Decent article on 3 bullish catalysts for oilhttps://oilprice.com/Energy/Crude-Oil/3-Bullish-Catalysts-For-Oil-This-Fall.html
Of particular interest to me was point #3 SUPPLY CRUNCH
"i
n an excellent op/ed, vice chairman of IHS Markit Dan Yergin observes that it's almost inevitable that shale output will go in reverse and decline thanks to drastic cutbacks in investment and only later recover at a slow pace. Shale oil wells decline at an exceptionally fast clip and therefore require constant drilling to replenish lost supply. Indeed, Norway-based energy consultancy Rystad Energy recently warned that Big Oil could see its proven reserves run out in less than 15 years, thanks to produced volumes not being fully replaced with new discoveries"
The article talks about major cutbacks in CAPEX and reductions in reserves for Exxon, Shell, and Chevron.
"Indeed, Norway-based energy consultancy Rystad Energy recently warned that Big Oil could see its proven reserves run out in less than 15 years, thanks to produced volumes not being fully replaced with new discoveries."
Unless I'm completely missing something, the demand for hydrocarbons is going to remain well beyond 15 years, regardless of the transition of transportation. The electrical grid is going to need huge overhauls and alternatives are just too expensive at this time. In addition, the need for petrochemicals isn't going away.
In summary, while the world is worried about stranded oil assets, I think SU's low cost, and soon to be "cleaner" oil strategy will keep the company producing for at least a couple of generations.
I don't disagree with Experienced's belief that SU needs to transition to renewables over time, but I think the company is well positioned to make the moves on its own terms and will continue to pile up FCF as it goes.
If the GS and JPM analysts predictions of $75 to $80 oil are correct, SU is going to be out of debt in about 4 years and have a few hundred million less shares. If the Bank of America analyst prediction of $100 oil in 2022 is correct, I have no idea what SU will do with all of the cash. I just hope they make well thought out moves about renewables as they go.