Newsletter No. 56
Hello,
It is Thursday, March 7, 2024. There is a lot of oil and gas news to talk about. So, I am going to jump right into some of the highlights.
This Week’s Headlines
- Industry Expert Jeremy A. Paul Sheds Some Light on Oil and Gas Market
- Oil Prices Climb as Saudi Warning Sparks Speculation of OPEC+ Output Cuts
- UK Extends Oil and Gas Windfall Tax Amid Industry Concerns
- Russia’s Oil and Gas Income Surges 80% Despite Sanctions
- Fueling Success: Diving into the World of Oil and Gas with Rhett Bennett, Founder and CEO of Black Mountain
- Talos Energy Expands Portfolio with QuarterNorth Energy Acquisition
- TotalEnergies and Qatar Secure Stakes in South African Oil and Gas Exploration
Global Oil & Gas News
Industry Expert Jeremy A. Paul Sheds Some Light on Oil and Gas Market
Renowned oil industry expert Jeremy A. Paul sheds light on the dynamics of the oil and gas market, emphasizing its resilience and growth amidst geopolitical changes. With extensive experience in the sector, particularly in the U.S., Paul discusses the impact of conflicts like the Russian-Ukrainian crisis on global oil prices. As CEO of Eagle Natural Resources, he underscores the complexity of energy-related conflicts and their influence on commodity prices. While acknowledging the growing conversation around sustainability, Paul cautions against an abrupt shift to renewable energy, citing the ongoing reliance on proven reserves. Despite environmental concerns, the oil and gas market, according to Paul, presents investment opportunities amid geopolitical uncertainties and inflation.
Oil Prices Climb as Saudi Warning Sparks Speculation of OPEC+ Output Cuts
Oil prices rose after a warning from Saudi Arabia’s energy minister, raising expectations of potential output cuts by OPEC+. Brent crude settled at $76.84, up 1.1%, while U.S. West Texas Intermediate (WTI) reached $72.91, up 1.2%. The increase is driven by forecasts of a tighter gasoline market and optimism from a surge in U.S. gasoline futures. The warning from Saudi Arabia adds to concerns about supply shortages, potentially leading to discussions on additional output cuts at the upcoming June 4 meeting. Analysts note that Brent crude prices need to surpass $77.50 for a significant sentiment shift. However, uncertainties surrounding the U.S. debt ceiling may impact oil’s upward momentum amid ongoing economic challenges.
UK Extends Oil and Gas Windfall Tax Amid Industry Concerns
The UK government, led by Jeremy Hunt, prolongs the 35% surcharge on oil and gas profits until 2029, despite objections from the Scottish Conservatives. Originally introduced in 2022 to address rising energy prices, the tax extension aims to navigate ongoing challenges related to the Ukraine war. Critics, including industry leaders and Scottish Conservative leader Douglas Ross, express worry about its impact on investments and jobs. The decision sparks debate and highlights divisions within political circles, leaving the industry and stakeholders grappling with the implications.
Russia’s Oil and Gas Income Surges 80% Despite Sanctions
In February, Russia’s earnings from oil and gas sales soared over 80%, exceeding $10 billion, despite Western sanctions. Taxes on oil and petroleum products doubled, making up 84% of total hydrocarbon revenues. This financial boost, crucial for Russia’s budget amidst growing military expenses from the Ukraine conflict, defied efforts to limit its oil revenue through sanctions. Moscow adapted by using tactics like a shadow fleet of tankers and collaborating with non-Western partners. To safeguard cash flows, Russia also enforced a price floor mechanism, ensuring tax payments based on a $15-a-barrel discount for Urals to Brent.
The Jay Young Show
Fueling Success: Diving into the World of Oil and Gas with Rhett Bennett, Founder and CEO of Black Mountain
I recently sat down for an insightful interview with Rhett Bennett, the visionary founder and CEO of Black Mountain, a powerhouse in the Texas oil and gas industry. Rhett takes us on a journey, sharing the fascinating story of his rise from a Kentucky coal mining family to leading a highly successful frac sand company in the heart of the Texas shale plays. On the latest episode of The Jay Young Show, Rhett opens up about his strategic prowess, unveiling the secrets behind spotting opportunities, rapidly scaling operations, and deftly navigating the ever-changing dynamics of the oil and gas landscape.
We dive into the technological marvels of horizontal drilling and fracking, gaining a deeper understanding of the industry’s evolution under Rhett’s leadership. Together, we explore the astonishing growth of the Permian Basin, witnessing its transformation from 1 million to 5.8 million barrels a day in just a decade.
Beyond the technicalities, Rhett and I look at the broader implications of U.S. energy, discussing its pivotal role in geopolitics and global security. You can watch the episode below. You can also subscribe to The Jay Young Show on Apple or Spotify, and you can watch many of the episodes on YouTube.
MOVEs to Watch
Talos Energy Expands Portfolio with QuarterNorth Energy Acquisition
Talos Energy Inc. has successfully concluded the acquisition of QuarterNorth Energy Inc., adding deepwater assets to its portfolio. The completion of the deal results in approximately 183.0 million shares of common stock, with 24.4 million shares issued to QuarterNorth shareholders. Talos President and CEO, Timothy S. Duncan, expresses enthusiasm for the early closure of the transaction, emphasizing the potential for increased free cash flow and expanded growth opportunities. The acquisition also brings Joseph A. Mills, QuarterNorth’s designee, to the Talos Board of Directors, enhancing the company’s leadership with valuable industry experience. Talos plans to provide updated operational and financial guidance for 2024 in the coming days.
TotalEnergies and Qatar Secure Stakes in South African Oil and Gas Exploration
TotalEnergies and QatarEnergy are set to acquire stakes in an oil and gas exploration license off South Africa’s coast, part of their strategy to develop the Orange Basin area in Namibia. In this move, TotalEnergies will hold a 33% stake in the offshore block 3B/4B license, covering about 7,000 square miles, while QatarEnergy will take a 24% stake. The remaining ownership will be with Africa Oil, Azinam (owned by Eco Atlantic), and Ricocure. This development follows TotalEnergies’ successful Venus discovery in Namibia, contributing to the exploration efforts in the promising Orange Basin. Namibia, once without oil and gas production, has become a hotspot for exploration, with notable discoveries by industry leaders like Shell, TotalEnergies, and Galp.
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Recommended Reads
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MEJIA and ALIAKBARI: Red tape and uncertainty hurting oil and gas investment in Canada
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
