US Oil Is Back -- Stronger Than Ever -- February 26, 2023

Link here.

ESG is dead.

Energy transition is dead.

But US oil sector is not. 

From the linked article:

A year of war in Ukraine has highlighted the return of oil as a source of U.S. financial influence and geopolitical power.

As the West has shunned most Russian energy, unleashing a pressure campaign against the Kremlin’s petroleum revenues, record U.S. crude exports have helped fill the gap in Europe with the oil needed to produce gasoline, diesel and jet fuel.

Since February 2022, when Russia invaded Ukraine, average monthly seaborne cargoes to the continent jumped 38% compared with the previous 12-month period, according to ship-tracking firm Kpler. A fleet of skyscraper-size tankers carried more crude to Germany, France and Italy—the European Union’s largest economies—as well as Spain, which alone boosted purchases by about 88% over the period.

The pull of oil shipments from the Gulf Coast to Europe, which Kpler pegged at 1.53 million barrels a day in January, has in recent months made the continent a larger destination for U.S. crude than Asia.

By the way, have others noted "Kpler"?

Now, fallout from the war in Ukraine is underlining how the shale boom remade U.S. energy leverage over the past 15 years. Innovations in hydraulic fracturing and horizontal drilling that tapped gushers of fossil fuels are reshaping energy trading and prices in the image of West Texas and other shale regions.

U.S. natural gas shipments to Europe more than doubled last year, according to the White House, cushioning the continent’s households and manufacturers after Russia throttled supplies. Analysts say surging U.S. crude production helped to calm markets as the West restricted most Russian exports with bans and novel price caps in recent months.

“America is back in the most predominant position it has been in world energy since the 1950s,” said Daniel Yergin, an energy historian and vice chairman of S&P Global. “U.S. energy now is becoming one of the foundations of European energy security.”

Much, much more at the link.

Remember: the most recent round of sanctions went into effect earlier this month, February 5, 2023.

And Russia has announced it's cutting production by 500,000 bopd starting in three days -- March, 2023.

Russian Economy -- Update -- February 25, 2023

Link here.

France 24.

Russia "War" Budget -- 2023 - 2025 -- Signed December 5, 2023

Trivia: Putin signed the "war" budget the day the December 5, 2022, sanctions went into effect. 

The Russian budget: https://www.osw.waw.pl/en/publikacje/analyses/2022-12-12/russias-war-budget-2023-2025. Archived. This is an incredibly bleak report / analysis. 

Russian National Wealth Fund -- Russia's sovereign wealth fund: wiki. 

Russia's sovereign wealth fund: wiki.

Previously reported:

Jan 18 (Reuters) - Russia's National Wealth Fund shrank to $148.4 billion as of Jan. 1, down $38.1 billion in a month, as the government took out cash to plug its budget deficit, data showed on Wednesday. The ministry said it had spent 2.41 trillion roubles ($35.1 billion) from the NWF, a rainy day fund that accumulates oil revenues, to cover the deficit in December. Along with heavy state borrowing at domestic debt auctions, the NWF - which was originally intended to support the pension system - has become the main source of financing for the budget deficit since Russia invaded Ukraine last year and was hit by waves of unprecedented Western sanctions.

It's All About Free Cash Flow -- February 8, 2023

Updates

Later, 1:43 p.m. PT: TTE -- link below.

TotalEnergies saw its net profit double in 2022 to a record $36.2 billion and announced an increase in dividends and share repurchases after the best annual results for the company and for Big Oil ever. 

The French supermajor reported on Wednesday, February 8, 2023, $36.2 billion in adjusted net income for 2022, double from a year earlier, thanks to higher oil and gas production, higher prices, a jump in LNG sales, and what it described as a “historic” performance in the downstream segment.

For the fourth quarter of 2022, TotalEnergies reported cash flow of $9.1 billion, and an adjusted net income of $7.6 billion, up by 11% from Q4 2021. For the full year 2022, the company generated $45.7 billion in cash flow. 

4 x 9.1 = $36.4 billion, so an "actual" $45.7 billion in cash flow is ... well, stupendous. 

Let's put that in come perspective (remember, we're in a recession and an unprecedented supply chain snafu):

Original Post

For those that missed it:

• start here;
• then, here;
• then, here, and parse that headline;
• then, note that WTI is still below $80 this morning, even after adding another 1% to its price from yesterday;
• then, note that Iran expects $100-oil when Chinese demand rebounds;
• then, most important(ly) for investors, literally no profit-taking yet this morning, or very little:
• XOM: just added two cents:
• CVX: down 1.23%
• DVN: down 0.6%
• EOG: up 1%:
• HES: down 0.3%
• PXD: flat

Weekly EIA petroleum report, link here:

• US crude oil in storage increased by 2.4 million bbls;
• US crude oil in storage now stands 4% above the five-year average and WTI still goes up
• refiners operating at 87.9% of capacity;
• distillates remain 15% below the five-year average;
• jet fuel supplied was .... up a whopping 6.6%.

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

Active rigs: 46. Note comments in "Focus on Fracking" regarding rig counts and then consider:

• the number of active rigs in North Dakota; and,
• it's the middle of winter with some of the harshest weather ever;

Peter Zeihan newsletter.

WTI: $77.69.

Natural gas: $2.525.

Thursday, February 9, 2023: 23 for the month; 93 for the quarter, 93 for the year
39010, conf, CLR, Rhonda 7-28H,

Wednesday, February 8, 2023: 22 for the month; 92 for the quarter, 92 for the year
39020, conf, CLR, Rhonda 6-28H1,
38916, conf, Rampart Energy, Coteau 2,
38466, conf, Crescent Point, CPEUSC Riley Anne 8-36-156N-98W-TFH,
38465, conf, Crescent Point, CPEUSC Riley Anne 9-36-156N-98W-MBH,

RBN Energy: to survive DOE's hydrogen hub cutdown, certain factors may prove critical, part 2. Archived.

The U.S. is gearing up to provide billions of dollars in financial support for a series of regional clean hydrogen hubs and had what amounts to an informal cutdown at the end of December, announcing that 33 project proponents had been formally encouraged to submit a full application this spring. Although the Department of Energy (DOE) didn’t name any of the projects on the “encouraged” list, we’ve been able to identify many of the proposals — and add five more in today’s blog — even though a lot of project details remain under wraps. In today’s RBN blog, we’ll look at the new projects on our list and examine the major factors that are likely to influence a project’s viability.

A fifth project we can add to our list is the Heartland Hydrogen Hub, which is centered on a partnership between Bakken Energy and BNSF Railway, which could utilize clean hydrogen produced from natural gas across its rail network, which covers much of the U.S. west of Chicago. Planning began with a 2021 agreement between North Dakota-based clean hydrogen producer Bakken Energy and Mitsubishi Power Americas to develop a hydrogen hub in the state. North Dakota — along with its neighbors Minnesota, Montana and Wisconsin — agreed in October 2022 to work with Bakken Energy and BNSF on the hydrogen hub proposal. BNSF also signed a memorandum of understanding with Cummins Inc. and Schneider Carriers Inc. to work on incorporating the needs of long-haul trucking into the hub proposal.

A Geo-Political Note -- January 30, 2023

Folks in Congress who say we need to abandon Ukraine have no clue about geopolitics. This is as much about China-Taiwan as it is about Russia-Ukraine. 

These are the same folks who criticized the hasty withdrawal from Afghanistan. 

And, of course, there was Vietnam -- a war the US lost ...

Link here.

Link here.

And, this from Bloomberg today: