Sunday, August 28, 2022
Friday, August 26, 2022
New Cash Flow Records -- Oil And Gas Producers -- Miichael Kern -- Oilprice -- August 26, 2022
From BMO Capital Markets in a new report cited by Upstream.
- Data points from BMO:
- 120 oil and gas firms globally
- new records in cash flows and offer the best return on capital employed (ROCE) in fifteen years.
- 2020: $17 billion
- last year (2021): $300 billion in free cash flow
- 2023: ROCE could hit highest level since 2008 financial crisis; could top 25% by 2023;
- Data points from Deloitte:
- global firms could generate a record $1.4 trillion (2022)
- $1.4 trillion (2022) vs $300 billion (2021): 5x
- Capital discipline has resulted in the oil and gas industry being “in one of its healthiest periods currently, with its lowest ever leverage ratio (20%) and one of its highest ever dividend yields (6%), compared to other sectors,” according to Deloitte.
Saturday, August 20, 2022
Natural Gas Global Proved Reserves; Global Annual Production; Global Annual Consumption -- August 20, 2022
What is the volume of world natural gas reserves?
As of January 1, 2020, there were an estimated 7,257 trillion cubic feet (Tcf) of total world proved reserves of natural gas. Proved reserves of natural gas are the estimated quantities that analysis of geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from reservoirs under existing economic and operating conditions.
Consumption of natural gas worldwide is projected to increase from 120 trillion cubic feet (Tcf) in 2012 to 203 Tcf in 2040 in the International Energy Outlook 2016 (IEO2016) Reference case. By energy source, natural gas accounts for the largest increase in world primary energy consumption.
7,257 trillion / 200 TCF = 36 years.
Recently, global production is 4,000 bcm / year (https://yearbook.enerdata.net/natural-gas/world-natural-gas-production-statistics.html)
4,000 bcm = 141,258,666,288,888 cf = 141 TCF
So, if I did the math correctly, natural gas:
EIA global reserves: 7,000 TCF
Global production, annually: 140 TCF
Global demand, annually: 120
7,0000 / 200 = 35 years
Friday, August 19, 2022
OXY, Buffett, Hollub -- A Reply To A Reader's Question -- August 19, 2022
A reader sent comments, ideas, thoughts about OXY, Buffett, Hollub.
I won't repeat the question but from my reply one can probably guess what the reader was asking.
My comments;
1. I've watched a fair amount
of CNBC this week after getting back from Montana. I watch Jim Cramer
from 7:45 to 9:00 a.m. every day. I occasionally watch his end-of-day
5:00 p.m. show.
2. I watch a fair amount of Fast Money with Melissa and a fair amount of the talk at noon.
3. Energy is talked about occasionally and only in a general way. Seldom do they talk about individual oil companies.
4. Investing in oil companies seems not to be of much importance to these guys.
5. So, to answer your first question:
the OXY and Buffett story is occurring in a vacuum. No one seems to
care. You can see it today: oil companies were up but it was all because
oil and natural gas were. OXY/Buffett news drove no new buying in oil sectors.
6. So, no I don't think what Buffett is doing with OXY is having any effect or will have much effect on traders/investors.
7.
Oil has been the worst performer in the past 20 years; a lot of
investors were burned by oil; and, no desire to get back in. In
addition, "everybody" sees oil as a dead-end investment.
8.
So, I thought that OXY / Buffett would make a deal, but it didn't and
in retrospect, I'm not surprised. As noted earlier, Buffett / OXY is in
occurring in a vacuum. It's nothing more than what it is. Oil companies
are undervalued for a reason. Most folks see oil as a dead-end
investment.
Second question. Buffett's plans.
1.
Suggesting Buffett would let price run and then he would sell goes
against everything I've known about Buffett. If he does that, it will be
disappointing because that's not his style.
2.
When he dumped Verizon the stories came back that when asked how long
Buffett likes to hold his investments, he said "forever." He took
forever to sell Verizon; he took forever to sell Wells Fargo. If he
sells OXY it would be very out of character.
3. In addition, I thought I had recently posted this on the blog, maybe not. But I did back in July, 2022 (https://themilliondollarway.blogspot.com/2022/08/berkshire-hathaway-continues-to.html).
4.
I am convinced that Warren Buffett and Vicki Hollub have formed a very,
very close financial relationship. They have probably bonded very, very
closely. Oh, yes, here it is, from the blog from the other day:
I was too young by the time Warren Buffett had made his mark as an investor but after I turned 27 years old, or something like, I started following him.
These are his milestones -- three -- that put him alone in the investing pantheon (of gods).
- buying BNSF: up until then, one could argue that BRK was a mutual fund with a lot of wholly-owned smaller companies but nothing like BNSF; Buffett said he "bet his company" on BNSF
- taking his stake in AAPL, despite being late to the party;
- his financial relationship with Vicki Holub
5.
I think both would like to do one last big deal. He has run out of
time; he has no time to do one more deal as big as BNSF or AAPL.
6.
Vicki Hollub has had a great run with OXY. She would still run the
company but would have access to huge amounts of capital (borrowed from
BRK) for CAPEX.
Bottom line:
1.
I don't see traders / investors being swayed at all by OXY / Buffett.
No one seems to be talking about it except the headlines today.
2. I don't see new traders coming into oil based on this story.
3. Current investors in oil and gas have already made their decisions where they want to invest. OXY/Buffett won't change their thinking.
4. It would be out of character for Buffett to sell a huge investment like OXY with its great returns likely to continue.
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