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Oil patch insider: COP good buy; Per IEA $540B year spend to maintain output thru 2050
Kay Cashman Petroleum News
Seeking Alpha's analyst Seeking Profits, who has some 4.83K followers, penned a lengthy piece on Sept. 17 that contains interesting insights about ConocoPhillips in Alaska.
The piece was titled "ConocoPhillips: Attractive Free Cash Flow in a Muted Oil Price Environment".
Seeking Profits summary said ConocoPhillips "is optimizing its portfolio, targeting $5 billion in asset sales by 2026, and focusing capital on high-return LNG and Alaska projects for future growth."
If Seeking Profits is reading the situation correctly it is good news for Alaska.
Furthermore, Seeking Profits says ConocoPhillips remains an attractive "Buy" despite recent underperformance, offering a compelling 8% forward free cash flow yield and a secure 3.3% dividend.
Seeking Profits also points out in his/her/their summary that ConocoPhillips' "integration of Marathon Oil is ahead of schedule, driving over $1 billion in cost synergies and supporting robust production even with reduced drilling."
Management's long-term outlook implies about "$14 billion in 2029 free cash flow. One-third of this growth will come through LNG. Conoco is also building out a large expansion of its Alaska operation in its Willow Project. This project could boost total company production by 6%-8%. As it moves from construction to production, there should be a meaningful uplift in cash flow by 2029. President Trump, in both his first and second terms, has been focused on increasing production in Alaska, providing a favorable regulatory backdrop to getting this project completed."
Seeking Profits in-depth analysis of ConocoPhillips is worth reading.
Who is Seeking Profits? Per Seeking Profits, "Over fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me know!"
Analyst's disclosure: "I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article."
Petroleum News recommends checking out Seeking Profits on Seeking Alpha.
IEA: $540B a year needed On Sept. 15 Bloomberg reported that IEA said in a webinar that the world needs to spend in the neighborhood of $540 billion a year exploring for and producing more oil and gas to maintain current output by 2050.
Christophe McGlade, head of the energy supply unit of the International Energy Agency, or IEA, says while global spending is likely to hit $570 billion this year, that is down from 2024
The outlook, Bloomberg reported, "means that companies will need to tap reserves that haven't yet been discovered, unless demand shifts away from fossil fuels."
IEA's forecast is part of a report that analyzed more than 15,000 fields and how fast their output is declining.
"Without investment, global supply would fall by the combined production of Norway and Brazil -- more than 5 million barrels a day -- every year. That amount is around 40% higher than it was in 2010, partly because of more reliance on shale production, particularly from the U.S., which typically depletes faster than conventional reserves," Bloomberg reported.
"The outlook matters because there's little sign of oil demand peaking soon, meaning that more output will be needed for years to come," Bloomberg said.
"An absence of upstream investment would remove the equivalent of Brazil and Norway's combined production each year from the global market balance," IEA Executive Director Fatih Birol said in a statement. "The situation means that the industry has to run much faster just to stand still."
Build-up of icebreaker fleets President Trump wants to add 48 icebreakers to the current U.S. fleet of three. The tax bill that passed into law this year earmarked US$8.6 billion to get started. According to the U.S. Coast Guard it is enough to fund 17 new vessels.
Per a Sept. 16 Bloomberg report, thawing at the top of the world has "stirred a global competition to forge new, previously unnavigable shipping routes and access once-remote oil and gas fields and stores of minerals."
The thawing in the Arctic has also spurred military interest in the area with Russia "the clear world leader with 47 icebreakers in service, according to Mikhail Grigoriev, director of the Moscow-based Gecon consultancy," per Bloomberg.
China, Sweden and Canada are also looking to expand their icebreaker fleets.
According to the Canadian government, as part of its fleet renewal plan, the Canadian Coast Guard, or CCG, is acquiring two polar icebreakers through the National Shipbuilding Strategy. To deliver these vessels by the early 2030s, construction work is being done by two shipyards: Chantier Davie Canada Inc. and Seaspan's Vancouver Shipyards.
These new polar icebreakers will be Canada's most powerful icebreakers and among the most powerful icebreakers in the world.
They will enable CCG to operate at higher latitudes for longer periods and help the fleet better support Indigenous Peoples and other northerners.
The heavy icebreakers will also strengthen Arctic security, advance high Arctic science and improve responses to maritime emergencies.
Sweden's polar icebreaker fleet is led by the research icebreaker Oden, a unique vessel suited for polar operations.
The Swedish Maritime Administration, or SMA, is currently modernizing its fleet with Project New Icebreakers to acquire new A-Class icebreakers to support increasing demands in northern Sweden, with one new methanol-powered icebreaker expected to be delivered by 2027 or 2028.
The SMA is undertaking a project to acquire new A-Class icebreakers to replace older units and meet growing needs.
The planned new icebreakers will be designed by Aker Arctic and will run on methanol.
Sweden's current three A-Class icebreakers are the Atle, Frej, and Ymer, which were built in the 1970s.
-Oil Patch Insider is compiled by Kay Cashman
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