Newsletter No. 101
Good afternoon,
It’s Thursday, January 30, 2025, and in this edition of The Upside, we’re taking a moment to recognize the tragic crash at Reagan National Airport on Wednesday night. Our hearts and prayers go out to the families of those who lost their lives, and to the first responders on the scene.
In this issue, we’ll cover the latest updates from the oil and gas industry, along with important news from King. As always, I hope to keep you up to date on the trends shaping our industry. Thanks for reading.
This Week's Headlines
- Ukraine Strikes Second Russian Oil Refinery in Less Than a Week
- Oil Traders Turn Bullish for 2025 as Market Dynamics Shift
- Low Winds in Germany Push Up Power Prices Across Europe
- Oil Prices Rise, Bringing Good News for U.S. Oil and Gas Producers
- U.S. Upstream Oil and Gas Deal Value Hits $105 Billion in 2024
- Haslam Family Office Sees Big Opportunity in Oil and Gas
- Upcoming Blog: How Texas Oil Producers Are Thriving Riding Demand Wave
- Watch for King Webinars Featuring Mauldin and Rice
- Diversified Acquires Maverick for $1.275 Billion to Expand in Permian
Ukraine Strikes Second Russian Oil Refinery in Less Than a Week
Ukraine launched a drone attack on Russia's Lukoil Norsi refinery in Kstovo, near Nizhny Novgorod, early on January 29, 2025, causing a large fire. This marks the second attack on a Russian oil refinery in less than a week, following a strike on a major refinery in Ryazan. The Norsi refinery, which processes 262,000 barrels of oil per day, suffered significant damage, including a fire at a 20,000-ton oil storage tank. Ukraine’s defense forces have targeted Russian energy facilities to disrupt operations and support their ongoing military efforts. These attacks have led to fuel supply disruptions and reduced refining capacity in Russia.
Oil Traders Turn Bullish for 2025 as Market Dynamics Shift
Oil traders are turning optimistic for 2025, shifting from net short to net long positions in oil futures. Key factors driving this shift include potential U.S. sanctions on Iran, which could limit its oil exports, particularly to China. Additionally, OPEC+ production cuts and a stabilizing demand from China are reinforcing bullish sentiment. With these factors, crude oil traders are positioning for higher prices in the year ahead.
With President Trump’s return to office, there’s a renewed focus on energy independence and domestic oil and gas production. The president recently spoke to attendees of The World Economic Forum in Davos. He said, “The U.S. has the largest amount of oil and gas of any country on Earth, and we’re going to use it.” Watch the full video
Low Winds in Germany Push Up Power Prices Across Europe
Germany has been facing lower-than-usual winds for months, reducing wind power generation and causing electricity prices to soar. Without enough wind, Germany has had to rely more on fossil fuels like coal and natural gas to meet energy demand. Wind energy struggles because it depends on consistent wind speeds, but when those speeds drop, it can't produce enough power. In contrast, oil and gas are always in demand because they can be controlled and used anytime, regardless of weather conditions. As a result, energy prices have risen across Europe, putting a strain on both households and industries, especially in Eastern Europe.
Oil Prices Rise, Bringing Good News for U.S. Oil and Gas Producers
Oil prices climbed on January 28, 2025, giving U.S. oil and gas producers a much-needed boost. The increase followed the announcement of potential tariffs on Canadian and Mexican imports, which could create opportunities for U.S. producers by tightening energy trade. While global economic concerns and mild weather in the U.S. weighed on demand, a rise in U.S. crude oil stocks by nearly 3 million barrels suggests stronger market conditions. For U.S. producers, the price uptick and inventory growth could mean better margins and more stability in production. You can see the up-to-the-minute commodities numbers
here.
U.S. Upstream Oil and Gas Deal Value Hits $105 Billion in 2024
Dealmaking in the U.S. upstream oil and gas industry reached $105 billion in 2024, the third-highest total on record, though activity slowed in the second half due to fewer acquisition targets. The Permian Basin remained the top focus, but buyers are increasingly looking beyond it, exploring mature shale plays like the Williston and Eagle Ford basins. Gas-focused mergers surged fourfold in 2024, driven by strong demand for liquefied natural gas. Despite fewer targets, smaller operators may still face consolidation, and refracking offers a more cost-effective growth strategy. The largest deal in Q4 was Coterra Energy’s $3.95 billion acquisition in the Delaware Basin.
Haslam Family Office Sees Big Opportunity in Oil and Gas
The Haslam family office, HF Capital, views the current lack of investment in oil and gas as a big opportunity for producing companies looking to raise capital for drilling. With $15 billion in assets, the Haslams are actively investing in U.S. oil fields and believe there’s strong potential for oil and gas producers to thrive as capital for these projects becomes scarce. HF Capital's focus on energy investments highlights a growing interest in supporting companies that can tap into these opportunities, creating a favorable environment for producers to attract capital and grow their operations.
HAPPENING AT KING
Upcoming Blog: How Texas Oil Producers Are Thriving Riding Demand Wave
With global energy prices on the rise and disruptions hitting major oil producers like Russia, Texas oil producers are well-positioned to meet the growing demand for energy. As industries like AI and data centers require more power, Texas, with its rich natural gas reserves and robust infrastructure, is playing a vital role in supplying this energy.
Be on the lookout for an upcoming blog at kingoperating.com/blog, where we’ll explore how Texas oil producers are benefiting from these trends and what the future holds for energy production.
Watch for Webinars
We are hosting informative, insightful webinars every month. Be on the lookout for more webinars featuring King's Chief Economist John Mauldin and our Macro-Economic Advisor Eric Rice coming up in February.
Move to Watch
Diversified Energy Acquires Maverick for $1.275 Billion to Expand in Permian
Diversified Energy is buying Maverick Natural Resources for $1.275 billion to boost its presence in key oil and gas regions, including the Permian Basin. The deal will create a combined company worth about $3.8 billion, producing around 200,000 barrels of oil equivalent per day. CEO Rusty Hutson said the acquisition fits well with their strategy, as Maverick’s assets and performance align with Diversified’s goals. The deal is expected to close by mid-2025.
Also, please let us know how we are doing at King Operating Corporation. Leave a review here.
Thank you for your continued support, and if you have any questions for myself or any member of the King team, please don't hesitate to reach out.
All the best,
Jay
