Chevron’s acquisition of Noble Energy launched an ongoing M&A frenzy in the U.S. shale patch as companies look to consolidate to cut costs while adding immediately cash-flow-positive resources to their portfolios. For Chevron, the US$5-billion all-stock deal to take over Noble Energy was not only about adding acreage in the DJ and Permian basins.

Through the transaction, the U.S. supermajor is gaining more exposure to natural gas assets in the Eastern Mediterranean, including a large stake in Israel’s biggest gas field, which started production in December 2019.

The already producing Leviathan gas field, the biggest energy project in Israel ever, is diversifying Chevron’s portfolio with more natural gas resources and a position in the eastern Mediterranean very close to the Middle East and European gas markets.

The timing of the U.S. supermajor’s bet on natural gas in the Eastern Mediterranean coincides with expectations that gas will play a major role in supporting the growing share of renewables in Europe amid the European Union’s (EU) push to bet heavily on renewable energy sources to reach carbon neutrality by 2050 under the European Green Deal.

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Source: Oil Price

Dan Doyle speaking: To talk about a Biden-Harris administration let’s first talk about the Obama-Eric Holder/Loretta Lynch administration. Back in 2015 and 2016, Holder and Lynch were President Obama’s Attorney Generals. A frack company was beset with an IRS audit, an International Fuel Tax (“IFTA”) audit.

In addition to that, there has been a Department of Labor investigation. Let’s talk more about the 1031 Exchange Biden effect on U.S Oil and Mineral Rights in this article.

IRS Audits

Without exclusion, I undergo personally an audit by the IRS. Fortunately, I and my company gain clearance from the IRS audit without penalty (other than paying our accountant). The Department of Labor audit got us for something less than $250, based on some arcane back of the book calculation on arbitrarily given bonuses. But the IFTA audit did some damage with a $40,000 paperwork-related fine even though all our taxes were paid at the pump. All three agencies and all four audits were federal, and all came at roughly the same time.

When I asked the Department of Labor attorney how she even found our little basement office, she kept mum. There was no point in her answering—we both knew why she was there. Her 18,000-employee strong department, like the IRS and IFTA, had been weaponized to undermine the oil and gas industry. AGs Holder and Lynch, likely with President Obama’s blessing, were picking and choosing and I and they chose my industry.

On March 1st, 2016, coming home from work, I tell my wife my worry about Aubrey McClendon. He is the founder of Chesapeake Energy and American Energy Partners. The following morning, there was an arraignment in Oklahoma for violations of the Sherman Anti-Trust Act.

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Source: Oil Price / Photo: Wikipedia Creative Commons

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Oil prices will struggle to rise above $50 a barrel because of the technological shift in U.S. shale that has unlocked more production in recent years, and because of the growing importance of environmental considerations in investing, Morgan Stanley says.

According to the investment bank’s most recent market insight on crude oil, the market moved from a ‘peak oil supply’ narrative back in 2008 to concerns about peak demand in 2020.

“How we got here is a story of technology and environmental advocacy, and one that has material cross-asset implications,” Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley, said.

Technology, especially fracking, allowed U.S. producers to dramatically raise oil production in recent years, while investments in green energy and technology are already becoming a major investment theme, according to M.Stanley.

Expectations that oil demand may be closer than thought before the pandemic and the environmental policies have significant implications on the oil market, the investment bank said.

“Coupled with the near-term challenges our analysts see for the oil market, we think prices will really struggle to move above $50/barrel, as levels above this will encourage producers to hedge much more aggressively at these prices. As such, oil prices should lag other ‘reflationary’ assets in this cycle that we like a lot more,” Morgan Stanley’s Sheets said.

The Wall Street bank is more bullish on natural gas producers than it is on oil producers because of more favorable fundamentals in the gas markets.

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Source: Oil Price

Their budgets just don’t add up anymore. That’s why natural gas offers the lifeline of distressed gulf oil giants.  Oil-rich Arab nations are in the throes of a deep economic crisis and facing gaping holes in their finances. Saudi Arabia needs the price of Brent crude to rise to $76 dollars a barrel while UAE needs it to hit $69, Bahrain $96, and Oman $87 to balance their books. Save for tiny Qatar, no Arab oil producer can balance its books at the current price of $40/barrel. GCC nations are now facing huge fiscal deficits, with Kuwait’s deficit of ~40% of GDP the highest in the world.

To make matters worse, once free-flowing credit lines have started to shut down for some. A good case in point is Oman, which is struggling to borrow after credit-rating agencies listed its debt as junk. Jordan had to plead to receive a $2.5bn aid package from the Gulf, only half of what it got eight years ago. Meanwhile, no one from the Gulf appears willing to bail out cash-strapped Egypt or Lebanon.

In short, the countries are being forced to take pretty drastic steps.

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Source: Oil Price