1 of 7/ A deeply serious, non-sarcastic thread on the US LNG "pause."

First, there is no such thing as a standard "industry view":
- US gas users (US pet chem, power gen) would favor LESS LNG and support the pause.
- Oil & Gas companies with previously approved LNG projects will favor LESS future competition.
- Buyers of LNG in Europe and Asia will favor MORE US LNG from all suppliers and would be against the pause.
- US gas producers that are NOT in the LNG value chain will favor MORE LNG exports (demand source) to possibly boost Henry Hub pricing.
- Wall Street generally HATES most traditional energy CAPEX and will favor FEWER new LNG projects. 2 of 7/ Europe.
- The risk of de-industrialization and perhaps an inevitable resumption of Russia pipeline gas creates downward risk to most long-term LNG demand forecasts for Europe.
- The occasional cold winter might provide a short-term respite.
- Europe is not a region in which any company or investor should want to base their CAPEX plans.
- Goodbye Europe, Hello Rest of Word has been a key theme of ours.

1/ CERAWeek2023 takeaways thread. Lots of early talk about pragmatism and needing to move to an orderly, from a chaotic, "transition" that will take many, many decades. The pragmatism is definitely welcomed...but doesn't change the reality that...

@CERAWeek #CERAWeek 2/ ...we are still very early in the energy CAPEX cycle. We are under-invested in capacity and deliverability in traditional energy. It is still way, way early in the ramp period for the multitude of new technologies being pursued and that would be needed to transition.

1 of 6/ Will Oil Go The Way of Coal?

Oil bulls can only hope so, as coal demand reached an all-time high in 2022 and shows no signs of entering terminal decline. On equities, IMO, there is no comparison between US coal and US oil & gas in terms of relevance and needed CAPEX. 2/ Coal demand reached an all-time high in 2022 driven by China and non-OECD demand. You can love or hate or not care…to me, it simply shows how hard it it is to kill massive, low cost, reliable, and secure energy resources.

1/ @SuperSpiked looks at the bubble stock cycle, EV hockey stick adoption forecasts, and what I expect will be a growing recognition that oil demand is not going to structurally decline any time soon. Oil demand resilience—>+ terminal value for traditional energy. 2/ The IEA’s “Net Zero by 2050” report mainstreamed the idea oil demand could peak soon. But that requires (1) efficiency gains to accelerate and (2) EV growth to hockey stick up. Neither is likely, in my view. IEA NZE report marked the start of the energy crisis era.

1 of 7/ Metaverse Meets Universe @SuperSpiked. As happens every 20-30 years or so, the world is structurally short deliverable oil, refined products, and natural gas/LNG. We are in need of a major CAPEX cycle that exactly no one wants. arjunmurti.substack.com/p/metaverse-me… 2/ A CAPEX cycle is unlikely so long as investors believe the traditional energy business is going away either this decade or next…neither of which I think is true. A “zero” terminal value is way too low, especially for 1Q/2Q ROCE companies.

1 of 8/ This week’s post focuses on sentiment toward the traditional energy sector. Key takeaway: It's early days in the new energy crisis era.

arjunmurti.substack.com/p/sentiment-wa… 2/ At a time when above- and below-ground inventories + spare capacity are exhausted and the normal world is in the process of ex-communicating Russia, we are in need of a major CAPEX cycle. This requires much more of a sentiment + mind-set shift than we have seen thus far.

1 of 5/ Energy macro commentary - A week of progress

Good to see a growing recognition from some left-of-center, climate types that higher US oil & gas production is a good thing…. a pretty notable departure from the overwhelming pre-Ukraine rhetoric. 2/ The increasing recognition of the importance of US oil & gas coupled with improving mid-cycle ROCE/FCF bodes well for long-term sector valuations. Energy availability, affordability, reliability, and security are all enhanced with a healthy US oil & gas industry.

1 of 10/ What does pariah state status imply for future Russia oil exports?

Shocking insight: pariah states tend to be unreliable oil suppliers because...wait for it...they are pariah states for a reason.
arjunmurti.substack.com/p/what-does-pa… 2/ Has Russia reached that point of no return where it faces long-term sanctions and exclusion from the group of "normal" functioning countries? It increasingly seems that way. The risk I am focused on is long-term structural oil supply declines, not short-term impacts.

1 of 7/ We need more good barrels and fewer bad barrels

Today’s post outlines a path for USA + Canada to displace 10 mn b/d of Russia + Iran oil exports by 2030

arjunmurti.substack.com/p/we-need-more… 2/ There are no great short-term solutions to the current energy crisis environment. But the tragedy in Ukraine should also leave no doubt that there is such a thing as “good” and “bad” barrels.

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…

https://twitter.com/viscosityredux/status/1500507845195821057

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…

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.

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.

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.

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.

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.

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?

1 of 10/ An open letter to COP27 organizers

Dear Team COP27, A few suggestions from someone who sincerely cares about reducing energy poverty, ideally with zero CO2.

Warning: Another attempt at Parody. Save the hate for a future tweet about newfound E&P capital discipline. 2/ No brainer Suggestion #1: Ban all delegates from using private planes (ex world leaders). Come on, this one is a piece of cake. Normally, I poke fun at virtue signaling. But we are all progressives on this point. I hear Lufthansa now offers “green” seats!

1 of 16/ Wouldn’t it be simpler for President Biden to just tell the truth about why oil prices have risen, since its mostly not his fault? Here’s a script outline he could consider:

WARNING: Non-partisan parody follows. My apologies in advance to everyone offended. 2/ Oil has a 150 year history of being a deeply cyclical commodity. Buy Bob McNally’s great book “Crude Volatility” that eloquently and entertainingly brings this reality to life. RN, it’s mostly good ole supply/demand.

1 of 10/ We badly need a new a narrative around climate and energy, if the goal is to have reliable, affordable energy the world needs with less CO2. The current “Oil is Evil and the New Tobacco” playbook, IMO, is driving a worst of all worlds outcome: Higher prices, Same CO2. 2/ Believing that we will have less CO2 if we could simply force oil companies to address “Scope 3” emissions is a fairy tale. You probably can succeed in killing the western oil industry as has happened with US coal. But the CAPEX, jobs, and CO2 will only shift to other regions.

1 of 8/ Energy Transition public policy and ESG pressures - the best thing going for the oil & gas sector

The unfolding energy crisis is unlike any prior. Normal investor angst about poor ROCE have been turbo-charged with a “worst of all worlds” public policy and ESG backdrop. 2/ We are not devoid of low-cost oil or nat gas resources, as we were in 2003-2010. But exactly no one wants higher CAPEX. Traditional and ESG investors, climate activists, and US/Canada/EU governments all argue for limiting oil & gas CAPEX.

1 of 11/ Energy lies, damn lies, and politicians...Part 1.

This is a non-partisan look at energy sector falsehoods, mis-truths, and outright lies told by politicians, industry participants, environmentalists, and Wall Street analysts. 2/ ENERGY LIE: Gasoline prices are high due to “price gouging” and “manipulation” by oil companies (implication: by Big Oil).