Australia’s biggest export is boomerangs. It’s also their biggest import. What actor could never play Quasimodo? Humpfree Bogart Doctor: Your body ran out of magnesium. Me: 0mg. The urge to sing The Lion Sleeps Tonight is just a whim away. A client writes: Paul! One day doesn’t make a market, but your next letter can’t come soon enough. Is the run in oil done? Dear clients, Key bear triggers were twofold yesterday. First, […]

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8:42 AM

Morning Sankey 6/15/21

At the last in-person Shell analyst meeting at the NYSE, I raced the head of upstream in a life-sized side-by-side Pennzoil NASCAR simulator and then moved on to talk to CEO Ben van Buerden. One key message: sell the Permian. My argument was that Shell would never be recognized as a Permian player, would never get credit, even if they out-performed the industry, and valuations were riding high. Shell should be a mega-project player in […]

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8:46 AM

Sunday Sankey 6/13/21

The note today is delayed by England vs Croatia, thankfully the currently ongoing Austria vs North Macedonia game is not imperative for me to watch.  There are some great slides in today’s presentation. For example on how solar projects do not deliver their IRR, on worrying Indian oil demand, on the global petchem balance by company, and our new mega-theme, of new young CEOs following through on our “Renaissance” theme of US E&Ps. This new […]

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2:22 PM

Morning Sankey 6/10/21

Well, I made it to and from Texas Tuesday/Wednesday, getting back yesterday evening, which was a Board speech and dinner at a famous country club. But the flights were pretty hellish, be warned. My outbound was cancelled, which bounced me to economy, Those tiny first class cabins are 4x over-booked. Newark TSA was typically crammed, it turns out my Global Entry is expired, putting me in the line of people wearing lace-up boots and multiple […]

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9:05 AM

Friday Sankey 6/4/21

I’ve just had my vaccine, but they administered it in my leg. My Pfizer hurting. I got my first shot. I’ll get my second one as soon as I get the bartender’s attention. Why do gay people have parades in June? Because Pride comes before the Fall. What do you call an Englishman at the Euro 2021 soccer final? Referee. Surgeon: “Don’t be nervous Jeff, you should be able to handle this operation easily.” Patient: […]

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8:57 AM

Memorial Monday Sankey 5/31/21

OIL RISK HIGH. We have an OPEC meeting tomorrow, and the word is that Iran is pumping into storage on anticipation of successful negotiations with the Biden administration, which, for reasons I do not fully understand, is very keen to make a nuclear deal. This will allow Iran back into global oil markets. We understand that OPEC is warning Iran not to flood the market, and Iran is saying “we are going to flood the […]

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1:34 PM

Evening XOM – hug a tree

“This is the biggest shareholder vote in ExxonMobil’s history”, says the FT, quoting Paul Sankey. And so it came to pass that the Engine #1 “tree-huggers” got their two – possibly three – board seats; as of today, in the true style of recent dramatic US elections, the final result remains unknown. What is the problem in the digital age with fast voting results? Maybe if all shareholders could vote quickly, digitally, XOM would have […]

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10:11 PM

Morning Sankey 5/26/21

Of course one of the most egregious aspects of Oxy’s deal for Anadarko was that a shareholder vote was deliberately avoided by CEO Vicki Hollub. This doubly bad because a preferred $10bn deal with Warren Buffett was the route taken to get a deal cash-rich enough to avoid a shareholder vote. Activist Carl Icahn took revenge by issuing warrants to all shareholders – but not to preferred Buffett – and effectively capped the Oxy share […]

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9:06 AM

Sunday Sankey 5/23/21

Watching Iran, but 1mb/d of oil exports are already in the market. Huge week ahead for ExxonMobil, with the Shareholder Meeting and board vote on Wednesday this week. We wrote about it on Thursday, see the note on www.sankeyresearch.com or emailed. Noted that Halliburton shareholders rejected the company’s pay proposal last week, which is encouraging. The pay of oil executives relative to shareholder returns has been an abomination for years. Executives should try a few […]

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12:19 PM

Morning Woods & Trees 5/20/21

Happy hour tonight 5pm ET with Uzi Yemin, CEO Delek USA, refining & marketing. Should be great. Journalists are hassling me on the subject of the ExxonMobil shareholder vote, which is next Wednesday. They tell me that the Engine #1 board seat candidates are likely to have some success, with Greg Goff seen as very likely to get on to board. Chairman and CEO likely to be split in due course. Put it this way, […]

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9:04 AM

Sunday Sankey 5/16/21

Good day, The week ended with the guided announcement from Marathon Petroleum that its deal with Seven & i to sell the massive Speedway gasoline retail network had closed for $21bn cash, and upside guidance from Marathon Petroleum on an imminent Dutch Auction for $4bn of stock, within a $10bn open buyback authorization. It was uncertain how much debt would be paid down, but that was announced light at $2.5bn. MPLX, the 63% MPC-owned MLP, […]

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12:59 PM

Friday Sankey 5/14/21

“Darling I think the new clothes drier is shrinking my clothes.” “No honey, that is caused by the fridge.” On the other side: “Does this outfit make me look fat?” “No your fat makes you look fat.” Don’t spell part backwards. It’s a trap. Our tortoise was falling in love, but now he’s only falling apart. There’s nothing I can do, it’s a turtle eclipse of the heart. Yesterday it felt like the market confirmed […]

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8:28 AM

Morning Sankey 5/12/21

*INVITATION * Today * 10am ET * – Happy Coffee with Li-Cycle CEO Ajay Kochhar. Ajay is extremely strong on all things to do with his business, of re-cycling lithium-ion batteries. By extension, he is extremely strong on batteries, EVs, and particularly Li-Ion factories. He is absolutely at ease with battery market dynamics. Join a conversation with Sankey + a few clients. Yesterday the company announced an agreement with Ultium Cells, a joint venture of […]

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9:01 AM

Sunday Sankey 5/9/21

Happy Mother’s Day! $AMTX – this small-cap generated way more response than my more-or-less throwaway comment on Friday ever intended, highlighting of a Twitter post. It was about related party transactions and we said it read poorly. Because it did. Apologies if your Friday was adversely affected, there is certainly hedge fund interest here. We have some strong bulls on the stock, who have done way more work than I have. The CEO is controversial, […]

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12:18 PM

Morning Sankey 5/4/21

As we hoped, oils’ results are going great. The sector is powering higher, with the overall steady outperformance grind that has resumed in value over growth. The oil price for Q2 is tracking well ahead of these results, further boosting the EPS upgrade cycle. Huge result from Suncor; great commentary on cash return from COP, a surprise beat from Marathon Petroleum with major disposal and buyback coming… good results from head-to-head rivals Diamondback and Aramco, […]

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8:41 AM

Sunday Sankey 5/2/21

All presentation today, see attached link, after the Sunny Saturday Sankey published yesterday and emailed to you, outlined the past week. The week ahead is extremely busy with results – you can see my diary in the attached presentation. The monster week of earnings is behind us, with impressive results from FMAGA – Facebook, Microsoft, Amazon, Google, Alphabet. Week ahead also has Secretary of State Blinken travelling to Ukraine. “I can’t tell you that we […]

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12:25 PM
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