Saudi, Short Of Cash? Looking To Monetize Its Pipelines -- April 6, 2021

Another indication of tough times for Saudi Arabia. 

Saudi Aramco may sell upwards of 49% of its vast pipeline holdings -- The WSJ. 

Saudi Arabia’s energy giant is in advanced talks to sell up to a 49% stake in its oil pipelines to a consortium of U.S., Chinese and local investors for between $10 billion and $15 billion, according to people familiar with the matter.

Saudi Arabian Oil Co., known as Aramco, is in talks to sell the minority stake to a group of investors that could include U.S. buyout giant Apollo Global Management Inc., energy investment firm EIG Global Energy Partners, Chinese infrastructure fund Silk Road Fund, and China Reform Fund Management Co., a Chinese private-equity fund, along with Saudi pension funds, the people said.

The talks represent another far-reaching attempt to monetize Saudi Arabia’s prodigious oil assets—once considered so strategic that even a minority stake sale seemed far fetched. With the ascension of Crown Prince Mohammed bin Salman, however, the kingdom has been more willing to lure foreign investors and cede some control over its oil industry in exchange for cash. Over several years, Prince Mohammed promoted an international listing of Aramco shares, before ultimately deciding on a local listing of a very small slice of the company. 

Under any agreement, Aramco is aiming to sell the minority stake for between $10 billion and $15 billion in a deal that could value Aramco’s network of oil pipelines at more than $20 billion, these people said. A deal could be announced as soon as this week.

For me, this was the most interesting part of the story:

The final structure of any winning group is still in flux, these people said, and talks could still collapse. One possibility is that either Apollo or EIG drop out of the consortium, according to people familiar with the matter. That would help ensure all players in the group have enough equity in the deal to make it worth their while. 

Still, there is recent precedent for two Western anchor private-equity investors teaming up. Abu Dhabi National Oil Co. successfully convinced BlackRock Inc. and KKR & Co. to drop their individual bids and join forces to secure a $4 billion midstream pipeline deal in 2019.

1Q21 Earnings Should Be Very, Very Interesting -- Exhibit A: COP -- April 6, 2021

Pardon the interruption! Wow, wow, wow -- our granddaughter's high school varsity women's soccer team advanced! The score just coming in now. At a neutral field in Mineral Wells, TX, our Grapevine team played the team from Abilene, TX. This was the sweet sixteen; they now move on to the quarter-finals. It appears to have been a blowout -- 2-0 at the half; 3 - 1 final score. Details pending. 

Now back to COP. Link here. In thirty-seven years of investing, I don't think I've ever been so excited to see earnings reports for 1Q21, and full year 2021 (we will have to wait quite awhile), and then the next several years after that, particularly E&P companies. I think one would have to go back to the years immediately after WWII to see something even remotely to what we're going to see over the next couple of years: coming out of a global lockdown, multiple stimulus bills, and then a multi-trillion-dollar infrastructure bill. 

Back to the linked COP story. Data points:

• COP will report May 4, 2021;
• Concho Resources acquisition was completed in January, 2021;
• recently provided some preliminary operational and financial updates;
• reiterated CAPEX of $5.5 billion; an increase from their 2020 $4.7 billion;
• first quarter overall production estimate: 1.5 million boepd, excluding Libya;
• reported 1.3 million boepd 1Q20 (same quarter, last year)
• crude oil, 1Q21: 772K bopd; if so, would indicate a jump from 654K bopd a year ago;
• for boe:
  
• expects a 1Q21 average realized price range of $43 - $45 per boe; a year ago: $38.81
• also, a huge improvement over $33.21/boe in 4Q20;
• for crude oil:
• 1Q20: $56 - $58 / bbl
• a year ago: $48.86 / bbl
• 4Q20: $40.89 / bbl
• EPS:
• Zacks consensus estimate: 52 cents, a 16% y-o-y rise
• but, a $600 million profit hit due to Concho Resources acquisition

Update On The Sempra Energy -- KKR Deal -- April 6, 2021

A reader who follows this a lot more closely than I do provided this "head's up" regarding Sempra Energy (SRE):

I want to pass on to you an analyst's take on the recent KKR-Sempra deal involving the $3 +  bilion that KKR is giving to Sempra for partial ownership of Sempra's LNG infrastructure.

Sempra is poised to announce - supposedly by the end of June  - an expansion of its Cameron facility from 12 to 25 million tonnes per year. (That is a lot). 

The funds to help in the buildout will partially come from KKR.

Any of the brownfield/expansion projects from existing US LNG plants are apt to be exceptionally profitable as so much of the existing infrastructure is already in place. This includes shipping berths, feed pipelines, onsite power plants, storage tanks, etc.

From a more macro view, the production costs of natgas  from US shale plays - whether associated like in the Bakken, Permian, at al, or dry gas plays like the Marcellus and Haynesville - have become so low as to continue to crowd out potential global competitors.

(Argentina, despite having amongst the largest shale gas resources on the planet, is embarking upon its second round of bidding to IMPORT more LNG this winter ... much of which will come from the US).

Previosuly posted: 

Sempra Energy, link here:

• offloads non-controlling interest in Sempra Infrastructure Partners to KKR
• summary:

• Sempra Energy entered into a definitive agreement to sell a non-controlling, 20% interest in Sempra Energy's new business platform, Sempra Infrastructure Partners, to KKR for $3.37B in cash.
• This transaction, expected to close in mid-2021, values Sempra Infrastructure Partners at ~$25.2B, including expected asset-related debt at closing of $8.37B.
• "Over the next decade, we expect the energy markets in North America to continue to grow and become increasingly integrated. Combining our resources with KKR improves our ability to capture new investment opportunities in cleaner forms of energy and the critical infrastructure that stores and transports it," SRE chairman and CEO Jeffrey W. Martin commented.
• As per agreement terms, KKR will be acquiring its indirect interest in IEnova at $4.13/share; KKR will have certain minority rights with respect to Sempra Infrastructure Partners correlated with investment size.

Ovintiv With Five New Kramer Permits In Siverston Oil Field -- April 6, 2021

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. 

Stocks to watch: special shareholders' meeting tomorrow for AMD and XLNX shareholders, AMD to acquire XLNX:

• AMD: up slightly today; closed at $81.44;
• XLNX: down 33 cents today; closed at $130.40;
• a pretty much given: after tomorrow, XLNX shareholders will become AMD shareholders;

Market closed mixed today; not much change after hitting all-time records yesterday:

• BRK-B: up slightly; closed at $263, coming close to its 52-week high, $268;
• UNP: down 1%; closed at $221; near its 52-week high, $225;
• SRE: green, whoo-hoo; up slightly; closed at $134; near its 52-week high, $137
• MNRL: up a whopping 6%; closed at $15.69;
• YUM: up over 3%; hits 52-week high; closed at $114;
  
• YUMC: up over 1%; closed at $60; near its 52-week high;
  

Texas economy, link here:

• Max Midstream to start Texas crude export in May, 2021
• first crude exports to Europe in first week of May;
• focused on shipping Eagle Ford grades for now;
• next expansion, Permian connections slated for April, 2022;
• terminal at the Port of Calhoun:
• goal: establish an export hub: between Houston and Corpus Christi, and the Port of Calhoun
• Max will focus on Europe; most large Texas exporters focused on Asia
• much more at the link;

***************************************
Back to the Bakken

Active rigs:

$59.33	4/6/2021	04/06/2020	04/06/2019	04/06/2018	04/06/2017
Active Rigs	13	40	62	57	49

Five new permits, #38239 - #38243, inclusive:

• Operator: Ovintiv
• Field: Siverston (McKenzie)
• Comments:
• Ovintiv has permits for five Kramer wells in Siverston oil field;
• will be sited in NWNE 18-150-97;
  
• wells will be sited between 440' and 360' FNL and 2201' FEL;

Six permits renewed:

• Petro-Hunt (3): three State permits in Burke County;
• Sinclair (3): three Porcupine permits in Dunn County;

Three permits canceled:

• EOG: three Austin permits in Mountrail County;

NOG Announces Closure On Reliance Marcellus -- April 1, 2021

Press release.

Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern”) announced today that it closed on its previously announced acquisition of properties owned by Reliance Marcellus, LLC on April 1, 2021.

HIGHLIGHTS

• Extends Northern’s non-operated model to Appalachia – the leading US natural gas basin – and creates a national non-operated franchise, diversified by region and commodity mix
• Northern paid closing consideration of $120.9 million in cash (including previously paid deposit), which is subject to final post-closing settlement, and 3.25 million common stock warrants
• The cash closing payment was funded with borrowings under Northern’s revolving credit facility, which had $263.0 million of outstanding borrowings as of March 31, 2021, prior to funding the closing, a reduction of $24.0 million from the previously announced balance as of March 11, 2021
• 2021 guidance reiterated for the acquired assets, including production of 75-85 MMcfpd and $20-25MM of CAPEX
• Northern has hedged approximately 66% of forecasted remaining 2021 PDP gas production on the acquired assets at an average price of $3.00/MMbtu and 36% of forecasted Q1:2022 PDP gas production at an average price of $3.17/MMbtu

Weekly Covid-19 Vaccination Rollout Update -- April 6, 2021

Link:

		Doses of vaccine distributed to health facilities	Change from day before	Vaccinations given	Change from day before	Percent of distributed vaccine that is actually administered	Doses received in past week, current Monday from previous Tuesday	Average number of doses given / day in past seven days
Tuesday	April 6, 2021	219,194,215	11,302,820	168,592,075	1,404,280	76.91%
Monday	April 5, 2021	207,891,395	100	167,187,795	2,134,049	80.42%	27,244,830	3,053,566
Sunday	April 4, 2021	207,891,295	24,650	165,053,746	3,365,324	79.39%
Saturday	April 3, 2021	207,866,645	3,147,310	161,688,422	4,081,959	77.78%
Friday	April 2, 2021	204,719,335	4,222,700	157,606,463	3,975,059	76.99%
Thursday	April 1, 2021	200,496,635	4,914,910	153,631,404	3,358,112	76.63%
Wednesday	March 31, 2021	195,581,725	6,130,440	150,273,292	2,670,947	76.83%
Tuesday	March 30, 2021	189,451,285	8,804,720	147,602,345	1,789,510	77.91%
Monday	March 29, 2021	180,646,565	100	145,812,835	2,350,144	80.72%	23,912,010	2,757,586
Sunday	March 28, 2021	180,646,465	2,340	143,462,691	3,281,956	79.42%
Saturday	March 27, 2021	180,644,125	3,142,350	140,180,735	3,496,047	77.60%
Friday	March 26, 2021	177,501,775	3,976,440	136,684,688	3,379,393	77.00%
Thursday	March 25, 2021	173,525,335	4,302,210	133,305,295	2,831,442	76.82%
Wednesday	March 24, 2021	169,223,125	6,244,285	130,473,853	1,982,059	77.10%
Tuesday	March 23, 2021	162,978,840	6,244,285	128,491,795	1,982,059	78.84%
Monday	March 22, 2021	156,734,555	0	126,509,736	2,028,324	80.72%	20,886,720	2,489,697
Sunady	March 21, 2021	156,734,555	0	124,481,412	3,039,915	79.42%
Saturday	March 20, 2021	156,734,555	2,535,320	121,441,497	3,127,679	77.48%
Friday	March 19, 2021	154,199,235	3,090,790	118,313,818	2,583,810	76.73%
Thursday	March 18, 2021	151,108,445	3,517,830	115,730,008	2,692,381	76.59%
Wednesday	March 17, 2021	147,590,615	4,672,090	113,037,627	2,299,771	76.59%
Tuesday	March 16, 2021	142,918,525	7,070,690	110,737,856	1,655,996	77.48%
Moday	March 15, 2021	135,847,835	0	109,081,860	2,021,586	80.30%	19,469,220	2,427,430