Art Berman: Shale Companies Are Swimming In Cash -- December 19, 2021

Link here. Headline and story from Financial Times.

Two things to start: 

1. Au revoir, long-term European gas contracts. The European Commission has proposed banning deals between EU members and energy suppliers outside the bloc, such as Russia, that would last beyond 2049. That’s a long time away, but is the last year before the EU economy is supposed to have hit a net zero emissions target.
2. Remember peak oil consumption? US weekly oil demand soared last week, hitting a new record of almost 23.2m barrels a day, according to the Energy Information Administration, leaping by 17 per cent compared with a week earlier. The four-week average is not — yet — at a record high. 

That US demand number is startling. 

But Omicron seems certain now to decide whether the US — or indeed global — energy consumption continues to rise so quickly. 

OPEC remains sanguine about the variant, saying in its latest market report that the impact on demand “is expected to be mild and shortlived.”

The International Energy Agency was less confident, saying in its December oil-market report that Omicron “poses a significant risk to the economic outlook.”

Much, much on the robust free cash flow for shale operators. This from the linked article:

Scott Sheffield, chief executive of Pioneer Natural Resources, the biggest shale player, described it to me in Houston last week as a new “contract” between the industry investors. In Pioneer’s case that means growing by no more than 5 per cent annually and distributing a hefty chunk of free cash flow back to investors. And this new model is here to stay, he told me: “There’s no way that the industry is going to change overnight and start growing again.”

Market caps:

• XOM: $256 billion
• COP: $90 billion
• EOG: $49 billion
• PDX: $42 billion
• DVN: $26 billion
• HES: $22 billion