Just finished a 3h 31m update by S Garg on youtube. He does every quarter. Focus, was was on US shale, with about 2h 42 there and remainder on Q&A which he covers lots of O&G companies, and their recent reporting. I wanted to skim but was sucked into watching the whole thing. A deep immersion on what's going on. A few highlights that stick out.
Oil supply in general is still about 2MM/day short, less 1MM/day by SPR release. World inventories continue to drain to unprecedented levels. Were nearing uncharted waters.
Went into air traffic on various countries as a proxy for covid and economic lock down. Domestic China traffic recovered for last 6 weeks, (as well as their oil purchases). China demand to increase big time. Japan, Mexico, Vietnam, Spain, Greece and many others, traffic has recovered above precovid. Singapore, Malaysia, Australia still down due to covid policies. Uk, Germany traffic down due to airports, and airlines not being staffed up. 1MM/d demand increase when all air traffic fully recovers.
US gasoline demand still strong miles traveled, gas buddy info, no hint of the dreaded demand destruction.
EIA forecasting is junk. US production yoy up 800K, 250K due to GOM projects, most of the rest by smaller conventional wells reworked due to high oil price. Little to no growth from shale, and his thesis is that Permian has peaked and will start an extreme decline, as it was ramped up too fast in the boom by cheap money. A shortened Hubble curve on steroids. Rynstat had a forecast of US production increasing 1MM a day for 6 years, funded by Saudis. Guess this is what our Administration is touting. Well, he fired a full spread of 6 torpedoes of data to disprove this lie. All six hit imho. Too much detail to even summarize. What a mess.
Some insight on paper trading oil near the end which I couldn't really follow. Bottom line expect more volatility.
Discussed various companies in Q&A.
High on VET, Montney buy, Corib, EU gas prices high for years, small float, started buybacks before earnings: Aug 11 - which may be big. He has a large stake in options.
High on MEG, shares have languished for months, but could explode like VET. Starting buybacks sometime in Sep, 2% a month.
Neutral on CVE, problems with refineries. Still digesting Husky.
The new "inflation" proposed bill increases co2 credits in the US from $35 to 85/ton. Great news for OXY with lots of old well inventory, shrewd move by Buffet. Lots of other US companies which could benefit.
View on increased co2 regulations in Canada. Cap would stop any Canadian production increases which would support oil price, and Canadian oil profits. His view is that Canada is the only area in the world which could increase production by 5MMbod in the mid term.
Baytex, good Canadian assets, why not sell Eagle Ford for 2BB and go all in up north in Clearwater.
High on OBE but similar to Surge which he owns now.
Good comments on CPG near the end.
Anyway just great data and in depth discussion.
https://www.youtube.com/watch?v=6OYn8HbSSTc