17
Jul

Wrap – Week Ended 07/16/21

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July has been a tough market for energy names.

  • July is two weeks old.
  • July is all we have of the third quarter so far.
  • This is a function of:
    • a sharp rise off the lows of spring 2020.
    • strong gains YTD 2021 in the traditional energy space relative to the broader markets.
    • and profit protection after strong gains in oil, natural gas, and NGLs
    • with oil price momentum having slowed (but with no sell off by speculative longs) in the face of some minor OPEC+ noise and a resurgence of Covid cases.
      • OPEC+ said to be meeting 12 pm Vienna time 7/18/21. 
    • meanwhile the natural gas 12 month strip at $3.49 rests this weekend at a new high for 2021.
    • and NGLs are more than solid at well over 12 month highs.
  • Earnings will be sequentially strong in almost all upstream and oil service names.
  • Discipline will be the focus for upstream 2Q21 calls.  Word to the wise from someone who's been an upstream analyst since the 1990s, it it different this time. Raise your capex, at all, and it is likely to be more poorly received than your talk of increased near term Free Cash Flow.  Even if you have a potentially good reason - as reference LPI's decision to up capex this month post acquisition and their spiral lower by more than double the July benchmark drubbing.
  • Please see the calendar tab at left or here for earnings dates/call times we care about as we approach month end.

Holdings Watch:

  • We largely sat on hands last week but did take a sideways SPAC off the table (down 25% to our average cost from early this year), took profits in one solar tied name (up 39%). and added to our largest oily position and a commercial EV name.
  • The blotter is updated.
  • The positions page has been updated.

Questions and comments under The Wrap will be addressed in the Monday post.

Questions about the site may be directed to zman@zmansenergybrain.com

Have a good weekend,

Z

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2 Responses to “Wrap – Week Ended 07/16/21”

  1. 1
    zman Says:

    GOEV – interesting snippet from linked in

    https://i.imgur.com/LsmRa6m.png

  2. 2
    zman Says:

    OPEC Watch: Agreement reached. OPEC+ met over the weekend:
    Production to increase by 0.4 mm bopd per month beginning in August.
    5 countries received an aggregate base line increase of 1.63 mm bopd over prior quota levels (no effect on near term group production, just a higher baseline to eventually get to)
    Russia says it will be back to pre Covid production levels in May 2022 and is as part of the agreement increasing volumes by 0.1 mm bopd (or 25% of the monthly increase).
    OPEC+ agrees to monthly meetings. 
    OPEC+ now seen as unified with long term plan to stick together.  

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