The Million Dollar Way (The Bakken Oil Blog): How Phillips 66 Broke Even -- SeekingAlpha -- November 4, 2020

Peak Demand
Rystad Revises Forecast

This is very interesting. I've said from the beginning the Chinese flu pandemic would be with us for four years based on the experience of the Spanish flu pandemic in 1918 - 1920. Rystad suggests oil demand won't be back to pre-Covid-19 levels until 2023. That's about four years. The difference between the Spanish flu pandemic and the Chinese flu pandemic: politicians elected to "flatten the curve" when Wuhan flu broke out, thereby extending the duration of the pandemic.

In addition to this story, there is another article in Rigzone suggesting a Biden presidency will accelerate energy bankruptcy fillings. There are going to be a huge number of opportunities for vultures, particularly SPACs. This will be fascinating to watch. Qatar thinks it can manage a budget based on $40 oil. Saudi Arabia cannot.

Link here to Rigzone:

Rystad Energy revealed on Monday that the Covid-19 pandemic and the acceleration of the energy transition have led it to significantly revise its long-term oil demand forecast.

The company now sees global oil demand peaking at 102 million barrels per day in 2028 as the most likely scenario. Before Covid-19, Rystad Energy was forecasting that peak oil demand of just over 106 MMbpd would be realized in 2030.

According to Rystad Energy, the persistence of the pandemic is likely to cause 2020 oil demand to decline to 89.3 MMbpd, compared to 99.6 MMbpd in 2019.

Demand is then expected to recover to 94.8 MMbpd in 2021 and 98.4 MMbpd in 2022, Rystad Energy outlined, adding that it will still be stuck below pre-virus levels due to structural Covid-19 impacts, such as less work commuting and slower aviation recovery.

The company says it is only in 2023 that oil demand will recover to pre-Covid-19 levels and jump back to 100.1 MMbpd.

Between 2025 and 2030, oil demand will enter a plateau phase at around 102 MMbpd, Rystad Energy noted. In this phase, the company no longer sees any residual Covid-19 impacts. In the very long-term, the company sees a steep decline of oil demand to 62 MMbpd in 2050, “driven by the high penetration rate of EVs in the automotive industry”.

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Qatar: Plans for $40 Oil

Link here to Bloomberg via Rigzone:

Qatar will base its budget on an oil price of $40 a barrel, below what markets expect, as the world’s biggest exporter of liquefied natural gas seeks to reduce the impact on its finances, according to its ruler.
The move will help Qatar “avoid negative economic consequences due to oil-price volatility,” Emir Sheikh Tamim bin Hamad Al Thani told members of the country’s legislative body, the Shura Council, on Tuesday.

The price of oil is closely linked to that of natural gas. Still, gas has fared better amid this year’s coronavirus-triggered slump in energy prices, helping Qatar weather the fallout more easily than oil-dependent neighbors such as Saudi Arabia and Kuwait.

Early results show that Qatar’s budget deficit for the first half of the year is 1.5 billion riyals ($406 million) despite expectations it would be much higher, the emir said.

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PSX: Breaking Even

Link here.

Summary:

Phillips 66 posted a break-even Q3 with a loss of a penny a share;
midstream, chemicals, and M&S propped up the refining segment, which remains in a state of depression;
while the results show the benefits of management strategy to diversify away from refining, the company still burned $400 million in cash during the quarter;
the refining segment is in for a long, tough slog due to the pandemic. However, PSX looks very well-positioned and the dividend, at least for now, looks secure (yields 7.7%);

Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

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COP: How The Company Wasted $10 Billion
SeekingAlpha Contributor

Link here. Archived.

Summary:

ConocoPhillips released its Q3 EPS report on Thursday and there were no big surprises given the current O&G price environment;
for those investors who made it to the end of the conference call, the best question was saved for last;
it was a question that concerned COP's $10 billion of wasted shareholder capital on stock buybacks and the future of the dividend;
CEO Ryan Lance says he wants to make COP a "compelling" investment to draw investors back to the energy sector. But actions speak louder than words.
this article will discuss the dividend impact for both Concho and Conoco shareholders going into - and out of - the merger which is expected to close in Q1 2021.

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Cenovus Buys Husky

Link here.

Summary:

Cenovus reached an agreement to buy fellow Canadian oil sands producer Husky Energy.
with the transaction, Cenovus doubles-down on oil sands production (bad) while achieving additional refining and pipeline exit capacity (good).
the problem is that the pandemic has put North America refining into a state of depression, especially for distillate refining due to jet-fuel demand destruction.
while the longer-term outlook for this combination makes strategic sense, there is no need for investors to rush into this duo.

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For The Archives: ATT Will Increase Dividend -- Tea Leaves
SeekingAlpha Contributor

Link here.

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Chinese Flu Update

Link here.