Notes From All Over, Part 1 -- January 28, 2020

XOM, Guyana: 16th Stabroek discovery. Ninety-four feet of high-quality oil -bearing sandstone.

XOM has now raised its recoverable resource estimate from this play by 2 billion boe to more than 8 million boe. Link here. Peak oil? What peak oil?

Selling out Putin? This and several other stories suggest huge developments for Russia.

Facing economic collapse and painful sanctions, the socialist government of Venezuelan President Nicolas Maduro has proposed giving majority shares and control of its oil industry to big international corporations, a move that would forsake decades of state monopoly.

Maduro’s representatives have held talks with Russia’s Rosneft PJSC, Repsol SA of Spain and Italy’s Eni SpA. The idea is to allow them to take over government-controlled oil properties and restructure some debt of state oil company Petroleos de Venezuela SA in exchange for assets, according to people with knowledge of the matter.

Brooge: link here.

Brooge Petroleum and Gas Investment Co. plans to expand its crude-storage capacity six-fold at the Middle Eastern port of Fujairah to meet “huge” demand at the busiest oil-trading hub in the region.
The United Arab Emirates-based business will sign contracts by the end of the first quarter, or soon after, to lease out the additional capacity, Chief Executive Officer Nicolaas Paardenkooper said in an interview. It will complete a study for the project over the same period and may start construction work by the end of 2020.

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Party Like It's 1999

I've talked about this before: I'm convinced the 2020's in the US will be one of the best decades for investing ever. And that comes after an incredible past four years. Re-posting:

2020: party like it's 1999. Americans to inherit almost $1 trillion this year ... tax-free. I've talked about this before. I might have to come up with a new tag. We'll see. Related, recently: pipelines; BlackRock; $13 trillion; SecureAct; mandatory distributions.

The EV revolution will happen around 2025. Re-posting:

A reader sent me a link to "GM to invest $2.2 billion in Detroit plant to produce electric cars." Google it.

My reply, not ready for prime time:

The auto manufacturers are all getting ready for the mandates that will be put in place in 2021, or 2025 at the latest, when Trump is out of office.

At some point, the auto manufacturers will have poured so much money into the EV scheme, that "too big to fail" will be "new" again; and the government will have no choice but to mandate EVs for all. If not, a lot of US manufacturers will fail, and a lot of stateside manufacturing plants will close regardless of whether they are Japanese, German, or Korean.

It will be a huge transition for everyone on such a huge scale. The infrastructure alone that is needed is huge: just the neighborhood transformers (GE) that will all need upgrading. The utilities will have to expand exponentially to handle the electricity / grid issues. Solar / wind won't keep up, and natural gas will be the bridge (a bridge that will last at least 50 years) before we transition to small, modular nuclear reactors.

A lot of mechanics, service station attendants, will be looking for new work. A whole ICE supply chain will disappear. NAPA Parts? How about NAPA Departs?

I don't see investing in automobile companies as particularly attractive: the margins won't be huge; batteries are simply too expensive, and no "moat" -- every auto manufacturer will be building them. Competition will be incredibly stiff. But infrastructure investing might be different: utilities, charging networks (copper wiring?), GE transformers, commodities such as lithium, cobalt. 

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