RBN Energy

The massive energy-industry dislocations caused by the COVID-19 pandemic forced every upstream, midstream, and downstream player to consider what it all meant for them and what they could and should do to weather the storm. A common theme emerged: management needed to delay or even jettison their plans for growth and instead focus on efficiency by cutting costs, working to maximize the revenue from every molecule, and seeking out opportunities to streamline and optimize their operations. A prime example of this push for efficiency came last week with the announcement by Plains All American and Oryx Midstream that each will contribute assets to a new, Plains-operated crude oil pipeline joint venture in the heart of the Permian’s Delaware Basin. Today, we review the plan and its rationale.

Financial pain, increasing regulatory scrutiny, and rising environmental mandates have been keenly felt across the entire energy industry in the past few years. When times are tough and companies are struggling to regain their footing, corporate mergers often increase in frequency. One recently announced merger between two large Canadian midstream providers, Pembina Pipeline and Inter Pipeline, has grabbed headlines and is also turning into a corporate dogfight with a prominent third party trying to scuttle the merger and take control of Inter Pipeline. Today, we examine the two companies and what the combined entity might look like and what it might mean for the energy industry in Canada.

Nearly 300 million COVID vaccine doses have been administered in the U.S., and normal life is returning to public places across America. Actual fans are replacing cardboard facsimiles in ballpark seats, corner pubs and corner offices are filling up, and family gatherings now feature hugs instead of half-inch squares on a Zoom screen. And another powerful antidote, in the form of higher oil prices, has spurred a significant revival in the fortunes of the pandemic-battered upstream oil and gas industry. The spring-of-2020 crude oil price crash hit the E&P sector like a tsunami, shattering capital and operating budgets, upending drilling plans, eviscerating equity valuations, and raising concerns about whether some companies could generate sufficient cash flow to keep the lights on. Remarkable belt-tightening allowed most producers to survive, and the swift rise of oil prices beginning last fall dispelled the COVID clouds.  But the recovery in profitability and cash flow generation was slow. Today, we review the dramatic surge in E&P profits and cash flows in the first quarter of 2021.

Just one year ago, the onset of the COVID-19 pandemic plunged the energy industry’s exploration and production (E&P) sector — already reeling from a steep decline in oil prices in late 2019 — into a memorably brutal spring that threatened its survival. Demand cratered, price realizations fell to the lowest point in a decade, and cash flows dried up. Sure enough, E&P results for the first half of 2020 were a train wreck, with the three-dozen companies we track reporting a whopping $45 billion in losses, including impairments. But the dark clouds hovering over the industry began to clear in the second half of the year as the combination of production cutbacks and recovering demand triggered rising prices.  With the massive price-related impairments largely in the rear-view mirror, year-end 2020 results revealed that most E&Ps had clawed their way back to near-profitability. Today, we review their latest numbers and preview what we expect will be a sunny 2021 for the industry.

Much the way that COVID-19 accelerated the trends toward working from anywhere, shopping online, and exercising at home, the pandemic and its far-reaching energy-market effects fast-forwarded the challenges that many North American midstream companies had been expecting to face more gradually through the 2020s. The good news — if you can call it that — is that a lot of economic pain was front-loaded into the past 10 months. The bad news is that a sizable subset of midstreamers is saddled with too much capacity in shale basins where drilling activity and production are down sharply. For them, there’s still more pain ahead, even bankruptcy in a few cases. In today’s blog, we discuss highlights from the newly released 2021 edition of East Daley Capital’s Dirty Little Secrets report about what’s ahead for the midstream sector and 27 leading companies within it.

Wafting through the late autumn air in November, along with the sharp scent of burning leaves and the cinnamon-tinged aroma of pumpkin pie, was a moderate whiff of optimism for the energy industry’s long-beleaguered exploration and production sector. Equity prices in general were buoyed by news on the efficacy of the COVID-19 vaccines and the prospects of imminent approval that could finally bring the pandemic under control and improve industry fundamentals. E&P stocks, which also benefited from a rebound in third-quarter earnings, recorded the largest monthly gain in history: a 32% rise in the S&P E&P Index. However, their share prices were still down 69% from the 2019 highs and 45% from end-of-last-year levels as oil and gas producers still face a long road to return to “normal.” Today, we analyze the third-quarter earnings of the 40 major E&P companies we track and review the major impacts on the sector since the onset of the pandemic.

There’s no question, the pressures on many U.S. midstream companies have been steadily increasing for some time now, and the past few months have really tested them. Like exploration and production companies, refiners, and others in the energy space, midstreamers have seen their well-considered plans for 2020 upended by demand destruction, commodity-price gyrations, and cutbacks in capex, drilling, and production. While it may be tempting to simply wait out the last few weeks of this crazy, unforgettable year and hope that 2021 will be better, there’s actually at least some good news out there for the midstream sector, and good reason to believe that midstreamers have been positioning themselves to financially weather whatever next year may have in store. Today, we discuss highlights from East Daley Capital’s newly issued 2021 Midstream Guidance Outlook, which focuses on key trends affecting midstream asset owners.