28
Aug

Wrap – Week Ended 08/27/21

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Solid week in the greater energy space.  We made some changes early in the week adding weight to our gassy position and increasing our net count of names in the segment briefly with a new name addition before exiting our long held VEI position with a 10% gain to average cost (we owned VEI for a reason and it wasn't to be a future holder of CHK).  We also added another infrastructure name. The portfolio was up 14% on the week with strong oil and gas prices and a rebounding broader renewables segment buoyed the portfolio.

Gassy names outperformed the XNG (gas heavy ETF) but also easily under-performed gains in the front month and strip which are playing off a huge short position (still there) and the storage deficit which looks increasingly bullish (if not $4+ bullish) for 2022+. We are pleased with how pricing in the gassy and NGL rich space have developed and note the lack of meaningful new hedges being added and would suggest that gassy names with better (lighter) hedges in 2022 should start to adjust to the new higher strip (if not front month) pricing. Note that Cal 22 at $3.70 is far above current Street thinking for the year at $3.17.  Again, we've been bolstering our gassy wedge.

Other numbers of note:

  • Basic 3-2-1 crack rebounded last week despite a short lived dip in RBOB ... we still anticipate one last hurrah for throughput prior to maintenance season with volumes eclipsing 16.3 mm bopd.
  • Net oil imports remain tame. And are expected to remain tame. We are watching OPEC+ name import levels to see if the month 0.4 mm bopd increment shows up on U.S. shores. So far not really but it's early. So we watch.
  • Natural gas storage is trending as expected or a bit better (that was the smallest injection for that week of the year last week ... it's about supply and not just about production).  No change to thinking here.  Expected peak-trough-peak remain gas price supportive.
  • Natural gas speculative shorts are at a new high (net long vs short) at 0.66x.
  • Lastly, Ida will make the next two EIA oil weeklies a bit wonky.
    • Lower production for a couple of days (at last check over half of the Gulf was shut in),
    • but also fairly unpredictable imports and exports.
    • We do not expect a big impact on refiner throughput unless Ida makes a left turn.

Last Week's Free Stuff:  Nothing.

Last Week's Updates:

  • Antero (AR) - comments and a cheat sheet update in last Tuesday's post.
  • Range Resources (RRC) - comments and a cheat sheet update in last Wednesday's post.
  • Z4 Natural Gas Macro Slide Show - last Thursday's post.
  • And an infrastructure name in Friday's post.

Holdings Watch:

Questions and comments will be addressed in the Subscriber Mailbag section of the Monday post. 

Questions about the site including our current Test Drive offer (see Membership Options link at left) can be addressed to zman@zmansenergybrain.com

Stay safe Louisiana, 

Have a good weekend, 

Z

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9 Responses to “Wrap – Week Ended 08/27/21”

  1. 1
    zman Says:

    https://www.bsee.gov/newsroom/latest-news/statements-and-releases/press-releases/bsee-monitors-gulf-of-mexico-oil-and-48

    GOM Curtailment

    91% of oil, 1.653 mm bopd
    84.9% of gas, 1.89 Bcfgpd

  2. 2
    zman Says:

    Ida Cat 4

    https://www.nhc.noaa.gov/refresh/graphics_at4+shtml/093339.shtml?cone#contents

  3. 3
    zman Says:

    Expect to see damage offshore with these kinds of wind speeds and steady path.

    https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/082821-producers-shut-in-close-to-90-of-volumes-refiners-close-plants-ahead-of-hurricane-ida?utm_source=social&utm_medium=twitter&utm_term=plattsoil&utm_content=a75446ce-2a5c-465b-8bfd-f346c3cbddce&utm_campaign=hootsuitepost

    Likely know more on that by Tuesday or Wednesday when they can begin inspections but Cat 3 is less of a problem than pre 16 years ago and Katrina. Cat 4 and especially this path is trouble for rigs, platforms, and gas and transmission lines offshore and some power feeds as well.

  4. 4
    zman Says:

    The Positions page is updated:

    https://zmansenergybrain.com/subscriber-data/holdings-wiki/

  5. 5
    zman Says:

    The update request line is open.

  6. 6
    zman Says:

    Mars roaming freely in GOM

    Mars off station. #oott

    https://www.lafourchegazette.com/townnews/meteorology/reports-shell-mars-broke-loose-in-gulf-as-ida-moved-through/article_35167ce8-08ef-11ec-a49d-6b9750841a4a.html

    https://www.offshore-technology.com/projects/mars/

  7. 7
    zman Says:

    re 6 – or maybe not, reporter may have been fooled.

  8. 8
    crysball Says:

    Pemex takes desperate measures to restore the 440,000 bopd of offshore crude production lost from the fire & explosion on the Ku Alpha platform.

    It is desperate because(according to Bloomberg) they tried it once before in the offshore Cantarell field and seriously damaged the EUR, as it reduced the log term production.

    https://gcaptain.com/pemex-uses-nitrogen-in-hopes-to-resume-oil-output-after-major-fire/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Gcaptain+%28gCaptain.com%29

    PEMEX is under intense political pressure from AMLO.

  9. 9
    crysball Says:

    AGOCO shuts down (temporarily) Libya loses 280,000 bopd.

    https://www.libyaobserver.ly/inbrief/arabian-gulf-oil-company-suspends-activities-after-delay-necessary-funding-company-operation

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