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

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

WEO Woah Woe Sankey

One of the cool things about experience in energy that goes back 30 years now, is that long term energy forecasts have come, and gone. Fifteen years ago, I obtained ExxonMobil’s 1980 energy outlook (to 2010), which was fascinating. It correctly predicted $100/bbl oil prices, but unfortunately missed the first move to $10/bbl (1986). CEO Lee Raymond swore never to use an oil price forecast again. At the IEA in the early 1990s, I worked […]

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8:47 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

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

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

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

Mid-Morning Sankey

Tonight, Happy Hour Zoom, contact me for details. It’s 5pm and always fun and interesting, always frankly to my surprise. All welcome to a maximum of eight. In due course this 5pm meeting will feature corporate access guests. Tomorrow 5:20am CNBC with Brian Sullivan. Brian was interested in yesterday’s Morning Sankey which made the Renaissance argument for “orderly liquidation” of major oils. So this week the Dallas Fed published a survey that had me just […]

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10:23 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

Morning Mini Sankey 9/22/20

Today, on Tesla battery day, a quick look at electric car economics. Why are so few electric cars sold? Because they are more expensive. Why when the fuel economics are so over-powering, are so few taxis electric? Because electric cars take too long to fill for taxi drivers. Why does this matter? Because the single largest part of the world oil market is US gasoline. As shown below, the red balloon is North American gasoline, […]

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9:15 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

Let me fly!

The future of global energy, key focus points: Battlegrounds: EU, US, China, India. Reminder: nearly 60% of Chinese and Indian energy still comes from coal. Or, as a refining CEO tells us “China has more coal-fired power plants under construction, than the US has coal-fired power plants”. Noted, US is still 12% coal-fired, vs 9% renewable (total energy balance). In this note, jet fuel demand. Jet is the key to the future of global oil. […]

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9:04 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

Morning Saudi US$ Sankey

There is a glaring omission from McKinsey’s Vision 2030 for Saudi Arabia. It does not mention the Saudi Riyal – Dollar peg, other than in a footnote to indicate that the modelling in the outlook assumes the long-standing $3.75 peg is maintained. We are just wondering if a Biden Presidency would engage Iran, and if Saudi retaliation could take the form of dropping the Riyal-Dollar peg. Our understanding is that while the Saudi Arabian Monetary […]

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9:14 AM

Sunday Sankey 9/6/20

G’day and happy holiday weekend, Middle son Max is studying at Atlanta’s famous college Emory from home, which is deeply unfortunate. I am hoping to have him intern at Sankey Research once I get more organized about office space. Youngest son Harry headed to college at Northeastern in Boston for the first time yesterday, naturally excited, with NY news reporting that 11 Northeastern students had been sent home for having a party in a local […]

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9:50 AM

India vs China; Silk, Opium, and Internet Access

This note started in an effort for the Morning Sankey to explain the current military skirmishes between India and China in the Himalayas. I went down a rabbit hole. It took me on a journey back some 8,000 years, across Empires, continents, religious histories, syncretic philosophies, and to my personal favourite, Bangladesh’s submarine base. Why did it take so long and get to 30 pages? There is a mega-theme behind the confusion of headlines pertaining […]

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7:32 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

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

Oil Guns and God Morning Sankey 8/25/20

My head is spinning this morning from reading the transcript of Donald Trump’s speech last night to the Republican National Convention. It didn’t take too long to realise he was speaking off-the-cuff, there was an opening that went straight to mail-in ballots, and the stream of consciousness continued from there. He looked very tanned and relaxed, a bit hoarse to start. And was referring to notes. But the content was pure stream-of-Donald-consciousness. But first, the […]

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8:48 AM

The new peak oil: Government as God

Two highlights from the Sunday Sankey today. 1) The concept of EU carbon trading as “super-charged OPEC” has been raised in the FT over the weekend, and we highlighted the article in yesterday’s Sunday Sankey. The FT article provocatively titles the EU CO2 market as a “one-way bet for hedge funds” which is sure clickbait. The article almost inadvertently highlights the crazy world of energy we are about to enter, which is “the new peak […]

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8:55 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

Morning Lumber 8/17/20

With our “new 1950s” theme of US suburbanisation, featured in the Sunday Sankey last week as this week sees many suburban stocks reporting (Home Dept, Lowes), we got some feedback on our lumber price boom commentary yesterday. One thing that your energy transition former oil analyst immediately noticed when he looks at the discussion around lumber prices: nobody mentions the US$. With marginal supply coming from Canada, a quick screen on the DXY trade-weighted US$ […]

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9:09 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

Friday Sankey 8/14/20

I asked my Doctor when we could anticipate an end to the COVID epidemic. He said “I don’t know, I’m not really into politics.” A man has been charged with over-using commas. The judge told him to expect a really long sentence. Everyone says hippos are very dangerous, but in reality humans kill far more people every year. They are just being hippocritical. The Kamala Chameleon note got good response yesterday. I started writing the […]

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8:15 AM

Kamala Chameleon

Background of Vice Presidents and Energy Policy Al Gore @algore tweets: “@JoeBiden has selected an extraordinary running mate in @kamalaharris! Kamala has made climate and environmental justice a top priority in her career in public service, and I know she will continue to be a strong advocate in the White House. #BidenHarris2020” It is quite clear that one key rationale for Joe Biden to pick Kamala Harris as Vice President (VP) is for her perceived […]

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2:20 PM

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

Friday Sankey

Friday jokes! What do you call a magician who has lost his magic? Ian. My Dad is a bitcoin trader, I asked him to lend me $20. He replied “$18.23? Why do you need $21.42?” What is the difference between a cooked sweet potato and a flying pig? One is a heated yam, the other is a yeeted ham. Say what you will about Secretary of State Mike Pompeo, he has an impressive resume. Top […]

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8:40 AM

Morning Sankey 7/17/20

As we expected since May, as basically happens every year, oil prices run into Memorial Day and then stall out. Same for this year, so in writing about oil in June, it was clear that around $40/bbl was about as good as it would get for 2020, with such major overhangs on supply, never mind the vagaries of demand recovery. One of the major drivers of the run from negative -$37/bbl to +$37 a barrel […]

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8:20 AM

Morning Sankey, Oil’s restructuring is ripping

Huge day yesterday for the re-balancing of oil markets, consolidation of the oil corporate landscape, and ultimate mega-tightening of the oil balance leading to global inflation. The biggest oil producer in California, $CRC, files for bankruptcy Top class Permian player $FANG slashes its activity and volume outlook Spare capacity gets cut by OPEC, noting additional OPEC oil demand from unusual seasonal demand patterns from COVID, that will reduce exports. Quickly on OPEC – the extra […]

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8:13 AM

Morning Sankey Biden Time

Washington Brief: the latest Biden energy plan announced yesterday is essentially roll up of the AOC/Bernie Sanders Green New Deal and Nancy Pelosi’s recent HEROES Act, not passed by the Senate, which represent huge – multi-trillion – US$ government spending. Intelligence from Washington: if the Democrats sweep in November, it’s happening. Intelligence from Washington: will the Democrats sweep in November? Yes. These are opinions based on public facts, but informed and respected opinions. Meanwhile, also […]

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8:50 AM

Morning Sankey 7/13/20

Well, there goes another bankruptcy. Hi Crush ($HCR), the Frac sand play has filed with some $500m in debt. As readers of the Sunday Sankey yesterday https://www.sankeyresearch.com/2020/07/12/sunday-sankey-7-12-20/ can see , the collapse in US E&P activity has been extraordinarily severe in terms of rigs, and equally severe in terms of Frac Spreads. Running at 350 crews as recently as Mid-January 2020 (see chart below), by May 2020 spreads dropped below 50 and currently stand at […]

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7:40 AM

Morning Sankey 7/10/20

The market seems toppy, if it sells off on a judge ruling on the long-running debate over President Trump’s tax returns, which is what happened yesterday. The ruling extends the to-and-fro and is seen as unlikely to result in a release before the election. Yet the S&P500 sold off… but the NASDAQ, as ever, rose regardless. Later in the day, a potentially more market-unfriendly series of headlines somehow had less negative effect: CNBC reports Presidential […]

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8:30 AM
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