Why Exxon and Chevron are doubling down on fossil fuel energy with big acquisitions

October 25, 2023

Why Exxon and Chevron are doubling down on fossil fuel energy with big acquisitions

Post By zittrexstore Oil and Gas business news, Chevron Corp, Climate, Energy, Environment, Exxon Mobil Corp, Hess Corp, Oil and Gas, Pioneer Natural Resources Co No Comments

Prices at a Chevron Corp. gas station in Fontana, California, on Thursday, July 8, 2021.

Kyle Grillot | Bloomberg | Getty Images

On Monday, Chevron announced plans to acquire oil and gas company Hess for $53 billion in stock.

Less than two weeks prior, Exxon Mobil announced it is acquiring oil company Pioneer Natural Resources for $59.5 billion in stock.

On Tuesday, the International Energy Agency released its annual world energy outlook report that projects global demand for coal, oil and natural gas will hit an all-time high by 2030, a prediction the IEA’s executive director Fatih Birol had telegraphed in September.

“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if,’ it’s just a matter of ‘how soon’ — and the sooner the better for all of us,” Birol said in a written statement published alongside his agency’s world outlook. “Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”

But based on their acquisitions, Chevron and Exxon are seemingly preparing for a different world than the IEA is portending.

“The large companies — nongovernment companies — do not see an end to oil demand any time in the near future. That’s one of the messages you have to take from this. They are committed to the industry, to production, to reserves and to spending,” Larry J. Goldstein, a former president of the Petroleum Industry Research Foundation and a trustee with the not-for-profit Energy Policy Research Foundation, told CNBC in a phone conversation Monday.

“They’re in this in the long haul. They don’t see oil demand declining anytime in the near term. And they see oil demand in fairly large volumes existing for at least the next 20, 25 years,” Goldstein told CNBC. “There’s a major difference between what the big oil companies believe the future of oil is and the governments around the world.”

So, too, says Ben Cahill, a senior fellow in the energy security and climate change program at the bipartisan, nonprofit policy research organization, Center for Strategic and International Studies.

“There are endless debates about when ‘peak demand’ will occur, but at the moment, global oil consumption is near an all-time high. The largest oil and gas producers in the United States see a long pathway for oil demand,” Cahill told CNBC.

Pioneer Natural Resources crude oil storage tanks near Midland, Texas, on Oct. 11, 2023.

Bloomberg | Bloomberg | Getty Images

Africa, Asia driving demand

Globally, momentum behind and investment in clean energy is increasing. In 2023, there will be $2.8 trillion invested in the global energy markets, according to a prediction from the IEA in May, and $1.7 trillion of that is expected to be in clean technologies, the IEA said.

The remainder, a bit more than $1 trillion, will go into fossil fuels, such as coal, gas and oil, the IEA said.

Continued demand for oil and gas despite growing momentum in clean energy is due to population growth around the globe and in particular, growth of populations “ascending the socioeconomic ladder” in Africa, Asia and to some extent Latin America, according to Shon Hiatt, director of the Business of Energy Transition Initiative at the USC Marshall School of Business.

Oil and gas are relatively cheap and easy to move around, particularly in comparison with building new clean energy infrastructure.

“These companies believe in the long-term viability of the oil and gas industry because hydrocarbons remain the most cost-effective and easily transportable and storable energy source,” Hiatt told CNBC. “Their strategy suggests that in emerging economies marked by population and economic expansion, the adoption of low-carbon energy sources may be prohibitively expensive, while hydrocarbon demand in European and North American markets, although potentially reduced, will remain a significant factor.”

Also, while electric vehicles are growing in popularity, they are just one section of the transportation pie, and many of the other sections of the transportation sector will continue to use fossil fuels, said Marianne Kah, senior research scholar and board member at Columbia University’s Center on Global Energy Policy. Kah was previously the chief economist of ConocoPhillips for 25 years.

“While there is a lot of media attention given to the increasing penetration of electric passenger vehicles, global oil demand is still expected to grow in the petrochemical, aviation and heavy-duty trucking sectors,” Kah told CNBC.

Geopolitical pressures also play a role.

Exxon and Chevron are expanding their holdings as European oil and gas majors are more likely to be subject to strict emissions regulations. The U.S. is unlikely to have the political will to force the same kind of stringent regulations on oil and gas companies here.

“One might speculate that Exxon and Chevron are anticipating the European oil majors divesting their global reserves over the next decade due to European policy changes,” Hiatt told CNBC.

“They are also betting domestic politics will not allow the U.S. to take significant new climate policies directed specifically to restrain or limit or ban the level of U.S. oil and gas domestic production,” Amy Myers Jaffe, a research professor at New York University and director of the Energy, Climate Justice and Sustainability Lab at NYU’s School of Professional Studies, told CNBC.

Goldstein expects the ever-expanding U.S. national debt will eventually put all kinds of government subsidies on the chopping block, which he says will also benefit companies such as Exxon and Chevron.

“All subsidies will be under enormous pressure,” Goldstein said, the intensity of that pressure dependent on which party is in the White House at any given time. “By the way, that means the large financial oil companies will be able to weather that environment better than the smaller companies.”

Also, sanctions of state-controlled oil and gas companies in countries like those in Russia, Venezuela and Iran are providing Exxon and Chevron a geopolitical opening, Jaffe said.

“They likely hope that any geopolitically driven market shortfalls to come can be filled by their own production, even if demand for oil overall is reduced through decarbonization policies around the world,” Jaffe told CNBC. “If you imagine oil like the game of musical chairs, Exxon Mobil and Chevron are betting that other countries will fall out of the game regardless of the number of chairs and that there will be enough chairs left for the American firms to sit down, each time the music stops.”

An oil pumpjack pulls oil from the Permian Basin oil field in Odessa, Texas, on March 14, 2022.

Joe Raedle | Getty Images News | Getty Images

Oil that can be tapped quickly is a priority

Known oil reserves are increasingly valuable as European and American governments look to limit the exploration for new oil and gas reserves, according to Hiatt.

“Notably, both Pioneer and Hess possess attractive, well-established oil and gas reserves that offer the potential for significant expansion and diversification for Exxon and Chevron,” Hiatt told CNBC.

Oil and gas reserves that can be brought to market relatively quickly “are the ideal candidates for production when there is uncertainty about the pace of the energy transition,” Kah told CNBC, which explains Exxon’s acquisition of Pioneer, which gave Exxon more access to “tight oil,” or oil found in shale rock, in the Permian basin.

Shale is a kind of porous rock that can hold natural gas and oil. It’s accessed with hydraulic fracking, which involves shooting water mixed with sand into the ground to release the fossil fuel reserves held therein. Hydrocarbon reserves found in shale can be brought to market between six months and a year, where exploring for new reserves in offshore deep water can take five to seven years to tap, Jaffe told CNBC.

“Chevron and Exxon Mobil are looking to reduce their costs and lower execution risk through increasing the share of short cycle U.S. shale reserves in their portfolio,” Jaffe said. Having reserves that are easier to bring to market gives oil and gas companies increased ability to be responsive to swings in the price of oil and gas. “That flexibility is attractive in today’s volatile price climate,” Jaffe told CNBC.

Chevron’s purchase of Hess also gives Chevron access in Guyana, a country in South America, which Jaffe also says is desirable because it is “a low cost, close to home prolific production region.”

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October 19, 2023

What tie-ups in the U.S. oil patch could mean for players like Coterra Energy

Post By zittrexstore Oil and Gas BP PLC, Breaking News: Markets, business news, Chevron Corp, Conocophillips, Coterra Energy Inc, Devon Energy Corp, Diamondback Energy Inc, Energy, Exxon Mobil Corp, Investment strategy, Jim Cramer, Marathon Oil Corp, Markets, Oil and Gas, Pioneer Natural Resources Co, stock takes No Comments

Exxon Mobil ‘s (XOM) planned deal to buy Pioneer Natural Resources (PXD) has sparked talk of more consolidation in the oil-and-gas industry. While we don’t own companies as mergers-and-acquisition plays, the potential for more tie-ups could have significant implications for our remaining oil name: Coterra Energy (CTRA). It’s unclear which shoe will drop next now that Pioneer — the largest independent producer in the Permian Basin, a key U.S. oil field in West Texas and New Mexico — is effectively off the market in an all-stock deal valuing the company at roughly $60 billion . But analysts expect the acquisition by Exxon, the most valuable U.S. oil-and-gas company at nearly $450 billion in market capitalization, to have ripple effects on producers of all sizes. “Consolidation is critical for the sector. It’s healthy. It’s needed, and I think you’ll see more of it,” said Gabriele Sorbara, an analyst at Siebert Williams Shank & Co. The consolidation could take multiple shapes, as companies seek scale and bolster the amount of quality land they own to drill on in the future. On the one hand, investors are looking at bigger U.S. players such as Chevron (CVX) and ConocoPhillips (COP), wondering whether they’ll follow Exxon’s lead and acquire smaller exploration-and-production (E & P) firms. Chevron’s market cap is around $324 billion, while ConocoPhillips is worth roughly $152 billion, based on Thursday’s stock prices. Another possibility could be that E & P companies further down the valuation ladder choose to pursue deals that make their own inventory positions more attractive to investors, according to Nitin Kumar, senior analyst at Mizuho Securities. Companies in this basket could include Coterra, Devon Energy (DVN) and Diamondback Energy (FANG). Coterra is valued at roughly $22.4 billion Thursday, while Devon and Diamondback are valued at $31.7 billion and $30.5 billion, respectively. “I’m not proposing there’s going to be a big wave of M & A, necessarily. But if scale is what matters, your options are limited,” Kumar said. He added: “You can choose to either go your own way…you can look at the small public guys and pick off a few assets there, or you could look at mergers of equals and say, ‘Hey look, let’s two of us get together and now we create a competitive position with 800,000, 900,000 acres into play.'” That would be roughly on par with Pioneer’s more-than-850,000 acres in the Permian Basin. “All those should be options that these guys should be thinking about strategically,” Kumar argued. Devon Energy is reportedly doing just that. In recent months, the Oklahoma City-based company has held preliminary talks with Marathon Oil (MRO) about a potential tie-up , Bloomberg reported after the close Wednesday , citing people familiar with the matter. Houston-based Marathon is valued at nearly $18 billion, as of Thursday. Devon has also eyed privately held CrownRock, which operates in the Permian, according to Bloomberg. In recent years, publicly traded E & P companies have adopted a more muted approach to production growth — bowing to investor pressure after spending heavily to pump more oil in the 2010s proved unkind to energy stocks as crude prices pulled back. Now, the priority is generating more sustainable cash flows that can be returned to investors through buyback programs and dividends. The shift has generally been positive for the stock prices of oil companies. Expense reduction is another way to satisfy investors, and is likely a major motivation behind any further consolidation that might occur in the sector, said Scotiabank analyst Paul Cheng. Smaller companies may not solve their inventory backlog problems by combining, Cheng said, “but that certainly could provide them additional room to reduce costs.” At the time the Exxon-Pioneer deal was announced, Jim Cramer’s Charitable Trust owned a position in Pioneer. We sold our entire stake Monday, and will consider redeploying some of the cash into Coterra on future pullbacks in its stock price. Our investment in Coterra has been rooted in its attractive fundamentals as an E & P play with sizable exposure to both oil and natural gas — not its viability as a takeover target, or even a buyer itself. Indeed, owning Coterra in the hopes that a larger company may swoop in and offer a big premium would not be a wise strategy. That’s because a substantial premium might never materialize — as we saw with Exxon’s valuation of Pioneer. The industry’s newfound restraint on production makes it harder to justify paying up for a company, analysts say, compared with the premiums paid in the early days of the U.S. shale boom a decade ago. “If you go back to 2014, 2016, in those deals it was asset acquisition driven by growth. Today, it’s asset acquisition driven by not volume growth, but cash flow sustainability and longevity. It’s a little bit of a different motivator,” Mizuho’s Kumar said. (Jim Cramer’s Charitable Trust is long CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Permian Basin rigs in 2020, when U.S. crude oil production dropped by 3 million a day as Wall Street pressure forced cuts.

Paul Ratje | Afp | Getty Images

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October 8, 2023

Top Wall Street analysts expect these dividend stocks to boost portfolio returns

Post By zittrexstore Business American Electric Power Company Inc, Brookfield Infrastructure Partners LP, business news, Coterra Energy Inc, Darden Restaurants Inc, Exxon Mobil Corp, Investment strategy, Markets, Weekend brief No Comments

A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018.

Sergio Moraes | Reuters

Dividend-paying stocks are looking even more attractive as investors grapple with a spike in bond yields and a tumultuous stock market.

With that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Exxon Mobil

First on this week’s list is dividend aristocrat Exxon Mobil (XOM). The energy giant offers a yield of 3.4%. The company’s dividend hike of 3.4% last year marked the 40^th consecutive year of annual dividend growth. Exxon’s dividends are backed by solid earnings and cash flows.

In the second quarter, the company distributed $8 billion to shareholders through share repurchases of $4.3 billion and dividends of $3.7 billion. It generated free cash flow of $5 billion in the June quarter.

Mizuho analyst Nitin Kumar reiterated a buy rating on Exxon with a price target of $139 after attending the company’s Product Solutions Spotlight event. The analyst said that the company is on track to meet its target of boosting its product solutions earnings by $10 billion by 2027 compared to $6 billion reported in 2019.

“With 1H23 annualized earnings at $11.5 billion, the company is halfway through that target, with most of the benefit to date from cost reductions,” noted Kumar.

He expects key strategic projects that have recently commenced, like Beaumont crude expansion and chemical expansions at Baytown, and major projects planned for 2024 to 2027, such as the Singapore Resid upgrade project, to help Exxon deliver most of the targeted improvement in earnings by 2027.

Kumar ranks No.67 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, with each delivering a return of 19.8%, on average. (See Exxon Insider Trading Activity on TipRanks)

Coterra Energy

Kumar is also bullish on Coterra Energy (CTRA), an oil and gas exploration and production company with major operations in the Permian Basin, Marcellus Shale and Anadarko Basin. Earlier this year, the company increased its annual base dividend by 33% to 80 cents per share.

The company’s shareholder return strategy is to distribute 50% of its free cash flow via base dividends, share repurchases and variable dividends. CTRA realigned its return strategy for 2023 to give importance to buybacks over variable dividends. In the first six months of 2023, it paid $303 million through dividends and made share repurchases worth $325 million, with the total shareholder return representing 94% of free cash flow.

Last month, Kumar hosted investor meetings with CTRA’s management and said the key takeaway was that the company is confident about delivering solid returns on investment in most commodity price scenarios. In particular, management highlighted the flexibility and optionality of CTRA’s asset base and capital allocation strategy.

“In our opinion, the common thread between their choices is the potential to outperform the three-year (2023-25) plan that calls for ~5%+ oil growth for ~$2.0-2.1bn of total capex – either through less capex or more volumes – but without a degradation of capital efficiencies,” said Kumar.

Calling CTRA his top pick, Kumar reiterated a buy rating on the stock with a price target of $42. (See Coterra Financial Statements on TipRanks)

Brookfield Infrastructure Partners

Next on this week’s dividend list is Brookfield Infrastructure (BIP), which operates assets in the utilities, transport, midstream, and data sectors. BIP paid a quarterly dividend of $0.3825 per unit on Sept. 29, which reflects a 6% year-over-year increase in its distribution. The company offers a dividend yield of 5.5%.

At an investor day event held last month, management discussed its goal to deliver more than 12% growth in funds from its operations per unit as part of its 1- to 3-year outlook.

RBC Capital analyst Robert Kwan, who ranks 194th out of over 8,500 analysts tracked on TipRanks, noted that the company’s targeted FFO/unit growth is expected to be partially driven by its significant organic capital backlog, mainly in the data center business.

The analyst also thinks that given the capital constraints in the current backdrop due to a slowdown in fundraising activity, an entity like Brookfield has the potential to enhance returns by investing capital above its 12% to 15% equity internal rate of return (IRR) target range.

“We believe that the unit price weakness is an attractive entry point based on a 5% current distribution yield with potential for double-digit underlying FFO/unit growth,” said Kwan.

Kwan reaffirmed a buy rating on BIP stock with a price target of $45. His ratings have been profitable 64% of the time, with each delivering an average return of 10.8%. (See BIP Stock Chart on TipRanks)

American Electric Power

Another RBC Capital analyst, Shelby Tucker, is bullish on utility stock American Electric Power (AEP). On Oct. 2, the company named Charles E. Zebula as its new chief financial officer and reaffirmed its 2023 operating earnings outlook of $5.19 to $5.39 per share and long-term operating earnings growth rate of 6% to 7%.

AEP paid a quarterly dividend of 83 cents per share on Sept. 8, its 453rd consecutive quarterly cash dividend. It offers a dividend yield of 4.6%.

Recently, Tucker lowered the price target for AEP to $90 from $103 to reflect a high interest environment but reiterated a buy rating. The analyst said that the stock remains one of the firm’s top picks in 2023 and one of the best-in-class utilities.

The analyst thinks that AEP’s $40 billion regulated capital spending plan, focusing on transmission deployment, offers strong resiliency against a challenging macro backdrop and cost inflation. Tucker also expects the company to benefit from the incentives under the Inflation Reduction Act.

“We believe AEP deserves a slight premium on valuations from rapid decarbonization of its generation fleet and robust investments in regulated renewable,” the analyst said.

Tucker holds the 367th position among more than 8,500 analysts on TipRanks. Moreover, 61% of his ratings have been profitable, with each generating an average return of 8.1%. (See AEP Blogger Opinions & Sentiment on TipRanks)

Darden Restaurants

Darden Restaurants (DRI), the owner of Olive Garden and other popular brands, delivered better-than-anticipated fiscal first-quarter results, despite the pullback in consumer spending affecting the company’s fine dining segment.

The company paid $159 million in dividends and deployed about $143 million toward share repurchases in the fiscal first quarter. With a quarterly dividend of $1.31 per share (annualized dividend of $5.24), DRI stock’s dividend yield is 3.7%.

Following the results, JPMorgan analyst John Ivankoe reiterated a buy rating on DRI stock but lowered the price target to $174 from $176.

The analyst noted that the company’s same-store sales growth of 5% surpassed his estimate of 4.4%, with its Olive Garden and LongHorn Steakhouse chains offsetting the softness in fine dining. Also, DRI’s same-store sales growth outperformed the industry average of 0.9%.

“Finally, the 10%+ TSR [total shareholder return] (EPS + annual dividend yield) remains intact for F24/25,” said Ivankoe.

Ivankoe holds the 854th position among more than 8,500 analysts tracked on TipRanks. Moreover, 60% of his ratings have been profitable, with each generating an average return of 7.1%. (See DRI Hedge Fund Trading Activity on TipRanks)

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October 6, 2023

Oil and natural gas prices are on different paths. Here’s what has been driving the moves

Post By zittrexstore Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Devon Energy Corp, Diamondback Energy Inc, Energy, Exxon Mobil Corp, ICE Brent Crude (Apr'23), Investment strategy, Jim Cramer, Markets, Natural Gas (Mar'23), Oil and Gas, Pioneer Natural Resources Co, S&P 500 Index, stock takes, United States, WTI Crude (Mar'23) No Comments

Oil and natural gas prices traveled divergent paths this week, resulting in a mixed picture for the Club stocks Coterra Energy (CTRA) and Pioneer Natural Resources (PXD). Fresh off robust third-quarter gains, crude has tumbled in recent days, sending the U.S. oil benchmark West Texas Intermediate and global oil standard Brent prices to their lowest levels since late August. Both WTI and Brent are on pace for their worst weeks since March on emergent concerns about demand for oil products. WTI dropped 2% on Thursday to settle at $82.31 a barrel. Brent also fell 2%, settling at $84.07 a barrel. On Friday, they bounced — coming off modest earlier declines after the government released much stronger-than-expected September job growth. WTI vs. nat gas this week @CL.1 @NG.1 mountain 2023-09-29 WTI and nat gas since Sept. 29 settle Meanwhile, the rally in natural gas has picked up steam, pushing the commodity to prices not seen since January, at over $3 per million British thermal units, or MMBtu. In Thursday’s session alone, natural gas prices jumped nearly 7%, as traders reacted to U.S. government data that showed a smaller-than-expected storage build. Traders also continue to monitor weather forecasts in search of clues about future demand heading into the winter months in the Northern Hemisphere. For the week, through Thursday’s settle, natural gas has climbed 8.1%, building on last week’s 11% advance. Natural gas on Friday morning jumped another 1.5%. In the oil market, a switch has seemingly been flipped. WTI and Brent rose more than 28% and 27%, respectively, in the third quarter, as major oil exporters Saudi Arabia and Russia cut production at a time when economic activity — and by extension demand for crude – proved more resilient than expected. Now, the market is grappling with the idea that demand might be waning. Those concerns were amplified by U.S. government data Wednesday that indicated gasoline inventories in the week ended Sept. 29 grew by 6.48 million barrels, a much higher increase than expected. WTI and Brent each plunged by 5.6% in Wednesday’s session. For the week, with one trading day to go, WTI and Brent sank more than 9% and nearly 12%, respectively. “The single biggest element of the global oil market is U.S. gasoline. We consume not far off 1 in 10 barrels just in U.S. cars,” veteran energy analyst Paul Sankey said Thursday on CNBC. “When it’s as weak as it came in [Wednesday] and it already been weak the week before, it becomes a major problem in the global oil market.” The magnitude of the sell-off, Sankey said, is linked to the traders who had been rushing into crude during its summertime ascent that continued into September , raising the specter of $100 per barrel oil . Brent traded as high as $97.69 a barrel on Sept. 28 while WTI reached $95.03 on the same day. Recent data has traders looking to reduce their risk, Sankey said. “The speculative interest before this run was very low,” he said. “Our view was that our shot at $100 was that speculators would pile in. The problem is … risk-off turned into [really} risk-off, and that became the speculators running for the exits again.” Some analysts see the oil swoon as temporary. In a note to clients Thursday, Goldman Sachs said the reasons for the declines — which in addition to gasoline demand concerns also include recession fears in 2024 and technical factors — “will prove to be transitory.” The firm said it still believes Brent crude can reach $100 a barrel by the spring. The recent decline in crude has hurt energy stocks including Pioneer and Coterra. Of the 11 sectors in the S & P 500 , energy has been by far the worst weekly performer through Thursday, falling nearly 6%. The broad S & P 500 index was down 0.7% over the past four sessions. Shares of Pioneer have retreated 6.4% over the same stretch, closing at $214.96 each Thursday. However, Pioneer’s weekly losses will be erased if the stock’s premarket surge of 10% holds. Friday’s spike higher came after The Wall Street Journal reported Exxon Mobil (XOM) was in advanced talks to acquire the Club holding. In April, the newspaper reported Exon held “informal” discussions on Pioneer. Pioneer vs. Coterra this week PXD CTRA mountain 2023-09-29 Pioneer vs. Coterra since Sept. 29 close Coterra held up better this week through Thursday, with the stock falling 3.5%, to $26.11 per share. The stock was little changed in Friday’s premarket. The relative outperformance in Coterra is likely tied to its significant natural gas exposure, compared with Pioneer and exploration-and-production (E & P) peers such as Diamondback Energy (FANG) and former Club holding Devon Energy (DVN). Coterra’s revenues are roughly a 50-50 split between oil and natural gas. On Monday, when we bought 200 more shares of Coterra, we argued its stock did not adequately reflect the appreciation in natural gas prices. Now, the stock has slipped a bit lower than where we bought while natural gas has climbed higher. (Jim Cramer’s Charitable Trust is long PXD and CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Oil prices eased in Asian as concerns over slow demand from top crude importer China grew after bearish trade and inflation data, outweighing fears over tighter supply arising from output cuts by Saudi Arabia and Russia.

David Mcnew | Getty Images News | Getty Images

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September 13, 2023

Oil prices are at 10-month highs. Here’s what Cramer thinks it means for two energy stocks

Post By zittrexstore Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Eli Lilly and Co, Energy, Exxon Mobil Corp, Investment strategy, Jim Cramer, Markets, NVIDIA Corp, Oil and Gas, Pioneer Natural Resources Co, stock takes, WTI Crude (Mar'23) No Comments

Oil prices are hovering around 10-month highs, as a stout summer rally extends into the fall and delivers additional gains for the Club’s energy stocks, Pioneer Natural Resources (PXD) and Coterra Energy (CTRA). And Jim Cramer believes it’s not too late to buy either of them. West Texas Intermediate crude, the U.S. oil benchmark, has jumped 32% since its lows of the summer on June 12, to nearly $89 a barrel. Meanwhile, global oil standard Brent crude has climbed 28%, to around $92 a barrel. Both WTI and Brent on Tuesday settled at their highest levels since November. Over the same stretch since June 12, Pioneer stock has risen 17.1%, while Coterra gained 16.4%. That makes them the fifth and sixth best-performing Club stocks during that time — ahead of artificial intelligence winner Nvidia (NVDA), but behind pharmaceuticals giant Eli Lilly (LLY). Coterra on Tuesday closed at its highest level of the year, at $28.47 per share. Pioneer is about 3% off its 2023 peak of $243 per share, reached on Sept. 5. “I think that it is not too late to buy either of these,” Jim Cramer noted on Tuesday. The rise in oil prices largely boils down to a mismatch between supply and demand. Production cuts from major oil exporters such as Saudi Arabia and Russia have contributed to tighter supplies at a time when major economies have remained healthier than expected. Indeed, prices took a major leg higher last week after Saudi Arabia and Russia said they’d extend through year-end their voluntary output reductions of a combined 1.3 million barrels per day. This week’s move in crude was helped by a new report from the Organization for Petroleum Exporting Countries , which projected that oil demand will grow by 2.25 million barrels per day in 2024, citing economic resiliency. Saudi Arabia is the de-facto leader of OPEC. Russia is the oil cartel’s largest partner producer in an expanded group known as OPEC+ . The current backdrop may keep oil prices supported through the fall, according to the U.S. Energy Information Administration’s short-term outlook published Tuesday . Citing Saudi Arabia’s production-cut extension and an expected further drawdown of global oil inventories, the government statistics agency forecasted Brent crude will average around $93 a barrel in the fourth quarter, less than 1% above where it settled Tuesday. If higher oil prices – and by extension fuel prices – are sustained in the coming months, the investment implications may be somewhat mixed. On one hand, Pioneer and Coterra would likely generate more free cash flow than in the first half of 2023 , which could lead to increased share repurchases and higher dividend payouts — key reasons investors like us are in the stocks. On the other hand, it may complicate the Federal Reserve’s efforts to squash inflation through higher interest rates. For much of this year, the downward trend in oil prices contributed to lower year-over-year inflation readings . Now, “oil is the wildcard” that might prompt the U.S. central bank to rethink policy and raise interest rates more aggressively than previously thought necessary, according to Jim. In the Labor Department’s monthly consumer price index report for August, released Wednesday, higher gasoline prices were responsible for more than half of the headline 0.6% month-over-month increase. Currently, the Fed is expected leave interest rates unchanged between 5.25% and 5.5% at its meeting next week, according to the CME Group’s FedWatch tool . The Fed had paused raising interest rates in June, before instituting another quarter-percentage-point increase in July — the central bank’s 11th rate hike in 17 months. There was no policy decision in August. Put another way, our energy exposure’s role as an inflation hedge – on display throughout 2022 following the crude-price surge tied to Russia’s invasion of Ukraine in February of that year – may become more apparent. And it adds to the attractiveness of owning Pioneer and Coterra here. Jim sees additional upside for both. Pioneer’s stock is less than 2% higher than where it traded back in April, in the days following a “bogus” report that Exxon Mobil (XOM) held talks to acquire the Club holding, Jim pointed out. Shares of Pioneer “should be much higher,” he said, noting the potential for more robust capital returns due to higher oil prices. Plus, he said, Pioneer’s natural-gas offerings are another potential plus for the stock. “I hadn’t figured it would matter that much, but any increase in nat-gas prices could be an added benefit,” he said. Coterra offers a quality mix between crude and natural-gas exposure. While natural gas prices are dramatically lower than a year go, the commodity has gained in recent months. And it’s currently riding a four-day winning streak, settling Tuesday at $2.743 per million British thermal units. That has helped Coterra shares. But Jim said the stock has still yet to break out in a meaningful way. “There’s more room to run,” he said. “I could see the stock busting through the $30 level.” (Jim Cramer’s Charitable Trust is long PXD and CTRA . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

An oil pump jack in Great Plains, southeastern Wyoming.

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May 2, 2023

Jim Cramer’s top 10 things to watch in the stock market Tuesday

Post By zittrexstore Oil and Gas Autos, Banks, BP PLC, Breaking News: Markets, Brinker International Inc, business news, Dupont De Nemours Inc, Exxon Mobil Corp, health insurance, Humana Inc, International Business Machines Corp, Investment strategy, Jim Cramer, Markets, Morgan Stanley, Oil and Gas, SoFi Technologies Inc, Tesla Inc, Uber Technologies Inc No Comments

My top 10 things to watch Tuesday, May 2 1. DuPont (DD) delivers a first-quarter earnings beat Tuesday, with adjusted earnings-per-share (EPS) of 84 cents, compared with analysts’ forecasts of 80 cents per share. But the materials giant cut its full-year revenue forecast, sending shares nearly 5% lower in premarket trading. DuPont also says it’s agreed to buy Spectrum Plastics Group from AEA Investors for $1.75 billion, in a deal that should be immediately accretive. 2. Club holding Morgan Stanley (MS) is planning to cut 3,000 jobs in the bank’s second round of layoffs in six months, Reuters reported Monday. 3. Tesla (TSLA) raises prices on some models of its electric vehicles in the U.S., China, Japan and Canada. The news come after several rounds of price cuts earlier this year. 4. Citi calls SoFi Technologies ‘ (SOFI) post-earnings sell-off “unwarranted,” while reiterating a buy rating and $10-per-share price target. Meanwhile, Wedbush downgrades SOFI to neutral from outperform and lowers its price target to $5 per share, from $8. 5. TD Cowen raises its price target on health insurer Humana (HUM) to $616 per share, from $581, while reiterating an outperform rating. The Club holding last week delivered a first-quarter earnings beat and raised its guidance. 6. Uber Technologies (UBER) reports a first-quarter revenue beat of $8.82 billion, ahead of analysts’ forecasts for $8.72 billion, sending the stock soaring by nearly 10% in premarket trading. The company reports an EPS loss of 8 cents, compared with expectations for a 9 cent-per-share loss, while guiding for gross bookings of $33 billion to $34 billion in the second quarter. 7. BP reports stronger-than-expected first-quarter profits on Tuesday, with its underlying replacement cost profit coming in at $4.96 billion on the back of strong oil-and-gas trading. The British oil major expects to deliver share buybacks totaling $4 billion for the year, at the lower end of its capital expenditure range of $14 billion to $18 billion. Shares of BP were down roughly 5% in premarket trading. 8. Morgan Stanley raises its price target on Exxon Mobil (XOM) to $122 per share, from $118, while reiterating an overweight rating on the stock. The bank cites the U.S. oil major’s record first-quarter profit , which it reported last Friday. 9. Bank of America raises its price target on Brinker International (EAT) to $33 per share, from $29, reflecting a higher market multiple. But the firm maintains its underperform, or sell, rating on EAT stock. 10. The CEO of International Business Machines Corp . (IBM), Arvind Krishna, said the company plans to pause hiring for back-office roles that could be replaced by artificial intelligence (AI) in the coming years. “I could easily see 30% [roughly 7,800 jobs] of that getting replaced by AI and automation over a five-year period,” Krishna told Bloomberg . (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

My top 10 things to watch Tuesday, May 2

1. DuPont (DD) delivers a first-quarter earnings beat Tuesday, with adjusted earnings-per-share (EPS) of 84 cents, compared with analysts’ forecasts of 80 cents per share. But the materials giant cut its full-year revenue forecast, sending shares nearly 5% lower in premarket trading. DuPont also says it’s agreed to buy Spectrum Plastics Group from AEA Investors for $1.75 billion, in a deal that should be immediately accretive.

2. Club holding Morgan Stanley (MS) is planning to cut 3,000 jobs in the bank’s second round of layoffs in six months, Reuters reported Monday.

3. Tesla (TSLA) raises prices on some models of its electric vehicles in the U.S., China, Japan and Canada. The news come after several rounds of price cuts earlier this year.

4. Citi calls SoFi Technologies‘ (SOFI) post-earnings sell-off “unwarranted,” while reiterating a buy rating and $10-per-share price target. Meanwhile, Wedbush downgrades SOFI to neutral from outperform and lowers its price target to $5 per share, from $8.

5. TD Cowen raises its price target on health insurer Humana (HUM) to $616 per share, from $581, while reiterating an outperform rating. The Club holding last week delivered a first-quarter earnings beat and raised its guidance.

6. Uber Technologies (UBER) reports a first-quarter revenue beat of $8.82 billion, ahead of analysts’ forecasts for $8.72 billion, sending the stock soaring by nearly 10% in premarket trading. The company reports an EPS loss of 8 cents, compared with expectations for a 9 cent-per-share loss, while guiding for gross bookings of $33 billion to $34 billion in the second quarter.

7. BP reports stronger-than-expected first-quarter profits on Tuesday, with its underlying replacement cost profit coming in at $4.96 billion on the back of strong oil-and-gas trading. The British oil major expects to deliver share buybacks totaling $4 billion for the year, at the lower end of its capital expenditure range of $14 billion to $18 billion. Shares of BP were down roughly 5% in premarket trading.

8. Morgan Stanley raises its price target on Exxon Mobil (XOM) to $122 per share, from $118, while reiterating an overweight rating on the stock. The bank cites the U.S. oil major’s record first-quarter profit, which it reported last Friday.

9. Bank of America raises its price target on Brinker International (EAT) to $33 per share, from $29, reflecting a higher market multiple. But the firm maintains its underperform, or sell, rating on EAT stock.

10. The CEO of International Business Machines Corp. (IBM), Arvind Krishna, said the company plans to pause hiring for back-office roles that could be replaced by artificial intelligence (AI) in the coming years. “I could easily see 30% [roughly 7,800 jobs] of that getting replaced by AI and automation over a five-year period,” Krishna told Bloomberg.

(See here for a full list of the stocks in Jim Cramer’s Charitable Trust.)

As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.

THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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April 28, 2023

Swiss central bank promises regulation review after collapse of Credit Suisse

Post By zittrexstore Oil and Gas Banks, business news, Central banking, Chevron Corp, Credit Suisse Group AG, Energy, Exxon Mobil Corp, Investment strategy, Oil and Gas, Shell PLC, TotalEnergies SE, UBS Group AG No Comments

Thomas Jordan, president of the Swiss National Bank (SNB), speaks during the bank’s annual general meeting in Bern, Switzerland, on Friday, April 28, 2023.

Bloomberg | Bloomberg | Getty Images

The Swiss National Bank on Friday pledged to review banking regulations during its annual general meeting in Bern, following recent turmoil involving Credit Suisse.

Set against a backdrop of protest over its action on climate change and its role in the emergency sale of Credit Suisse to Swiss rival UBS, Thomas Jordan, chairman of the governing board at the SNB, said banking regulation and supervision will have to be reviewed in light of recent events.

“This will require in-depth analysis … quick fixes must be avoided,” he said, according to a statement.

The central bank played a key role in brokering the rescue of Credit Suisse over the course of a chaotic weekend in March, as a flight of deposits and plummeting share price took the 167-year-old institution to the brink of collapse.

The deal remains mired in controversy and legal challenges, particularly over the lack of investor input and the unconventional decision to wipe out 15 billion Swiss francs ($16.8 billion) of Credit Suisse AT1 bonds.

The demise of the country’s second-largest bank fomented widespread discontent and severely damaged Switzerland’s long-held reputation for financial stability. It also came against a febrile political backdrop, with federal elections coming up in October.

Jordan said Friday that future regulation will have to “compel banks to hold sufficient assets which they can pledge or transfer at any time without restriction, and which they can thus deliver as collateral to existing liquidity facilities.” He added that this would mean his central bank could would be able to provide the necessary liquidity, in times of stress, without the need for emergency law.

A shareholder holding a placard reading in German: “Invest in the planet and not in its destruction” takes part in a protest ahead of a general meeting of of the Swiss National Bank (SNB) in Bern on April 28, 2023. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

Fabrice Coffrini | Afp | Getty Images

The SNB faced questions and grievances from shareholders about the Credit Suisse situation on Friday, but the country’s network of climate activists also sought to use the central bank’s unwanted spotlight to challenge its investment policies. Activists failed to gain traction with a vote to reprimand the SNB’s investment decisions, with just 0.8% of shareholders backing the move, according to Reuters.

Unlike many major central banks, the SNB operates publicly-traded company, with just over half of its roughly 25 million Swiss franc ($28.1 million) share capital held by public shareholders — including various Swiss cantons (states) and cantonal banks — while the remaining shares are held by private investors.

More than 170 climate activists have now purchased a SNB share, according to the SNB Coalition, a dedicated pressure group spun out of Alliance Climatique Suisse — an umbrella organization representing around 140 Swiss environmental campaign groups.

Around 50 of the activist shareholders were attendance on Friday, and activists had planned to make around a dozen speeches on stage at the AGM, climate campaigner Jonas Kampus told CNBC on Wednesday. Protests were also held outside the event with Reuters reporting that the campaigners totaled 100, leading to tight security.

The group is calling for the SNB to dispose of its stock holdings of “companies that cause serious environmental damage and/or violate fundamental human rights,” pointing to the central bank’s own investment guidelines.

In particular, campaigners have highlighted SNB holdings in Chevron, Shell, TotalEnergies, ExxonMobil, Repsol, Enbridge and Duke Energy.

Members of a Ugandan community objecting to TotalEnergies’ East African Crude Oil Pipeline, were also set to attend on Friday, with one planning to speak on stage directly to the SNB directorate.

As well as a full exit from fossil fuel investments, activists are demanding that the SNB implement the “one for one rule,” — a capital requirement designed to prevent banks and insurers benefiting from activities that are detrimental for the transition to net zero.

In this context, the SNB would be required to set aside one Swiss franc of its own funds to cover potential losses for each franc allocated to financing new fossil fuel exploration or extraction.

Ahead of the AGM, the central bank declined on legal grounds to schedule three motions tabled by the activists, and said on Wednesday that it would not comment on protest plans, instead directing CNBC to its formal agenda. Yet Kampus suggested that just the process of submitting the motions itself had helped expand public and political awareness of the issues.

“From all sides, there is public pressure and also political pressure that the SNB needs to change things. At this moment, the SNB is really far behind in terms of their actions taken compared to other central banks,” Kampus told CNBC via telephone, adding that the SNB takes a “very conservative view” of its mandate regarding price stability and financial stability, which is “very narrow.”

The shareholders’ cause is also backed by a motion in parliament, with support from lawmakers ranging from the Green Party to the Centre [center-right party], which demands an extension of the SNB’s mandate to cover climate and environmental risks.

“While other central banks around the world are going well beyond the steps taken by the SNB in this respect — the SNB has repeatedly taken the position that its mandate does not give it sufficient leeway to take climate risks fully into account in its decisions and monetary policy instruments,” reads the motion, filed on March 16 by Green Party lawmaker Delphine Klopfenstein Broggini.

Swiss National Bank chair: Maintaining stability is our main goal

“The present parliamentary initiative is intended to ensure this leeway and to make it clear that the SNB must take climate risks into account when conducting monetary policy.”

The motion argues that climate risks are “classified worldwide as significant financial risks that can endanger financial and price stability,” concluding that it is in “Switzerland’s overall interest that the SNB proactively address these issues” as other central banks are seeking to do.

Kampus and his fellow activists hope the national focus on the SNB after the Credit Suisse crisis provides fertile ground to advance concerns about climate risk, which he said poses a risk to the financial system that is “several times larger” than the potential fallout from Credit Suisse’s collapse.

“We feel that there is also a window of opportunity on the SNB side in that they maybe this time are a bit more humble, because they obviously also have done some things wrong in terms of the Credit Suisse crash,” Kampus said.

He noted that the central bank has always asserted that climate risk was incorporated into its models and that there was “no need for further exchange with the public of further transparency.”

Investor who predicted Credit Suisse decline says Swiss banking model is 'damaged'

“Very central to the SNB’s work is that the public just needs to trust them. Trust is something that is very important to the central bank, and to demand trust from the public without leading up to it or supporting it with further evidence that we can trust them in the long run is quite scary, especially when we don’t know what their climate model is,” he said.

The SNB has long argued that its passive investment strategy, which invests in global indexes, is part of its mandate to remain market neutral, and that it is not for the central bank to engage in climate policy. Activists hope mounting political pressure will eventually force a change in legislation to broaden the SNB’s mandate to accommodate climate and human rights as risks to financial and price stability.

UBS and Credit Suisse also faced protests from climate activists at their respective AGMs earlier this month over investment in fossil fuel companies.

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April 24, 2023

State leaders targeting climate investing have quiet stakes in the fossil fuel industry

Post By zittrexstore Oil and Gas BlackRock Inc, business, business news, Conocophillips, Devon Energy Corp, Environment, ESG investing, Exxon Mobil Corp, florida, George W. Bush, Government and politics, Government pensions and social security, Joe Biden, missouri, Oil and Gas, Political ethics, politics, Pollution, texas, Valero Energy Corp No Comments

In October, Scott Fitzpatrick, then-treasurer of Missouri, announced his state would pull $500 million out of pension funds managed by BlackRock.

He said he would move Missouri’s money away from the asset manager because it was “prioritizing” environmental, social and governance investing over shareholder returns. Fitzpatrick, a Republican who won election as the state’s auditor in November, used his office as treasurer to target BlackRock after years of criticizing Wall Street for a perceived turn toward investing focused on climate and social issues.

As he homed in on BlackRock, Fitzpatrick quietly held a financial stake in a massive fossil fuel company that could suffer from the broader adoption of alternative energy. Fitzpatrick and his wife owned a more than $10,000 stake in Chevron during both of 2022 and 2021, according to his latest financial disclosures filed with the state.

Fitzpatrick is among a group of powerful Republican state leaders who have waged similar fights against environmentally conscious investing as they held personal investments in, or saw political support from, the fossil fuel industry.

A handful of state financial officers who have similarly attacked ESG practices owned stock or bonds in oil, gas or other fossil fuel companies in recent years, according to the latest state financial disclosure reports reviewed by CNBC. Some of the state officials have received campaign donations from fossil fuel companies or their executives.

Climate activists with Stop the Money Pipeline hold a rally in New York City to urge companies to end their support for the proposed Line 3 pipeline project and stop funding fossil fuels and forest destruction, April 17, 2021.

Erik McGregor | LightRocket | Getty Images

State leaders face possible conflicts of interest when they have a chance to see financial gains from the fossil fuel industry as they use their offices to defend the sector — or in some cases move their state’s dollars away from clean-energy investments, government ethics experts told CNBC. As the officials ramp up their criticism of Wall Street investment practices, a lack of state laws requiring regular stock disclosures makes it difficult for the public to monitor what personal stake their representatives could have in the actions they take in office.

Brandon Alexander, the chief of staff to the Missouri auditor’s office, told CNBC in an emailed statement that Fitzpatrick’s publicly traded securities are either in a trust or qualified retirement accounts that are managed by a financial advisor.

“Other than employer sponsored retirement accounts (the entirety of which are invested in target date funds over which he has no control), all of Auditor Fitzpatrick’s publicly traded securities, are held in a trust or in qualified retirement accounts which are actively managed by a financial advisor to whom he gives no direction,” Alexander said. “He has never ‘had private briefings tied back to the fossil fuel industry’ nor does he personally direct or execute trades himself. Auditor Fitzpatrick stands by his criticism of the ESG movement, especially as it relates to the application of ESG standards in the management of public funds.”

Unlike members of Congress, state financial officers in many cases only have to disclose their stock ownership once a year. In some states, they do not have to divulge their investments at all. In contrast with federal lawmakers, they also do not have to file regular records disclosing their new trades.

None of the officials mentioned in this story engaged in illegal conduct. But the fact that they have investments that could be helped by their high-profile campaigns against ESG investing may create trust issues with the people they represent, says ethics experts.

“This is a problem that we have elected officials at the federal and state level that are simply not willing to avoid personal financial conflicts of interest,” Richard Painter, who was the chief White House ethics lawyer in the George W. Bush administration, told CNBC in an interview. “You could have someone own stock in a company and pursue policy that could benefit that company. What’s good for Exxon Mobil’s stock is not necessarily good for America.”

Painter said that owning such stock is not illegal for state based leaders. Congressional lawmakers are also allowed to own stock but the 2012 STOCK Act disallows members of Congress to use non-public information to gain a profit and prohibits insider trading.

Another government ethics expert also cited an appearance of conflict as an issue for public officials.

“If an official has a financial interest in a company or an industry, it is reasonable to question whether that interest impacts how they approach their government work,” Donald Sherman, a senior vice president and chief counsel for watchdog group Citizens for Responsibility and Ethics in Washington, told CNBC in an interview.

The fight against ESG investment standards has become a core issue for some Republicans at the federal and state level. Many of those officials have used their positions to target companies they believe are too politically active or, in some cases, are hurting certain industries, such as fossil fuels.

In the case of state financial officers, they have the power to shift public assets or pension funds away from certain firms and to other institutions.

Vocal ESG critics have fossil fuel ties

Georgia’s state treasurer, Steve McCoy, was appointed by Republican Gov. Brian Kemp in 2020. He was among state financial officers, including Fitzpatrick in Missouri, who last year co-signed a letter to President Joe Biden opposing policies that promote ESG. The Biden administration has promoted environmentally conscious investing, and the president used his first veto on a measure that would have shot down a Labor Department rule that promoted ESG policies.

The letter said the state officials “believe the White House should be spearheading a call to invest in American energy instead of pursuing ESG initiatives that divide American energy businesses and discourage investment in these reliable energy industries.” The group went on to say that “freedom is the key to addressing climate change. The depth and breadth of American innovation is unparalleled globally, including the development of green technologies. However, oil, gas, coal, and nuclear are currently the most reliable and plentiful baseload power sources for America and much of the rest of the world.”

McCoy is one of the state financial officers who held an investment in fossil fuels. He had a stake in the industry as recently as 2020 — though changes in disclosure rules mean he has not had to disclose his assets more recently.

McCoy disclosed in 2020 that he owns bonds in fracking company Halliburton and a stake in the U.S. Oil Fund, an ETF that tracks the benchmark price of U.S. crude oil. The disclosure says that these stakes are either “more than 5 percent of the total interests in such business or investment, or [have] a net fair market value of more than $5,000.”

The 2020 disclosure was the last time McCoy filed a document showing his investments. Some states, including Georgia, do not require officials who hold key state positions to file full disclosure forms, and require those leaders to publish only a one-page affidavit, according to Haley Barrett, a spokeswoman for Georgia’s Government Transparency and Campaign Finance Commission.

Two of McCoy’s affidavits filed with the state say virtually nothing about his business dealings and stock holdings. McCoy’s most recent affidavit, from 2022, shows his titles as treasurer and as a member of a variety of boards, including the state Depository Board.

McCoy also had to sign a statement to confirm that he has taken “I have taken no official action as a public officer in the previous calendar year which had a material effect on my private, financial or business interests.” That affidavit and a 2021 version of the document does not say whether McCoy currently owns any stocks in the fossil fuel industry.

When asked about what the state ethics commission does to verify if those signed statements are accurate, Barrett said in an email that “once these documents have been filed with our office and reviewed, there is an opportunity to determine if there are any discrepancies in the filings. Investigations can be initiated internally through our office or by a third party complaint.”

McCoy and his office did not return requests for comment.

McCoy is far from the only ESG critic who has a financial or political interest in fossil fuel companies.

Texas’ state comptroller, Glenn Hegar, argued in letters to money managers last year that he believes firms such as BlackRock, HSBC and UBS are boycotting the energy industry, saying in a statement at the time that he believes “environmental crusaders” have created a “false narrative” that the economy can transition away from fossil fuels. Hegar co-signed an open letter in 2021 with other state financial officers that was addressed to the U.S. banking industry and defended the fossil fuel industry.

“We will each take concrete steps within our respective authority to select financial institutions that support a free market and are not engaged in harmful fossil fuel industry boycotts for our states’ financial services contracts,” the letter reads.

He also co-signed the 2022 letter to Biden from a slate of other state financial officers defending the fossil fuel industry.

Hegar has since escalated his campaign against the institutions. Hegar sent letters to fellow state money managers arguing that they have not done enough to cut ties with BlackRock and other firms that he said boycotted the oil and gas industry, Bloomberg reported in February.

In the lead-up to his anti-ESG push, Hegar owned stock in the oil and gas industry. In 2021, the Texas comptroller and his spouse owned between 100 and 499 shares of Devon Energy and up to 99 shares of ConocoPhillips, according to his latest financial disclosure.

His financial records from all of the previous years since he became state comptroller in 2015 do not show any stock in these two companies or in the fossil fuel industry at large.

Hegar’s political ambitions have also seen a boost from the oil and gas industry — a dominating force in Texas. During his 2022 reelection, Hegar received donations from a range of PACs and executives from the oil and gas business.

His campaign received $10,000 last year from Ben “Bud” Brigham, the chairman of oil and gas development company Brigham Exploration, according to state campaign finance records. The PACs of Chevron, ConocoPhillips, Devon Energy, Calpine Corp. and Valero Energy were among Hegar’s fossil fuel donors during his run for reelection last year, according to state records.

Hegar and his office did not return requests for comment.

Jimmy Patronis, Florida’s chief financial officer, has been railing against ESG investment standards since around the time he was reelected to the position in November. Patronis was also among the co-signers of the 2022 letter to Biden defending the fossil fuel industry.

By December, Patronis announced that the Florida Treasury would start divesting $2 billion of assets managed by BlackRock. In an interview on CNBC’s “Squawk Box” in February, Patronis explained the decision.

“The bottom line: I’m seeing dollars are being siphoned off. I’m seeing individuals, like [BlackRock CEO Larry] Fink and others that are using the state of Florida’s money for a social agenda,” he said.

He added: “I just care about returns. And I’m not seeing that.”

Heading into 2022, he also had a financial interest in the fossil fuel industry.

Patronis owned 100 shares combined of Exxon Mobil and Chevron — the two largest gas companies in the world — at the end of 2021, according to his most recent publicly available disclosure.

His personal interest in fossil fuel companies has grown in recent years. In 2018, he disclosed only about 10 shares of Exxon and did not list any Chevron stock.

The document was the first time since 2018 that Patronis listed investments in the sector.

Frank Collins III, the state’s deputy chief financial officer, told CNBC in a statement that Patronis believes ESG efforts are part of a campaign to decimate the oil and gas industry. He said Patronis does not personally make trading or investment decisions for the state’s retirement systems.

“The CFO wants great returns for those in Florida’s retirement funds, nothing else. While the ESG movement has been on a campaign to erase America’s oil and gas industry from the map, those industries were making returns for investors,” Collins said.

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March 3, 2023

The Russia-Ukraine war remapped the world’s energy supplies, putting the U.S. at the top for years to come

Post By zittrexstore Oil and Gas Baker Hughes Co, business news, Cheniere Energy Inc, Chesapeake Energy Corp, Chevron Corp, Energy, EQT Corp, Exxon Mobil Corp, Freeport-McMoRan Inc, Market Insider, oil, Oil and Gas, Russia, Southwestern Energy Co, United States No Comments

An LNG import terminal at the Rotterdam port in February 2022.

Federico Gambarini | Picture Alliance | Getty Images

Russia’s invasion of the Ukraine a year ago has shifted global energy supply chains and put the U.S. clearly at the top of the world’s energy-exporting nations.

As Europe struggled with threats to its supply of natural gas imports from Russia, U.S. exporters and others scrambled to divert cargoes of liquified natural gas from Asia to Europe. Russian oil has been sanctioned, and the European Union no longer accepts Moscow’s seaborne cargoes. That has resulted in a surge in U.S. crude and refined product shipments to Europe.

“The U.S. used to supply a military arsenal. Now it supplies an energy arsenal,” said John Kilduff, partner at Again Capital.

Not since the aftermath of World War II has the U.S. been so important as an energy exporter. The Energy Information Administration said a record 11.1 million barrels a day of crude and refined product were exported in the week ended Feb. 24. That is more than the total output of either Saudi Arabia or Russia, according to Citigroup, and compares with 9 million barrels a day a year ago.

However, exports averaged about 10 million barrels a day over the four-week period ended Feb. 24. That compares with 7.6 million barrels a day in the year-ago period.

“It’s amazing to think of all those decades of concern about energy dependence to find the U.S. is the largest exporter of LNG and one of the largest exporters of oil. The U.S. story is part of a larger remapping of world energy,” said Daniel Yergin, vice chairman of S&P Global. “What we’re seeing now is a continuing redrawing of world energy that began with the shale revolution in the United States. … In 2003, the U.S. expected to be the largest importer of LNG.”

Yergin said the changing role of the U.S. oil and gas industry in the world energy order will be a topic of conversation among the thousands attending the annual CERAWeek by S&P Global energy conference in Houston from March 6-10. Among the speakers at the conference are CEOs from Chevron, Exxon Mobil, Baker Hughes and Freeport McMoRan, among others.

“One of the ironies, from an energy perspective, is if you only looked straight back, where we were the day before the invasion … if you look at price, you would say not much has happened,” said Daniel Pickering, chief investment officer at Pickering Energy Partners. “The price of global natural gas spiked but came back down. Oil is lower than where it was before the invasion. … The reality is we certainly have set in motion a rejiggering of global supply chains, particularly on the natural gas side.”

According to the Department of Energy, the U.S. has been an annual net total energy exporter since 2018. Up to the early 1950s, the U.S. produced most of the energy it consumed, but in the mid-1950s the nation began to increasingly import greater amounts of crude and petroleum products.

U.S. energy imports totaled about 30% of total U.S. consumption in 2005.

“There’s a global LNG boom that has become much more apparent and visible to the market,” said Pickering. “We’ve shifted around who consumes what kind of crude and products. We’ve meaningfully changed where Russian oil moves to.”

India and China are now the biggest importers of Russia’s crude. “You look at those things, and to me, we very clearly adjusted the way the world is thinking about supply for the next four or five years.”

But a year ago, when Russia invaded Ukraine, it was not clear that the world would have sufficient supply or that oil prices would not spike to sharply higher levels. That is particularly true in Europe, where supplies have been sufficient.

oil

RBC commodities strategists said there were a number of factors at play that helped Europe get by this winter.

“A combination of warm weather, mandated conservation measures, and additional supplies from alternative producers such as the United States, Norway and Qatar, helped stave off such a worst-case scenario for Europe this winter,” the strategists wrote. “Countries that had relied on low cost Russian gas to meet their economic needs, such as Germany, raced to build new LNG import infrastructure to prepare for a future free from Moscow’s molecules.”

But they also point out that Europe is not in the clear, especially if the military conflict continues. “Key gas producers have warned that it could be difficult for Europe to build storage this summer in the absence of Russian gas exports and a colder winter next year could cause considerable economic hardship,” the strategists added.

Qatar has promised to send more gas to Europe, and the U.S. is building out more capacity. “In gas, we’re going to be a very real player. We’re trustworthy. We have rule of law. We have significant resources, and our projects are reasonably quick, compared to a lot of other potential projects around the world,” said Pickering. “My guess is we will go from [capacity of] 12 [billion cubic feet] of exports a day to close to 20, and we will be a big supplier to Europe.”

Pickering said U.S. exports are currently around 10 Bcf a day.

Among the companies he finds attractive in the gas sector are EQT, Cheniere, Chesapeake Energy and Southwestern Energy.

The oil story is different. Pickering said the U.S. industry chose not to be the global swing producer. “We’re not the swing producer because we decided not to be with our capital discipline,” he said.

Energy companies now have earnings visibility that they did not have before, and that could be the case for another five years or so, Pickering said. Oil companies have not been overproducing, as they had in the past, and they did not jump in to crank up production despite calls from the White House in the past year.

The White House has also been critical of the energy industry’s share repurchase programs, which many have.

“They’re generating a lot of cash. They’re being rewarded by shareholders for being disciplined with that cash,” Pickering said. “You did see companies signal their optimism, like with Chevron’s $75 billion share repurchase.”

“The Russia, Ukraine dynamic may have ushered in an era where it’s cool to bash big oil, but my expectation is you can bash all the way to the bank and the political dynamic is very different than the financial and economic dynamic,” he said.

The U.S. now produces about 12.3 million barrels of oil a day, and Pickering does not expect that number to race higher. Producer discipline has helped support their share prices. The S&P energy sector is up 18% over the past 12 months, the best-performing sector and one of just three of 11 sectors that are showing gains. The next best was industrials, up 1.7%.

“Our absolute production levels are as high as they’ve been when you combine oil and natural gas. We were a net importer, and we’ve dramatically reduced that. It’s a massive shift,” said Pickering. “The shale boom benefited the energy sector. It benefited U.S. consumers. It was a terrible stretch for producers. They did their jobs too well. They overproduced. When we went from 5 million barrels a day to 13 million barrels a day, we were taking the most barrels away from OPEC. That was when we were most influential. We were the swing producer.”

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March 1, 2023

Critical for Kazakhstan to pursue oil export options outside of Russia, investor says

Post By zittrexstore Oil and Gas business news, Energy, Exxon Mobil Corp, Oil and Gas, Vladimir Putin No Comments

Bill Ross | The Image Bank | Getty Images

Kazakhstan’s ability to diversify its seaborne crude oil export routes away from Russian territory is critical to the country’s economy, the developer of an alternative port told CNBC.

“I believe it’s less political, more existential question, and we hope that also international community is going to support that initiative to have alternative routes in order to minimize the effects of any supply shortages,” Nurzhan Marabayev, CEO of Kazakh infrastructure investor Semurg Invest, told CNBC’s Dan Murphy and Hadley Gamble.

His company has been working to develop the Kuryk port on the eastern coast of the Caspian Sea — a project that includes a bulk cargo terminal, designed for the transshipment of oil, bulk oil cargo and liquefied petroleum gas.

Once complete, the port could provide an alternative to Kazakhstan’s main seaborne crude oil export route, which currently transports volumes across Russian territory via the 1,511-kilometer (939-mile) Caspian Pipeline Corporation’s pipeline, for later shipment from the CPC terminal near Russian port Novorossiysk.

Since Moscow’s full-scale invasion of Ukraine last year, concerns have mounted that Kazakhstan’s reliance on cooperation with Russia — with whom Kazakhstan shares a 7,644-kilometer (4,750 miles) border and a history of close political alignment — could endanger its oil supplies. Exports from the CPC terminal were intermittently disrupted in 2022, with Russia citing technical and regulatory issues. This included a delay in the port’s restart after storm damage, while Russian technical watchdog Rostekhnadzor carried out an unscheduled inspection, and a brief and unenforced Russian court ruling for CPC to halt exports for 30 days.

“Approximately 95% of oil is going through Russian territory, and we have seen some disturbance last year, and actually … it’s quite a threat to the Kazakhstan economy, because we are depending on the oil revenues,” Marabayev told CNBC on Wednesday.

Oil major ExxonMobil — which holds a 16.8% interest in the Kasahagan field and a 25% stake in the Tengizchevroil consortium that operates the Tengiz and Korolev fields — signaled similar concerns in a Feb. 22 securities filing.

“In the event that Russia takes countermeasures in response to existing sanctions related to its military actions in Ukraine, it is possible that the transportation of Kazakhstan oil through the CPC pipeline could be disrupted, curtailed, temporarily suspended, or otherwise restricted,” the company said, warning of a “loss in cash flows of uncertain duration” under such circumstances. ExxonMobil’s after-tax earnings linked to its Kazakh interests were roughly $2.5 billion in 2022.

Kazakhstan is the second largest producer of the non-OPEC contingent of the OPEC+ coalition and has typically aligned itself with Russia in the group’s petropolitics. Kazakh output slipped to 1.66 million barrels per day in January, according to the February issue of the International Energy Agency’s Oil Market Report.

The country has been studying potential alternative transport routes beyond Moscow’s borders, including the possibility of sending oil shipments via Azerbaijan’s Baku-Tbilisi-Ceyhan pipeline and through the incomplete Kuryk port project.

“Major infrastructure has been done, but still we need more support and attention to the port in order to fast-track the development of the private terminals,” Marabayev said. Development began in 2010, with operations starting six years ago.

U.S. outreach

Russia and Kazakhstan have historically observed a tight alliance, with Kazakh President Kassym-Jomart Tokayev last year calling on the Moscow-led Collective Security Treaty Organization to send paratroopers into Kazakh territory after nationwide protests erupted over fuel price increases.

But Russia’s war in Ukraine has stranded Kazakhstan in a precarious balancing act between Western powers and the Moscow administration of Vladimir Putin. Tokayev deepened engagement with Washington during the Tuesday visit of U.S. Secretary of State Antony Blinken, who repeatedly stressed that the U.S. backed Kazakhstan’s “territorial integrity.”

“Ever since being the first nation to recognize Kazakhstan in December of 1991, the United States has been firmly committed to the sovereignty, territorial integrity, and independence of Kazakhstan – and countries across the region,” Blinken said.

“In our discussions today, I reaffirmed the United States’ unwavering support for Kazakhstan, like all nations, to freely determine its future, especially as we mark one year since Russia launched its full-scale invasion of Ukraine in a failed attempt to deny its people that very freedom.”

Russian flows

The world’s third-largest oil producer, Russia has found its footing in the crude markets destabilized by EU and G-7 sanctions implemented against its seaborne exports of crude oil and oil products in December and February, respectively. Kazakh oil has been exempted from the measures despite transiting and exiting a port on Russian grounds.

The G-7 has put in place a scheme that allows Western providers to facilitate critical financial and shipping services to non-G-7 countries that purchase Russian volumes below a specific price. Moscow has repeatedly denounced this measure and threatened to deny its crude and oil products to those who observe such a price cap.

The withdrawal has pressured its production levels, which the IEA pegged down to 9.77 million barrels per day in January. Moscow announced it would reduce crude oil output by 500,000 barrels per day in March.

Russia has also been pushed farther into the Asia markets, now primarily relying on Chinese and Indian purchases:

“I think Russia, effectively, is an Asian nation by now. I think India and China will, for a long period, be the main buyers of Russia. It’s going to become the new norm,” Viktor Katona, lead crude analyst at Kpler, told CNBC’s “Squawk Box Europe.”

“I think that’s going to be the end result Russia out of Europe, Russia perennially into Asia, there’s going to be new links into those countries, and that’s pretty much it.”

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