As the world’s economy has stopped moving, demand for transportation fuel has collapsed. The latest weekly report from the U.S. Energy Information Administration (EIA) presents the statistical reality in our country. Gasoline supplies are down 46% from a year ago. Kerosene (jet fuel) is down 72%. Nobody has anywhere to go. Interestingly, propane supplies are […]
Yesterday the Texas Rail Road Commission (RRC) began their public hearings via Zoom on a request from some oil companies that they limit oil production (“proration”) to avoid unnecessary waste (see Navigating the Collapsing Oil Market). On the surface, it seems a pretty straightforward question. The pandemic has crushed oil demand, which is estimated to […]
The other day a client asked if we’d looked at insider buying among management teams of pipeline companies. So far this year, Energy Transfer (ET) dominates with $108MM, representing 63% of all the insider buys so far. Kelcy Warren receives plenty of criticism, not least from this blog (see Energy Transfer’s Weak Governance Costs Them), […]
Coming into 2020 the pipeline sector was in good shape. Spending on growth projects peaked in 2018, and lower growth capex combined with rising cashflow from existing assets were set to drive Free Cash Flow (FCF) higher. Across the companies that are in the American Energy Independence Index it was on course to more than […]
Crude oil drew the headlines this week. Trump’s Wednesday tweet forecasting a 10 Million Barrel per Day (MMB/D) agreed supply reduction (“Could be as high as 15 Million Barrels”) caught markets off guard. The demand collapse is astonishing. The world was consuming around 100 MMB/D of crude oil and liquids before the coronavirus. Estimates are […]
To the list of previously inconceivable events, add Texas oil drillers asking for their regulator to impose production curbs. Pioneer Natural Resources (PXD) and Parsley Energy (PE) filed a request with the Texas Railroad Commission (RRC) to hold a hearing on the state’s oil and gas production. It’s over 40 years since they last considered […]
Approximately 80% of our investments in midstream energy infrastructure are corporations – we invest in MLPs selectively. There’s a big difference between investing in pipeline corporations with their wide investor base, and MLPs whose pool of natural buyers is withering. That’s why eight of the ten biggest names in the American Energy Independence Index (AEITR) […]
Yesterday Williams Companies (WMB) provided an investor update on their business. WMB isn’t directly involved in crude oil, and they’re best known for owning Transco, a natural gas pipeline network running down the eastern U.S. So far, natural gas demand is un-impacted, and slightly above historical norms. WMB provided some information on their overall sensitivity […]
As our response to Coronavirus shifts from purely medical to political, markets have seen a glimmer of light. So far, decisions have been made, whether right or wrong, based on advice from epidemiologists. But as the economic cost has exploded, it’s provoked the obvious question: if the most vulnerable cohorts are identifiable, and the vast […]
None of us will forget the past couple of weeks. Investors and money managers are grappling with collapsing markets, working remotely and the challenges of ever stricter controls on our movement. Below we’ll highlight some information that investors may have missed, combined with what we’ve learned from multiple conversations. Pipeline companies that said anything publicly […]
