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

Xi-unday Sankey 9/12/21

In this note, natgas hedging exposure (oops) and a China focus. My S&P500 sentiment Twitter survey yielded a result that is spectacularly unhelpful, lol. Pretty much 50:50 bullish/bearish. All I can say is that it seems I got the categories right, given an almost exact balance between the four choices. One observation made by a major market maker to me this past Friday was that the market absorbed a ton of paper last week, between […]

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12:25 PM

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

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

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

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 4/23/21

Well, it’s feedback Friday! The age-old client meeting line gets used again: Client Q: “Paul, what is the most common question that clients are asking right now?” Paul A: “What is the most common question that clients are asking you right now?” True joke, but being Friday, we are not done – here they are: Newsflash: US customs have intercepted $2m of lumber being smuggled in shipments of cocaine What do you call an anti-vax […]

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9:12 AM

Morning Methane Limits

DC chat today, it’s Friday! Travelling to Atlanta via Washington and Durham today with son Max. I accidentally sprayed my son’s deodorant into my mouth this morning. Now when I talk I have this weird Axe scent. If you lose one of your senses, your other senses are heightened. That’s why people with no sense of humour have a heightened sense of self-importance. I told my wife I was making a bicycle out of spaghetti. […]

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7:12 AM

Sunday Sankey 1/17/21

Trying to get up this morning, I was pondering whether the US military could split and part go renegade. However we continue to believe the US constitution will prevail. Rather a negative start to the day, but I moved on to put together the Sunday Sankey for you, with energy, be it alternative, or regular oil and gas, starting the year very well. We continue to be obsessive about the US$ impact on oil prices, […]

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12:06 PM

Sunday Sankey 12/20/20

Special Sunday Sankey featuring the legendary oil’s share of the S&P500 vs oil’s share of the S&P500 earnings charts! Sadly, it was not worth running them all year, given the horrendous earnings of the sector in what will be the worst year in the history of oil relative to expectations. Now, as we look directly into 2021, the charts are beginning to make sense. More inside this note but a couple of starters for you, […]

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11:09 AM

Morning CEOs

Today: how many CEOs per barrel? The calculation was triggered by BP results this morning, which underline our description that the oil market has settled at an equilibrium of “exquisite pain” – sustaining almost exactly $40/bbl since the beginning of Q3 (Brent broke $40/bbl for the first time post-COVID on 5th June and has hugged the price ever since). This is the planning assumption that we believe oils have to assume as their base case. […]

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9:10 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

Halliburton beats expectations with a $1.7bn loss

Halliburton’s CEO Jeffrey Miller guided this year to be not a “V” nor “W” but an “L”. While there are “green shoots” of recovery, these are not “meaningful”, and full year guidance is below the eye-watering sequential declines seen Q1 to Q2, with full year revenues expected to be 50% down for 2020 over 2019 in North America. International decline expectations are mid-teens, with the year ending with “usual seasonal deceleration”. Given we expect another […]

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10:03 PM
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