Recent Posts

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

“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

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

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

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

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

Friday Sankey 9/25/20

What do the Russians say when their internet is down?Internyet A kid finds a magical lamp. He rubs the lamp, and a genie appears and says, “What is your first wish?” The kid says, “I wish I were rich!”The genie replies, “It is done! What is your second wish, Rich?” The bartender asks why the nonlinear storytelling? Quentin Tarantino walks into a bar. Friday in September, a great time of year in the US. Your […]

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9:00 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

Morning Sankey 9/21/20

The market looks weak this morning, and the news that Nikola founder and CEO Trevor Milton is stepping down is a notable moment in the history of hydrogen in heavy truck transport, and corporate fraud. We assume his completely unqualified brother will no longer be “Director of Hydrogen Production/Infrastructure” at Nikola. What a joke. Kudos to Hindenburg Research. Further to yelling on my part about how bad New York COVID policy is, note that a […]

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8:07 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 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

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

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

Morning Sankey 9/4/20

This year has had no rhythm. The traditional summer Memorial Day to Labor Day closes, but nobody is returning to the office in Manhattan. We think of the day after Labor Day – this coming Tuesday – as the start of the Wall Street sellside year; the Lehman Oil & Gas Conference in sweltering Manhattan, that starting company roadshows, Q3 results, going on the road marketing, the backdrop of Halloween, Thanksgiving, Christmas, the slog from […]

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7:07 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

And now, the weather. Morning Sankey 8/26/20

In this note we round up hurricanes, floods, wildfires, and the starting formation of the polar vortex. Stay safe out there! Dailybeast.com The National Hurricane Center warned early Wednesday that Laura has become “a formidable hurricane” with a storm surge that could push 30 miles inland and added: “There are no signs it will stop soon.” Laura has already killed at least 23 people in the Dominican Republic and Haiti, USA Today reports. Hundreds of […]

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8:22 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

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 Sankey 8/19/20

We were not wrong to highlight the reporting this week of “suburban stocks” with a huge beat from Target, (pronounced Tar-jay in French style, for its classy offering) and Lowe’s this morning both riding our “new 1950s” substantiation theme. Lumber was a theme of the Home Depot call yesterday as we expected, with strong demand driving profitability, and some debate over ongoing shortages, although Home Depot stated that supply was improving. As we noted in […]

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8:56 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

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

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 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

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
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