Politics, Geopolitics & Conflict

The United States of Gaza: One way Trump could increase natural gas production is through ownership of the Gaza Strip. In June 2023, Netanyahu awarded preliminary approval for the development of gas fields in Gaza Marine. It would have been an economic boon for the Palestinians, and it would also have given Netanyahu ammunition to demonstrate that he is working to make better living conditions for Gaza residents. These fields are estimated to contain over 1 trillion cubic feet of gas. That gas could go to Europe and could decimate what’s left of Russia’s gas supply to Europe. What’s left is largely LNG. The Palestinian Authority has wanted to move this project ahead for decades, but Hamas’ control over Gaza has made that nearly impossible. Now, Trump wants to skip ahead and take ownership of Gaza, but the gains would not go to the Palestinians, who would be evicted to Jordan and/or Egypt. That attempt is fodder for a wider regional war.

The Panama Canal remained a key geopolitical focus this week, with Panama President Jose Raul Mulino accusing the State Department of lying when it claimed its vessels would be able to traverse the canal for free. Like Gaza, Panama is up in arms over Trump’s threat to take the canal. The newly inaugurated president, however, has achieved a victory with respect to Panama, which this week officially told Beijing it would pull out of the Best and Road Initiative.

Discovery & Development

South…

Politics, Geopolitics & Conflict

The United States of Gaza: One way Trump could increase natural gas production is through ownership of the Gaza Strip. In June 2023, Netanyahu awarded preliminary approval for the development of gas fields in Gaza Marine. It would have been an economic boon for the Palestinians, and it would also have given Netanyahu ammunition to demonstrate that he is working to make better living conditions for Gaza residents. These fields are estimated to contain over 1 trillion cubic feet of gas. That gas could go to Europe and could decimate what’s left of Russia’s gas supply to Europe. What’s left is largely LNG. The Palestinian Authority has wanted to move this project ahead for decades, but Hamas’ control over Gaza has made that nearly impossible. Now, Trump wants to skip ahead and take ownership of Gaza, but the gains would not go to the Palestinians, who would be evicted to Jordan and/or Egypt. That attempt is fodder for a wider regional war.

The Panama Canal remained a key geopolitical focus this week, with Panama President Jose Raul Mulino accusing the State Department of lying when it claimed its vessels would be able to traverse the canal for free. Like Gaza, Panama is up in arms over Trump’s threat to take the canal. The newly inaugurated president, however, has achieved a victory with respect to Panama, which this week officially told Beijing it would pull out of the Best and Road Initiative.

Discovery & Development

South Korea’s much-hyped offshore gas discovery is looking like it could be a bust. The energy ministry is now admitting that the project may not be economically viable after all, although initial drilling data showed some signs of gas. Unfortunately, nothing substantial enough has been revealed that would justify full-scale development. President Yoon Suk Yeol had touted the potential for 14 billion barrels of oil and gas last year, but skepticism has been mounting, especially after opposition lawmakers slashed most of the funding for further exploration. With costs running high and a success rate pegged at just 20%, South Korea may have to stick to being an importer rather than a producer.

TotalEnergies’ long-delayed Mozambique LNG project is inching closer to securing U.S. financing, with CEO Patrick Pouyanne expecting approval in the coming weeks. The $20 billion project has been in limbo since 2021 due to violent unrest, and its completion timeline has now been pushed back to 2029-2030. The U.S. Export-Import Bank had previously committed $4.7B in loans, but the funds–and pledges from the UK and Dutch credit agencies–need to be re-approved. Britain is reportedly exploring a legal exit from its financing commitment.

Deals, Mergers, and Acquisitions

Egypt has signed $3 billion worth of LNG deals with Shell and TotalEnergies to secure 60 cargoes for 2025, as the country grapples with declining domestic gas production. Once a net exporter, Egypt has been forced to increase imports due to lower output from the Zohr gas field and surging power demand. Rising LNG spot prices are worrisome for the importer. Domestic gas production is expected to decline further by 2028, raising concerns about the country’s long-term energy security.

BP is putting its Ruhr Oel GmbH – BP Gelsenkirchen refining and petrochemical operations in Germany up for sale as part of its broader strategy to streamline its portfolio. The refinery, which processes about 12 million tonnes of crude per year, plays a key role in North Rhine-Westphalia’s chemical industry and will continue operating as usual during the sale process. The sale, expected to be finalized in 2025 pending regulatory approvals, aligns with BP’s push to focus on higher-value assets.

Q4 Earnings Beat

ConocoPhillips (COP): Houston-based ConocoPhillips reported an adjusted profit of $1.98 per share for Q4 2024, surpassing analysts’ expectations of $1.84. The company’s production increased to 2.18 million boepd, up from 1.9 million boepd the previous year. Despite a 10% decline in average realized prices to $52.37 per barrel, revenue was $14.7 billion, a 3.7% decrease from the prior year. For 2025, ConocoPhillips forecasts production between 2.34 and 2.38 million boepd and plans capital expenditures of $12.9 billion–with plans to spend 15% less on its Lower 48 projects and increasing its spend on its LNG projects in Qatar and Alaska.

Suncor Energy (SU): Based in Calgary, Alberta, Suncor’s adjusted earnings for Q4 2024 were C$1.25 per share, exceeding the consensus estimate of C$1.10. The company achieved upstream production of 875,000 bpd, up from 808,000 bpd the previous year, aided by the Trans Mountain Pipeline expansion. Refinery throughput reached 486,000 bpd, with utilization rates more than doubling. Suncor maintained its 2025 guidance for increased production and reduced expenditures.

Equinor (EQNR): Norway’s Equinor reported Q4 2024 earnings of $7.90 billion, slightly above analyst expectations. The company increased its 2030 oil and gas production target to approximately 2.2 million boepd, up from a previous estimate of 2 million. Conversely, it reduced its renewable energy capacity goal to 10-12 gigawatts from 12-16 gigawatts. For 2025, Equinor projects a 4% rise in oil and gas production in 2025 and has set capital spending at $13 billion. The Q4 dividend was raised to $0.37 per share.

ExxonMobil (XOM): Texas-based ExxonMobil reported Q4 2024 earnings that exceeded expectations, driven by increased production in the Permian Basin and offshore Guyana. Adjusted profit for the quarter came in at $7.39 billion, or $1.67 per share, beating analyst estimates. Earnings for oil and gas production came in at $6.28 billion, up from $4.15 in Q4 2023. Production hit 4.6 million boepd, up from 4.58 million boepd in the quarter prior.

TotalEnergies (TTE): French-headquartered TotalEnergies surpassed Q4 profit estimates, bolstered by robust liquefied natural gas (LNG) trading activities. The company’s diversified energy portfolio and strategic investments in LNG infrastructure played key roles in its financial success.Total’s 2024 earnings were €7.18 per share ($7.77), down from 2023. Total revenue for Q4 was $47.11B–a decrease from Q4 2023 when revenues were $47.26B. Revenues were down 13.9% y/o/y.

Marathon Petroleum (MPC):US-based Marathon Petroleum reported Q4 earnings that topped estimates, despite experiencing declining refining margins. MPC’s Q4 adjusted earnings per share was $0.77, with a disappointing bottom line of $3.98 for adjusted profit against revenues of $33.5B–a 9.1% slide from the same period last year, although it beat analyst estimates.

Alliance Resource Partners (ARLP): Tulsa-based Alliance Resource reported Q4 2024 total revenue of $590.1 million, with net income of $16.3 million and adjusted EBITDA of $124.0 million. The quarter was impacted by a 2.3% reduction in coal sales volumes and lower transportation revenues. The company declared a quarterly cash distribution of $0.70 per unit and anticipates coal sales volumes between 32.25 and 34.25 million tons for 2025.

Petrobras (PBR): Rio de Janeiro-based Petrobras experienced a 10.5% decline in Q4 oil and gas production compared to the previous year, totaling 2.63 million boepd. The decrease was attributed to maintenance activities, unplanned stoppages at offshore platforms, and the natural decline of mature fields. The company plans to address these challenges by bringing new production units online in the coming years.

Imperial Oil (IMO): Alberta’s Imperial Oil’s Q4 net income came in at $1.2B. The company returned $1.8B to shareholders in the quarter through buybacks and dividends.   

Enphase Energy (ENPH): Headquartered in Fremont, California, Enphase Energy reported Q4 results that surpassed expectations, driven by strong demand for its solar energy solutions. Q4 revenue was $382.7 million, with net income of $62.2 million. 

WEC Energy Group (WEC): Based in Milwaukee, Wisconsin, WEC Energy’s Q4 earnings missed estimates, influenced by factors such as weather conditions and energy consumption patterns. WEC reported net income of $1.5 billion, or $4.83 per share for 2024, compared to $1.3B in 2023. 

Xcel Energy (XEL): Minnesota’s, Xcel Energy’s Q4 results fell short of estimates, affected by factors such as regulatory outcomes and operational expenses. Q4 revenue of $3.12 billion came in under the $3.77B expected, largely due to maintenance expenses that were up 6.6% from the previous year. Adjusted profit was 81 cents per share. Profits were up 13.4% in the quarter from the previous year, to $464 million.