U.S. Oil Production Hits Record High

Newsletter No. 43

Good morning,

Check out the newest edition of The Upside. In this edition, discover crucial updates on the oil and gas industry and the latest buzz at King Operating Corporation. As you soak in the holiday festivities, may this newsletter become your go-to source for valuable insights into the oil and gas industry.

This Week’s Headlines

Embracing the Spirit of Christmas
ExxonMobil’s Plan: More Money, Less Emissions
Woodside and Santos in Talks for Mega Merger
Ask Jay
Oil Majors’ Quarterly Updates Indicate Weaker 2023 Outlook
U.S. Oil Production Hits Record High, Challenges Climate Goals

Embracing the Spirit of Christmas

Last night, we celebrated the Christmas season with our amazing King Family. We gathered with cherished family and friends. With laughter and love, we celebrated the season and each other.

This holiday, we recognize that we’re more than colleagues—we’re a family, supporting, encouraging, and celebrating together. This joyful season reminds us of the connections we share, and we’re truly fortunate to have such an incredible group alongside us.

ExxonMobil’s Plan: More Money, Less Emissions

ExxonMobil and Chevron reveal plans to invest in both traditional oil and gas ventures and emission-cutting solutions amidst the uncertainties of the energy transition. As COP28 climate talks intensify, debates on phasing out fossil fuels continue.

ExxonMobil’s CEO, Darren Woods, emphasizes addressing energy and emissions challenges simultaneously, advocating for a balanced approach. ExxonMobil’s $20 billion low-carbon initiative aims to reduce emissions while maintaining financial growth.

The company anticipates substantial cost reductions, doubling upstream earnings potential, and significant returns from strategic investments in low-cost projects. The focus on decarbonization includes a 40-50% reduction in greenhouse gas emissions intensity by 2030. ExxonMobil is on track for share repurchases and remains confident in delivering value through profitable growth and emission reduction efforts.

Woodside and Santos in Talks for Mega Merger

Australia’s top two oil and gas giants, Woodside Energy and Santos, are in preliminary talks for a potential merger worth nearly A$80 billion, aiming to create a national champion in liquefied natural gas (LNG) production. The move follows a trend of global consolidation in the sector. Woodside and Santos, despite transformative deals in recent years, face challenges in advancing key projects, leading to investor pressure.

The talks reflect a broader industry trend, with major players seeking strategic mergers to leverage substantial profits and acquire promising prospects. This is a trend that seems to resonate with many of the principles I’ve discussed in my book, “The Upside of Oil and Gas Investing,” and closely aligns with the strategies we implement here at King Operating Corporation. You can listen to the book here.

The potential merger could significantly reshape Australia’s LNG landscape, as companies worldwide invest heavily in the country’s world-class LNG assets.

Ask Jay

‘Tis the Season … In this week’s ‘Ask Jay’ i wanted to stay on the topic of taxes as we inch closer to the end of the year. This week I’m giving some insight into the tax benefits of investing in oil and gas. Watch the video here.

Oil Majors’ Quarterly Updates Indicate Weaker 2023 Outlook

The latest quarterly updates from major oil companies reveal a one percent decline in the total annual capital expenditure forecast for 2023, according to BMI analysts. While ExxonMobil and TotalEnergies raised guidance, BP and Shell lowered theirs. Overall, the group anticipates a 3.6 percent increase in capital expenditure for 2023, significantly below the 21.9 percent growth seen in 2022. Looking ahead to 2024, uncertainties around investment returns are expected to lead to a one percent decline in growth. Megamergers and evolving challenges, including interest rates and environmental concerns, pose additional factors influencing the oil majors’ investment strategies.

U.S. Oil Production Hits Record High, Challenges Climate Goals

The US has reached a record-high oil production of 13.2 million barrels per day, causing global oil prices to slide and posing challenges for climate goals. The unexpected surge, driven by increased efficiency and technology in shale drilling, contradicts earlier fears of a constrained industry. The Biden administration, advocating for fossil fuel phase-out at climate talks, faces criticism for the surge in oil production. Industry executives cite the need for balance between emissions reduction and meeting current energy demands. The unexpected boom may impact global markets and climate initiatives. These are all things I’ve discussed recently on our blog. You can read about these topics and more here.

As always, if you’d like to talk to someone about King and are an accredited investor, you can fill out your information here or schedule a Zoom conversation with one of our SVPs here and someone will reach out.

Need a good stocking stuffer? You can get a signed copy of my book, “The Upside of Oil and Gas Investing.” Just send your name and address to info@kingoperating.com. If it’s a gift, be sure to include name of the person you are giving it to.