Daily Energy Standup Episode #208 – Energy Insights: Shifting Tides in the Fossil Fuel Era – A Deep Dive into the IEA’s September 2023 Report

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‘Beginning of the end’ of fossil fuel era approaching, says IEA

IEA September Oil Market Report – As featured on the ENB Daily Show

Michael Tanner: [00:00:15] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous Thursday, September 14th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas. Stu is out on assignment today. So I am rocking a solo show, going to be a little bit smaller, really only have one story to cover, and then I’ll dive into some of the finance related stuff and an M&A deal that actually just dropped about 20 minutes ago before I’m about an hour and 20 minutes goes by, recorded this. So I’ll bring you some late thoughts on that. We also have the EIA coming out with a pretty large crude storage build. But I want to start with the story Oil Market Report for September 2023. That’s out by the IEA. The quote of the article, quote, Beginning of the end of the fossil fuel era is approaching, says the IEA dun, dun dun. But as always, guys, before we dive into that, check us out world’s greatest website www.energynewsbeat.com dashboardenergynewsbeat.com. You can email the show [email protected] Subscribe to us Apple Podcasts. Spotify hit us up at YouTube at Energy News Beat. If I was a 16 year old YouTuber, I’d say smash that like. But. But I’ll refrain from doing that. And just we appreciate everybody who sits there and subscribes to the show. That’s that’s the best way to help us out. [00:01:35][79.9]

[00:01:35] Let’s go ahead and dive right in. We’ll keep it quick today guys. EIA this morning drops crude Oil Market report for September 2023. As I mentioned, the highlight beginning of the end of the fossil fuel era is approaching. According to the IEA. They go ahead and actually put out a an op ed in the Financial Times. Vahid Bril, he’s the IEA head. The quote is the world is on the cusp of his dawning historic turning point, speaks for the three fossil fuels are a welcome sight. Interesting. The IEA welcomes aid to fossil fuels growing not interested in any money from Saudi. I’ll tell you that much showing that the shift to a cleaner, more secure energy systems is speeding up and that that effort avoids the worst effects of climate change that are incoming. Let’s go ahead, read the top line numbers. The world oil demand, according to the IEA, remains on track to grow by 2.2 million barrels per day in 2023, to just below the record of 102 million at 101.8 million barrels per day in 2023, mainly led by a resurgence in Chinese consumption, jet fuel and petrochemical feedstocks, China will dominate the overall increase to 101.8 or 102.8 million barrels per day, and that based on a below trend GDP growth. The extension of those output cuts by Russia and Saudi Arabia through the end of the year, again, investors are going to lock in a substantial market deficit. What they don’t tell you is that prices are up. They just tell you there’s a market deficit. They don’t necessarily tell you prices are going to go up. We do know that Russian they also mentioned Russian oil export revenues surged by 1.8 billion to 17.1 billion in August as higher prices have more than offset their lower shipments, even though they did ease exports by 150,000 barrels per day to 7.2 million barrels, which is again below their average shipments both to China and India slumped as well. Refining margins did hit eight month high as they did struggle again as refiners struggle to keep up with a lot of this demand. It’s just really interesting, though. You know this I think for heat re all this IEA and I’d recommend reading this article on energy news he mainly talks about the sooner than expected peak for fossil fuels was primarily driven by the speculative growth, the spectacular growth of clean energy and including solar panels, electric bills. What data is he looking at? This is just what I don’t understand about the IEA. What data are they looking at? I don’t know, because if you look around, it’s like, Oh, where’s Waldo on these solar panels, Where’s Waldo on this? The adoption that we’re all talking about, we just talked about a few days ago, Secretary Gramholm can’t even figure out how to take an ETF from four state four states away and they have to, you know, parking spot to make sure that there’s enough charging ports to so they can get there on time. I don’t know what data this guy is looking at but it’s absolutely insane. You know he did mention that this that in order to these projected declines are unfortunately nowhere near steep enough to put the world on path to limiting global warming to 1.5 degrees Celsius. This will require significant, stronger and faster policy action by governments. So our friends at the IEA think we’re all dead because oil and gas demand is going up. But by 2030 you’re going to be off it. And that’s an oversupply We’re not going to be all for by 2030. They’re saying it’s going to peak and then slowly start declining. I just say I doubt that when we look at the oil markets today, we actually saw a little bit of a slump today. It was it was a little bit of a of of a surprise, if only because the EIA, which is the Energy Information Administration here in the United States, they came out and actually showed a 4 million barrel rise in the crude oil up petroleum reserves. The IEA, the API yesterday only only set a. It is like one or 1.2. So this is about 3 million. Change to the upside is going to slightly her prices a little bit. Again, we’ve only edged down to 8874, even though we’re still at a ten month high as refining hits its 2020 highs. We did see that also in those numbers. So all around, okay, for oil, we’re a little choppy. [00:05:30][234.6]

[00:05:30] I thought the only really interesting I saw from an oil side today, guys vital energy they come out of three different agreements at this are three different M&A deals at the same time. Henry Energy, Paul City Property and Maple Energy Holdings call Citi and Henry. Those are both Midland operators, private family owned Maple Energy’s actually Riverstone. So a little liquidity event for the guys down there at Riverstone. They can enjoy their enjoy Bob’s Steakhouse tonight. I’m sure they’re eating well tonight. They’re set to close fourth quarter of 2023. To give you guys an idea, this is about 50,000 net acres in total. 44% of their reserves are oil. So it’s a little bit more of a gas weighted asset. To give you guys an idea for 2024, oil production is expected to be somewhere about 55,000 barrels of oil per day, which is pretty crazy. Add somewhere between 100 and 250 gross high value locations with an average break even price of $50. So cut that number by 90%. That’s the actual number. Acquisition sits in at a nice 2.9 times next 12 months. EBITDAX So you can read the read the fine print of what that means by 2.9. And again, we haven’t quite seen the three who’s going to pay three, We’ve seen two, we’ve seen about two and a half. We saw 2.9 with the Giddings Giddings deal earlier. We see vital come in at 2.9. Who’s going to be the one that breaks over the three times next 12 months? Cash flow. You know, obviously our Guy of the week, Vital energy to significantly increase Permian Basin scale through accretive transactions. Again, our favorite word on the show, guys,. [00:07:05][94.5]

[00:07:05] But that’s really all I’ve got is a little quiet of a day. Well, we’ll give you a break from from the climate hypocrisy and we’ll focus a little bit on some cool stuff going on. Oil and gas, guys, appreciate everybody interacting with the show, as always. Emails, [email protected] Follow us. Subscribe to our YouTube at Energy News Beat. But for Michael Tanner, guys, I’ll let you get out of here. This is our last show. You’ll see we have a Stuart podcast coming out tomorrow. You’ll hear the weekly recap on Sunday or on Saturday and then we’ll see you Monday, folks. Have a great weekend. [00:07:05][0.0][409.0]

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