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arjun⚡️murti 2.0 Profile picture
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Mar 6 • 5 tweets • 2 min read
Good pts from @ViscosityRedux. The world changed last week. It seems pretty clear from the IEA’s 10-pt “plan”, EU musings, and US federal gov’t noise, there does not yet appear to be a recognition that a “climate only” focus needs to evolve…in a big way…
2/ Canada is part of the solution. The “last barrels” of oil should come from the USA + Canada. We need more from both areas to offset geopolitical problem areas.

arjunmurti.substack.com/p/energy-secur…
3/ The search for “short-term” barrels we seem to be seeing based on US gov’t rhetoric appears to assume that Russia will return to being a long-term supplier. Why? And WTF?
4/ How can anyone be sure that Russia doesn’t morph to pariah state status like Venz and Iran. What would that mean for its long-term supply potential?
5/ Yes, we should look for ways to shift demand away from fossil fuels. Match that with USA + Canadian supply growth. Instead, current western public policy motivate the opposite.

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More from @ArjunNMurti

arjun⚡️murti 2.0 Profile picture
Mar 5
1 of 11/ Energy security and the case for Canada.

The world is better off with a healthy and growing Canadian oil and gas industry. #FreeCanadianOilandGas

arjunmurti.substack.com/p/energy-secur…
2/ The tragic events in Ukraine are an unfortunate reminder that a singular focus on climate ideology contributes to energy insecurity, un-affordability, and potentially un-availability while making the world less safe and less economically and environmentally healthy.
3/ If the world is serious about its over-arching challenge which is to eliminate remaining global poverty, provide a rising standard of living for all, while minimizing climate and environmental externalities, Canadian oil and gas will need to be part of the solution.
Read 11 tweets
arjun⚡️murti 2.0 Profile picture
Feb 12
1 of 9/ Super vol vs super cycle, a subtle but important mindset difference

Post my ROCE Deep Dive and ESG 2.0 & Energy Transition series, this week I turn to how Oil & Gas cos should look to navigate a “super vol” energy transition environment.

arjunmurti.substack.com/p/super-vol-vs…
2/ I prefer “super vol” over “super cycle” as the world is not short resource and ill-advised climate policies and ESG virtue signaling extremism can shift suddenly. We are likely to see sharp moves in both directions, not just upward.
3/ Suggestions on how cos might navigate a super vol transition era:

(1) Recognize high commod vol will persist for many years and prices can move sharply both ways; it's about navigating the extreme ends of the cycle, not thanking God a bull market is back.
Read 9 tweets
arjun⚡️murti 2.0 Profile picture
Jan 22
1 of 5/ Scope 3, as currently defined, is a societal cop-out

This is the 4th note in my series on how the oil & gas sector should think about energy transition resilience. The punch-line: Scope 3, as currently defined, is a societal cop-out on dealing with carbon emissions.
2/ The idea that energy supply, which is essential to modern human life and has contributed to big gains in life expectancy, poverty reduction, and environmental benefits, should have its negative externality (CO2) treated like any other consumer product issue is absurd.
3/ If de-linking oil D from GDP is the key to address CO2 w/o succumbing to Malthusian pessimism, #1 thing we could do (though won’t) is Ban SUVs (i.e., reform CAFE), the lack of which will be THE reason oil D will continue to grow through 2030 and badly miss NZ0 goals.
Read 6 tweets
arjun⚡️murti 2.0 Profile picture
Dec 18, 2021
1 of 8/ Dumb Calls I Made as a Street Analyst, Post #1

I have written two deep dive posts about applying an ROCE framework to the energy sector. Here is a practical example using a terrible call I made on OXY post its $3.6 bn March 2000 Altura Energy (Permian Basin) acquisition.
2/ I hated the deal at the time…that was wrong. A sharp, subsequent improvement in OXY’s ROCE post Altura, partly due to good performance on the asset and partly due to the onset of the Super-Spike era, made it a home-run stock in the 2000s after a miserable 1990s.
3/ I recall no talk about China/EM demand potential in 2000. We all expected robust non-OPEC growth. The Euro majors were in a bidding war to have the lowest L-T price deck: $16, $14, $12 forever? At GS I fought for the $17.50 view...yes 2 decimal precision!
Read 9 tweets
arjun⚡️murti 2.0 Profile picture
Dec 7, 2021
1 of 10/ From Not-For-Profit to a New ROCE Super-Cycle for Traditional Energy

Structural ROCE deep dive post #1: Capital allocation more important than oil price over long run
2/ I believe 2021 will mark the start of a new ROCE super-cycle era for traditional energy, with 2020 the end of a crushing 15 year ROCE downturn (2006-2020). This post is about ROCE, not oil prices.
3/ Energy was a not-for-profit sector generating a 0%—zero!—ROCE over 2016-20; extending to 2011-20 was not much better at a muni bond-like 4%. The end of the Super-Spike era and onset of the shale oil revolution has been a disaster for traditional energy.
Read 10 tweets
arjun⚡️murti 2.0 Profile picture
Nov 24, 2021
1 of 12/ Stop trying to get Blockbuster Video — i.e. Big Oil—to accelerate energy transition

Crazy-idea-of-the-week: Free Big Oil to focus on producing (still) needed oil and gas.
2/ The obsession by some ESG investors and others passionate about reducing CO2 to get Big Oil to switch CAPEX from Oil & Gas to low/zero CO2 projects is baffling. How many examples in any industry are there of companies transitioning to next gen tech or biz models?
3/ Did the failure of Blockbuster Video to recognize the Netflix threat stop streaming? Or did it actually hasten it. Thank goodness Netflix had the guts to stay independent.
Read 12 tweets

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