7th February 2024

Orsted’s results shocker | US crude growth flatlining | Woodside and Santos deal dies | The rot wont stop in Germany

Morning, morning. Here’s what’s what in all things oil, gas, and energy today:

💀 Orsted’s results shocker
➡️ US crude growth flatlining
🔴 Woodside and Santos deal dies
📉 The rot wont stop in Germany
➕ plus Guyana output booming; Aramco eyes up India; $14 trillion of oil investments; pipe sinks from BP rig.

Let’s dive in.

As of 05:05ET on 07/02/2024. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

US crude growth running out of steam - the EIA has sharply revised down its US crude growth forecast for 2024 to 170 kb/d, from a previous forecast of 290 kb/d. Last year, US crude output grew by 1.02 mmb/d to 13.2 mmb/d, so 2024’s expectations are a significant slowdown. US growth has met most of the increases in global oil demand in recent years so if US shale is indeed running out of steam, this marks a significant shift in the dynamics for global oil markets. They’ll be pleased in Riyadh.
US natural gas consumption hits record high - no wonder when its so damn cheap. The record was hit in January during the winter storm as Americans turned the heating up full blast.
Crude stocks edge up - they rose by 670 kbbls last week, less than the expected 2.1 mmbbls build, according to the API. Gasoline stocks jumped by 2.6 mmbbls.

Natural gas keeps you warm

Some earnings highlights - Total hikes dividend and buybacks after solid results; Equinor beats forecasts but cuts overall shareholder payouts for 2024. These strong results follow the trend of a bumper earnings season for Big Oil who have returned to focusing on profitability and are enjoying higher oil prices after difficult years between 2015-2021.
Pipe sinks from BP rig - a malfunction in harsh weather caused a riser pipe from the Ocean GreatWhite semi-sub to sink to the bottom of the North Sea. Ooops. There is reportedly no environmental damage or injuries but it’s likely the rig will be out of action for a while.
DNO acquires Arran stake - the Norwegian indy has acquired a 25% interest in the Shell operated gas field from ONE-Dyas for $70m.
Total pays $200m for drillship stake - it’s acquiring a 75% interest in a JV that owns the Tungsten Explorer drillship which Total is currently using in Namibia.

Aramco sets it sights on India - it seems everyone wants a piece of India these days (no, not in a British colonial sense). An Aramco senior exec commented that “hopefully we will see some announcements soon on investment in Indian companies”. Aramco has recently been going big on downstream investments in large customer markets, especially in China, and so it comes as no surprise that it’s looking to strengthen its position in India too.

Woodside / Santos $60bn deal is off - it was no secret that the two Aussie heavyweights were struggling to agree on a price and reportedly Woodside never ended up making a formal bid. Santos’ share price fell by 9% on the announcement while Woodside’s climbed slightly. Woodside had come under pressure from its investors to not pay a premium for Santos, something which Santos clearly couldn’t accept. There will be some sad investment bankers somewhere!

First oil at Akpo West in Nigeria - the Total-operated field is expected to produce 141 mmcf/d of gas 14 kb/d of condensate by mid 2024.

Guyana output surging - Exxon has said that oil output from the darling of the global offshore sector has reached 645 kb/d, a sharp increase from the 400 kb/d in late 2023. The output is from three projects, with 3 more in the pipeline that are set to bring total production in Guyana to 1.2 mmb/d by 2027.
YPF wants to quadruple its value - the Argentinian state-owned company thinks it can do this in just four years by massively boosting its production from the Vaca Muerta shale play. The Vaca Muerta has endless resources but output has been restricted by lack of infrastructure investment. This may be about to change.
Ex-Vitol trader in the dock for Pemex bribes - a court heard that a former Pemex manager expected a "cash register" of bribes would "start ringing" once he gave inside information to a Vitol trader. The US Department of Justice is undergoing a major investigation into corruption in the oil trade. I suspect there may be a trader or two out there having trouble sleeping…

Germany’s industrial production in longest ever decline - the rot won’t stop in Europe’s largest economy. Industrial output fell in December for a seventh consecutive month, far greater than expected, continuing a years long downward trend. This is the heavy price of high energy costs and shortsighted net-zero policies. The German public will tolerate this demise for only so long.
Oil industry needs $14 trillion - this is how much OPEC thinks the global oil sector needs to invest over the next 20 years if to meet global energy demands. Oil demand “will continue to rise and there’s a need to ensure that supply is maintained”, he said. Anyone else feel like we’re heading into a golden era for oil?
Saudi says no solution without Palestinian state - following talks between MBS and the US Sec. of State, and in the context of normalization talks with Israel, the kingdom released an official statement saying there “will be no diplomatic relations with Israel unless an independent Palestinian state is recognized on the 1967 borders with East Jerusalem as its capital”. Don’t hold your breath then.

#degrowth

Orsted’s results shocker - the offshore wind giant has announced it’s suspending its dividend for the next two years, exiting several markets including Norway, slowing down projects elsewhere, reducing its guidance for capacity installation by 30% by 2030, AND cutting 800 jobs. We'd have a little more sympathy if the offshore wind sector hadn't spent years gaslighting everyone about its true costs.

An AP1000 is a nuclear power reactor.

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Thanks for reading. Have a day out there. 🛢️🛢️