Recent Posts

Sunday Sankey 1/16/22

Well, I’m in one of those mindsets where every headline I read my reaction is “Bullish oil.” Iraq Oil report carries a much higher oil production number for Iraq than other sources. My reaction: “Bullish.” Libya struggles, my reaction: “Bullish.” These two elements are theoretically in opposition, but on the one hand, variable Libya performance is ongoing, on the other, the lack of spare capacity in oil markets is clearly driving prices and if Iraq […]

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2:07 PM

Mice & Men

Has Covid-19 forced you to wear glasses and a mask at the same time? You may be entitled to condensation. Vin Diesel only eats two meals a day to keep in shape for making movies: Breakfast and breakfurious A genie granted me one wish, so I said “I just want to be happy.” Now I’m living in a cottage with 6 dwarves and working in a mine. Robert Burns: “The best-laid schemes o’ mice an’ […]

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9:37 AM

We like them all

Make a good call, they always play out really fast and leave you wondering what’s next. We left last year predicting a bad January but a good year for markets, and a good year for oils. Markets have been quite the ride, notably yesterday the NASDAQ was crazy, while the oils have been good. In our cross plot of performance shown below, it is clear that some 2021 laggards are ripping this year, notably refining. […]

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9:38 AM

Looking for Kilos

Yesterday I took on re-modelling the oil market according to the new world order: OPEC+. But I also spoke to a top hedge fund portfolio manager, US mega-player, who is based in Singapore for a couple of months. He made the following points: Strong Singapore economy with staff shortages – he waited an hour for a coffee the other day China cutting back on energy intensity. Brain drain from Hong Kong. Massive capex cycle starting […]

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3:31 PM

Russia: the tyranny of the week

I got up thinking about a quick look at Russia for the Morning Note; ALMATY, Jan 6 (Reuters) – Fresh violence erupted in Kazakhstan’s main city on Thursday after Russia rushed in paratroopers to put down a countrywide uprising in one of Moscow’s closest former Soviet allies. Police in the main city Almaty said they had killed dozens of rioters overnight into the early hours of Thursday morning. The authorities said at least 18 members […]

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7:07 PM

Sunday 2022

Happy New Year! Dan Loeb was complaining on Twitter that we hardly got any time off here: “Even prize fighters get 6 months off between fights, NFL players a week. Only 2 days off between years makes me want to join a union”. He was also welcoming New York’s new mayor; I am completely with Dan on both these matters. By the same token it feels as if neither of us will be joining Gettr.com […]

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8:48 PM

Sunday Boxing

Happy Boxing Day, The name Boxing Day being for boxes given to servants for their big day off: 26th December. My servants are all off, so here I am. So; we start the year with Refining conference, we continue to watch Washington which has to get some legislation done; it may not, as the split in the Democrat Party might almost be terminal. The Progressive vs Moderate split goes to the heart of the current […]

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1:43 PM

Morning Libya, Ecuador, and Oil Shock

A couple of stories over the past week have highlighted the precarious nature of global oil supply Outage in Libya 300kb/d Force majeure declared in Ecuador, cutting exports by at least 200kb/d Upstream Online 20th December 2021 Production from four Libyan oilfields has been shut in, causing NOC, the state oil company, to declare force majeure on crude exports from two ports the Zawia and Mellitah terminals. NOC said in a statement on Monday that […]

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8:34 AM

Sunday Sankey-Laffer

Not talking about COVID, just to say I am feeling 100% fine. This Omicron will hopefully be the largest and fast mass vaccination programme in history, whether by God or Government. Nice chart this morning from Greg Wachsteter, who kindly said I could publish. No more comment on COVID, I think the conclusion here is pretty obvious; this chart is therefore bullish S&P Energy. Sankey-Laffer curves. The presentation attached today, made me think what a […]

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3:52 PM

Sunday Catch-up

It was a long trip to Texas, and it is good to be back in Brooklyn; this note is a short reminder to myself where markets are, having been running around. For example my time on Wall Street this past week, was Wall Street, Midland. What a comeback for oil last week, since the brutal air drop after Thanksgiving. We need to establish a level here, most would consider that the oil equity group is […]

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5:04 PM

OPEC Happy Hour? Yikes!

OPEC tomorrow: Joint Ministerial Monitoring Committee (JMMC) 7am ET; OPEC+ meeting 8am ET Woah it seems the chat from OPEC is they may just stick with the plan. That is, there is potential for an INCREASE in line with the 2021 plan tomorrow. This in spite of Joint Technical Committee (JTC) showing a massive excess of oil in Q1: LONDON, Dec 1 (Reuters) – OPEC+ sees the oil surplus worsening to 2 mbpd in January, […]

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7:15 PM

Morning Petrobras

ExxonMobil confirms capex of $20-$25 billion per year through 2027. Spending $16bn in 2021e. ExxonMobil Q&A Analyst call at 10:30am ET Petrobras analyst day barely registers with Wall Street. Production expected to FALL in 2022 vs 2021 Production of 2218kb/d liquids is a hair lower than 2235kb/d in 2021e Everything looks great at Petrobras as a company, great resource, major Non-OPEC player, the weak Real is a positive for the company with Real costs and […]

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8:46 AM

Me and The Big Unit; XOM History

Busted flat in Baton Rouge, waiting for a train… ExxonMobil has called a historic snap analyst meeting for this Wednesday 1st December. The first meeting under a new, externally appointed, CFO, former Diageo executive, Kathryn Mikells. She is now in charge of finance, strategy, communication, and investor relations (IR). Kathy already refreshed her first earnings call, Q3 2021, interjecting, freely commenting, communicating; the company also gave clear guidance over what to expect from this update […]

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11:01 PM

Letter from the Front Line 11/28

Very tricky to call, indeed! OPEC/Saudi surely will act if markets don’t bounce – my Middle East Intelligence says Saudi is worried about the price but wants to see the market follow through Monday. Fascinating real-time week coming up, we think there might be a unilateral cut by Saudi if the market continues to collapse. But for OPEC to do a cut, is extremely complicated. The easy out, given they have to do something unless […]

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4:36 PM

Sunday Bets

Presentation today, and commentary below: Thursday evening annoucement: major sellside meeting by ExxonMobil: “updates to their company plan” on Wednesday December 1st. Sellside invited. Virtual. Big deal for ExxonMobil. We had pondered how ExxonMobil would manage their annual capex announcement, due in December, vs their traditional strategy update due next March. We pondered if plans would be ready in time for a December update, given the scale of board and management change that has occurred […]

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3:55 PM

Saturday Stories: Shell at the St Regis

Continuing our Saturday history series, a single story about what I learned at the St Regis hotel in January 2004: Bad corporate newsflow comes in waves Good management get on great with their employees Don’t be emotional in business; this is the big leagues In 2004 I found myself at the St Regis Hotel, the classic Big Oil event venue in Midtown Manhattan at Park Avenue and 51st, at a major Shell event. I was […]

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2:30 PM

Morning Bundesnetzagentur 11/16/21

BREAKING Major European gas news, Germany regulator suspends approval of Nordstream 2. Bullish news on Shell Corning glance on high glass prices BREAKING Watchers.News: Natural gas prices in Europe soared again on Tuesday, November 16, 2021, as the German Federal Network Agency — Bundesnetzagentur — suspended the process of certifying the new Russian gas pipeline called Nord Stream 2. The pipeline was completed in September 2021 and is designed to bypass Ukraine and connect Russia […]

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8:57 AM

Sunday Sankey 11/14/21

Good day, Pretty mixed, at best, Q4 so far for oil & gas and “old energy”; but thrilled to see our new energy plays,  Li-Cycle and Embark trucks, catching a bid. Oil & Gas are clinging on to our 2021 market leadership. More of that in the attached presentation. Also in the ppt, I ran a whole load of valuation tables, and performance tables. Beautiful day here, although darkness has fallen as I am late […]

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5:25 PM

Saturday Chevron

Saturday: there’s an unrelenting element to being a stock analyst. “You are only as good as your last note.” The need to constantly publish is relentless. With that in mind, it has been my intention to write an oil book. Something that can sit on a shelf. One of my favourite oil books is Anthony Sampson’s “The Seven Sisters”, which provides a brilliant, and concise, history of the seven major oil companies that formed the […]

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8:07 PM

Friday Sankey 11/12/21

Just spent £100 on a belt that doesn’t fit. Huge Waist. The misuse of the word literally drives me figuratively insane. The sky was looking ominous so I asked Siri, “Surely, it’s not going to rain today?” She replied, “Yes it is, and don’t call me Shirley.” That was when I realized I’d left my phone on Airplane mode. Major geopolitical tension continues in Europe against the backdrop of natgas prices trading at $25/mmbtu before […]

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8:54 AM

Friday Sankey 11/5/21

Ezra’s first quarter as EOG CEO and he lofts it out of the park – massive increase in regular dividend, big special, buyback, he is in NYC next week, take a victory lap Pioneer wanes yesterday after weak buyback guidance Apache on fire We like Denbury on CO2 negative oil, and encourage Oxy carbon ventures Sunrun – we expected either a crashing miss or wild beat and massive stock reaction; we got neutral Delek beats; […]

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8:35 AM

Sunday Sankey 10/31/21

Jolly Halloween, Halloween is one of America’s greatest stealth exports. Now huge in UK, for example. In today’s presentation – Suncor strong Q4 to date in big catch up trade; oils outperform during inflation per Fidelity; growth won the past couple of weeks over value, even after Amazon and Apple missed; Big Oils have the highest free cashflow yields and dividend yields of the S&P500 Titans – by far; massive week of oil earnings ahead, […]

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3:03 PM

Morning Sankey 10/29/21

Last night on Happy Hour I was complaining that my calls are stone-cold right now, and sure enough, the theory that Chevron would have a messy quarter just got blown out of the water. Actually, I will take it, because my thesis all year has been long oils / short Big Tech, and these past two weeks, with feeble earnings from Oil Service, Kinder, Range Resources, EQT, badly received results from Hess (raising capex for […]

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9:45 AM

Morning Sankey 10/28/21

Bearish DOE and dodgy Q3 oil results, with a Shell miss and disaster at EQT, not helping the sector Horrendous results from EQT as expected – increases quarterly loss from 2020 Q3, to $1.98bn? Abysmal… AR re-iterating the client bull’s $35/share target Shell miss might mean bad news for XOM tomorrow, but results are irrelevant: a Shell rant Note Big Oil CEOs in DC today for a roast. One suggestion to the executives: if they […]

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9:21 AM

Sunday Sankey 10/24/21

Huge week for earnings on deck this week, just about 50% of the market cap of the S&P500 reports,  and to celebrate, the traditional Sunday Sankey is back with a full presentation attached. Sample slide: Bloomberg lists Kuwait’s oil production capacity as 3.08mb/d. In the slide shown in the Sunday Sankey presentation today from the authoritative MEES, Kuwait’s production capacity has dropped by more than 500,000 b/d over the past three years to just 2.63mn […]

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2:29 PM

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
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