Another big energy merger deal, another yawn from Wall Street. $CVX + $HES and $XOM + $PXD have very different assets, but contain several of the same messages. Many will look back at these deals in 3 years and wonder why they didn’t listen. Thread below. #EFT #OOTT Biggest message - LONGEVITY - $XOM and $CVX are spending $110B combined with a view that hydrocarbons are going to be around for a long time to come. INVENTORY - $PXD has some of the best in the Permian. $HES has long-lived world class position in Guyana.

I owe some additional color on my 14-15mmbopd by '27-'28 commentary. This doesn't happen because of consolidation of industry, I think it will happen because the world will need the barrels and US shale has the capacity to deliver. More via thread. #EFT #OOTT

https://twitter.com/pickeringenergy/status/1712056095911432375

Today the world sits at demand of 102mmbbls/day. I think its entirely possible/likely that we grow oil demand by 1-2%/year through 2028. That would put consumption at 107-112mmbopd. That would mean the world would need an incremental 5-10mmbopd by 2028.

Quick takeaways from Day One of $XOM + $PXD combo: Market didn’t love it, with XOM off ~4%. Probably a bit of deal exhaustion. If u believe this cycle has duration (which I do), this was a solid (massive) bolt-on at a decent price for excellent assets. Thread below #EFT #OOTT $XOM closed -4% at $106.49, with $PXD +1.5% at $240.82. 2.3234 exchange ratio says ~$247.40 at deal close, so PXD is trading only -2.6% vs. full value. Says the market believes the deal has a high likelihood of closing, despite the inevitable bellyaching from political types

The summer ends and things get busy. Haven't posted much, so here is my current stream of consciousness/ramblings. #EFT #OOTT

* Last Friday was scary - the air pockets in rates, the dollar, etc. was spooky. Felt like there could be a crash (like -10-15% S&P). Glad there wasn't. * The spanking taken by energy on Friday (WTI -6% breaking $80, -7% $XLE, -9% $OIH, -8% $XOP) was essentially the market throwing in the towel on the economy and saying "things will be bad"
* When towels are getting thrown in, fundamentals take a back seat to trading.

The energy shellacking continued today, but looking across the market, the action is actually fairly consistent (more in the thread below).As/when the industry puts up sustained cash flows, this selloff will look way overdone - but who knows if its over yet!?!? #EFT #OOTT Market action says recession coming, interest rates won't go up as much as you think, inflation will moderate. Examples:
1) bonds up, yields down
2) commodities softening - not just oil - wheat, copper, etc (why? expectations of demand softening)

Quick thread on White House address on gas tax holiday. Thanks for pulpit today @PowerLunch and Tyler Mathisen - so much more to say. Key point - "we're doing everything possible" is simply NOT the case. Much more is possible.

More below, #EFT #OOTT Recap of Biden statements:
1) Proposing Fed gas tax holiday - 18-24c/gal, 2) request states also waive (20-30c/gal),
3) Refine more oil
4) US production will be a record next year
5) OPEC+ adding supply
6) Gas stations need to pass along lower prices
7) Putin's fault = +$2/gal

A few thoughts #EFT #OOTT

Seems like old times...the bad old times. The yucky market finally caught up with oil and energy stocks. WTI went from "so good its almost bad" in the $120's to "still darn good but falling like a knife" in the $110's. XLE -20% since last Wednesday. Let's not forget natty. The cool new kid at the party wound up puking in the bushes - dropping from $9.30's to $6.90's (-26% for those scoring at home).

To what do we owe this nasty behavior? Well, risk off is the easiest and most obvious answer. Everything's ugly.

I have been one-directional in raving energy industry looks attractive. #EFT #OOTT Tight supply/demand AND structural underpin of Energy Security with Russia situation.Price is the one datapoint that (is supposed to) reflect all variables going into the collective market thinking I guess that is why chart people usually focus so heavily on price (and volume) - in a reasonably deep market like oil and gas, it is a dispassionate indicator of a jillion smart people with a jillion different objectives (trading, hedging, consuming, etc)

A lot to unpack around President's press conf remarks on SPR, gasoline, etc. Thread below.

Conclusion: Nothing I saw today makes me less bullish about owning energy equities.
Watch the back end of the curve (trading higher) - that is the tell. FY25 WTI is $73 going to $80+. First observation: Remember, no matter how many comments about patriotism, "the good of the world/country", there is a political dynamic that can't be ignored. Biden is taking a hit in approval ratings on high gasoline prices and midterms are coming up.

Have been pondering this $WLL situation. #EFT outrage over exec comp. Understandable..in old days, a BK company fired old management and hired new ones. Those people well paid, but usually less than prior team. Didn’t feel quite as icky. Thread continues... Thinking deeper, lets realize a BK company is virtually worthless for prior equity holders. That value incinerated as assets < liabilities, old equity essentially worth zero. Creditors become new equity, throwing standard 3% bone to old equity. Minimizes lawsuits I guess.