A thread – Our takeaways from the Dallas Fed Energy Survey (and how sentiment has changed from prior surveys)
Costs: Expected Finding & Development costs have slowed. Only 66% of Oil & Gas companies surveyed expect costs to rise (vs 72% last quarter) #oott#WTI#oilgas#invest
A thread –Dallas Fed Energy Survey
The drop in WTI has ‘Company Outlooks’ falling quite hard from prior quarters – with only 39% reporting a better outlook (vs. a high of 82% seeing a positive outlook in 1Q22). #oott#oilandgas#WTI
A thread –Dallas Fed Energy Survey
The Uncertainty Index continues to move higher and now back to levels seen at 2Q20. This ‘uncertainty’ likely keeps upcoming capex budgets muted, putting a lid on new oil and natgas supply for 2023 #oott#WTI#crude
A thread –Dallas Fed Energy Survey
Despite increasing concerns, Employment still remains robust – with 21% of Oil & Gas companies reporting more hiring whereas only 4% indicating less hiring going forward. The Index still remains near record highs #oilgas#crude
A thread –Dallas Fed Energy Survey
Oil & Gas mgmt expect WTI prices to be $88.74/bbl by YE 2022. This was above the reference price at the time, indicating mgmt likely see a tight physical market than what financial markets are suggesting #WTI#OOTT
A thread –Dallas Fed Energy Survey
Oil & Gas mgmt expect NYMEX natural gas prices to be $7.97/mcf by YE 2022. This is a pretty meaningful jump vs. 1Q22. Despite the natgas reference price falling q/q, mgmt increased their natgas price expectations q/q #LNG#ng
A thread - Dallas Fed Energy Survey
These are some of the special questions that caught our attention:
"Do you expect a significant tightening of the oil market by the end of 2024, given the current underinvestment in exploration?" 85% said yes
A thread - Dallas Fed Energy Survey
These are some of the special questions that caught our attention:
"Do you expect the age of inexpensive U.S. natural gas to come to an end as LNG exports to Europe expand?" 69% said yes by 2025; 12% said yes by 2030 #natgas
A thread - Dallas Fed Energy Survey
These are some of the special questions that caught our attention:
"Do you expect financial investors to return to the oil and gas sector?" 79% said 'some'; 10% said yes #investing
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Thread (1/5) Why have Oil & Gas stocks been so volatile? Since 2019, nearly all buying of CDN midcap E&Ps has come from high-turnover funds. Thus the first sign of WTI weakness had them rush to the exits. Encouragingly, low-turnover funds were the main buyer in 2Q buying $1.4 bln
Thread (2/5): Since 2019, most buying of CDN midcap Oil & Gas names have been from energy focused funds. Q2 was the moment where the 'Generalist' investor has finally come back (and in size), buying $1.1 bln! The sector is 'investable' again #energy#yyc
Thread (3/5): Importantly, some of the largest global funds are picking up CDN midcap Oil & Gas (finally). Given their AUM size, it can take multiple quarters to establish a position, suggesting there is more large block buying to come in future quarters #yeg#energy#CrudeOil
Thread (1/5): EIA Short-Term Oil Outlook Highlights
A top concern we hear from investors is the "Backwardation in the oil strip". This price reflects a recovery in crude inventories but as the EIA revisions show today, they’re back to revising inventory levels lower again #oott
Thread (2/5): EIA Short-Term Oil Outlook Highlights
Despite recession fears & high gasoline prices, global oil expected consumption was left essentially unchanged (OECD countries revised 0.2% lower; offset by non-OECD countries higher) #crude
Thread (3/5): EIA Short-Term Oil Outlook Highlights
Although no changes were made m/m, oil supply has still been revised down from Jan forecasts. This is despite WTI prices moving higher since then. Overall, shows the discipline with producers and not rushing back to drill #oott