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The Great Guyanese Oil Boom

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Image Shown: A drill ship floating in open waters. Image Source: Exxon Mobil Corporation – 2019 IR Presentation By Callum Turcan We’re going to get into the potential opportunity for energy producers in Guyana, but first, one thing that often gets lost in the noise surrounding press releases and presentations announcing new upstream projects coming online is that Exxon Mobil Corp (XOM) and its peers are contending with serious base decline rates. Decline rates are around 3-5% per year for conventional fields depending on the level of investment made in base maintenance (along with recovery rates and the quality of the rock), which includes such things as gas/water injection projects (this entails drilling injection wells to maintain reservoir pressure and often involves … Read more

Update: US and Iran Now De-escalating Tensions

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By Callum Turcan On January 7, Iran retaliated against the US for the killing of Iranian major general Qasem Soleimani (leader of a group that the US has deemed a terror threat under the Trump administration) less than a week earlier by firing missiles from Iranian soil at bases in Iraq that contain US, Iraqi, and coalition troops. The Iranian government aggressively publicized the attack by providing Iranian media outlets with footage of missiles leaving Iran that were targeted towards Iraq. Fortunately, no US, Iraqi, or coalition casualties were reported. We are very thankful that nobody was hurt as a result of the Iranian missile strike. For our first article covering recent events regarding Middle East tensions, click here. In … Read more

Middle East Tensions on the Rise

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By Callum Turcan Early Friday (Arabian Standard Time) on January 3 (the strike was carried out late Thursday evening Eastern Standard Time), under the orders of President Trump, the US took out major general Qasem Soleimani who was the leader of Iran’s Quds military group within the Islamic Revolutionary Guard Corps (‘IRGC’). Please note the US designated the IRGC as a Foreign Terrorist Organization in April 2019, and that the justification for the strike was due to there being an immediate threat to US lives (namely soldiers and contractors stationed in the Middle East), according to the Pentagon. It’s important to note that the strike occurred on Iraqi soil. The Quds force is known to be Iran’s extraterritorial military outfit, … Read more

Devon Energy Completes High-Grading Process, Free Cash Flows Remain Elusive

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Image Shown: An overview of Devon Energy Corporation’s remaining asset base, which consists of upstream oil and gas operations spread across four major unconventional plays in the US. Image Source: Devon Energy Corporation – December 2019 IR Presentation By Callum Turcan Times are tough in the oil & gas patch, especially for upstream producers of raw energy resources like Devon Energy Corporation (DVN). Not only are global oil prices low, which drags down natural gas liquids pricing for products like propane and butane, but North American natural gas supplies are trading at rock-bottom prices as well. Devon Energy has attempted to cope by divesting less economical assets and shifting all of its focus towards its best well locations, a process … Read more

Apache Comes Up Empty in Suriname, Shares Plummet

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Image Source: Apache Corporation – November 2019 IR Presentation By Callum Turcan On December 2, Apache Corporation (APA) announced that its first exploration well off the coast of Suriname (a small nation in northern South America) was a dud. The Maka Central-1 well was drilled to a total depth of 6,200 meters (~20,300 feet) in Block 58 and drilling activities commenced in late-September. While the well was testing two Upper Cretaceous plays, neither play appeared to have commercial level of hydrocarbons (more information will be provided by management on this issue in the near future) so Apache opted to drill down to a total depth of 6,900 meters (~22,600 feet) to test a third Cretaceous play. This news sent shares … Read more

Chesapeake Energy’s Pain Indicates Nothing “Safe” About Energy MLP Distributions

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Summary There is nothing “safe” in the stock market, and given the track record of the distributions of pipeline MLPs, there is nothing “safe” about pipeline MLP distributions. The MLP business model continues to be phased out, a trend that we anticipated when we made our bearish call on the group in June 2015. Chesapeake Energy’s pain is a yet another reminder of the pipeline MLP group’s exposure to energy resource pricing through the health (or rather ill-health) of its customer base. We continue to encourage pipeline operators to disclose free cash flow (cash flow from operations less all gross capital spending) prominently in press releases, alongside other industry-specific metrics. Investors of Chesapeake could get completely wiped out in a … Read more

High Yield Dividend Newsletter Portfolio Holding BP Sees Cash Flow Profile Improvements Ahead

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Image Source: BP plc – Third quarter 2019 earnings infographic If you may wish to add the High Yield Dividend Newsletter to your membership, please click here. By Callum Turcan On October 29, BP plc (BP) reported third-quarter 2019 earnings, and shares of BP have since climbed higher due in part to the energy giant’s nice cash flow profile and likely due to the improving outlook for a narrow US-China trade deal. We include BP in our High Yield Dividend Newsletter portfolio as a way to play the raw energy resource market and generate sizable income streams while taking advantage of the protection its large midstream (pipelines, storage facilities, etc.), downstream (refineries and petrochemical plants), and retail (gas stations/convenience stores) operations … Read more

High Yield Dividend Newsletter Portfolio Holding Magellan Midstream Keeps Growing

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Image Shown: Magellan Midstream is focusing heavily on growing its fee-based operations, with an eye towards expanding its refined products pipeline segment. Image Source: Magellan Midstream Partners L.P. – August 2019 IR Presentation If you may wish to add the High Yield Dividend Newsletter to your membership, please click here. By Callum Turcan On October 31, Magellan Midstream Partners L.P. (MMP) — 6.6% yield — reported third quarter 2019 earnings. Its quarterly GAAP operating income climbed 8% year-over-year due to a combination of top-line growth (GAAP revenues up 3% year-over-year) and lower operating expenses (GAAP operating expenses down 3% year-over-year). Cost reductions were largely a function of reduced cost of products sales, meaning Magellan Midstream’s marketing division had a decent quarter … Read more

Saudi Arabia Attacked, Oil Prices Shoot Higher

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Image Shown: Saudi Arabia’s oil infrastructure was attacked over the weekend, causing WTI and Brent to rally at the start of the trading session. By Callum Turcan Disaster struck this weekend when several drones took out the Abqaiq oil processing facility and the massive onshore Khurais oil field in Saudi Arabia (KSA) on Saturday, with WTI and Brent both surging on the news once trading resumed at the start of the week. The Khurais oil field produces around 1.5 million barrels of crude per day and the Abqaiq oil processing facility is the largest in the world. Saudi Arabia’s oil production capacity was reduced by 5.7 million barrels of crude per day due to these attacks and the country is … Read more

BP Says Goodbye to Alaska After 60 Years

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Image Source: BP plc – IR Presentation By Callum Turcan On August 27, BP plc (BP) announced it was selling its entire Alaskan operations to privately held Hilcorp Alaska (an affiliate of Hilcorp Energy Company) for $5.6 billion. BP sold Hilcorp some of its Alaskan assets five years ago and both companies have had a working relationship since then. This truly marks the end of an era as BP was long a staple of Alaska’s oil & gas industry. BP operates the Prudhoe Bay oil field, one of the largest in the world, which was responsible for over half of Alaska’s oil production in 2018. Additionally, BP is a major shareholder in the company that owns the 800-mile long Trans … Read more