March 11, 2020

March 11, 2020
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  • WTI is down 131c to $33.05/Bbl, and Brent is down 144c to $35.78/Bbl
  • Saudi Arabia’s energy ministry is directing Saudi Aramco to raise its output capacity to 13 MMBbls/d
    • This is 700 MBbls/d more than the 12.3 MMBbls/d that was originally planned for April
    • Aramco’s highest ever recorded production was a little over 11 MMBbls/d, meaning they will likely need to draw on storage or trading to meet their new targets
    • Platts notes that it could take six months of investment in Aramco’s onshore and offshore assets to reach sustained production of just 11.5 MMBbls/d
    • Saudi Arabia has booked at least eight supertankers to load next month
  • Occidental is planning on reducing capital expenditures from $5.2 to $5.4 billion to $3.5 to $3.7 billion
    • Matador will be reducing the number of rigs they are running from six to three, while pursuing non-core asset sales
    • Marathon will suspend all drilling and completion activity in Oklahoma where they currently run three rigs; they will also meaningfully reduce activity in the Northern Delaware where they currently run four rigs
  • OPEC cuts 2020 global oil demand growth forecasts by 920 MBbls/d
    • They also are reducing Non-OPEC supply estimates by 490 MBbls/d to 1.76 MMBbls/d
  • Natural gas is down 1.5c to $1.921/MMBtu
  • Freeport’s third and final train is reportedly receiving feed gas as it reaches final commissioning
    • The train should be fully operational by May 2020
    • The company is currently debating whether to expand the Freeport facility to four trains, a Final Investment Decision is expected in 1Q2020
  • US LNG developers are struggling to finalize long-term offtake contracts amid a global glut in the LNG market
    • In early January, an initial trade deal was reached between Beijing and Washington that provided optimism for LNG exporters, but several LNG terminal developers admit its hard to develop a project without China as a borrower according to Platts
    • Commonwealth LNG, a 1.1 Bcf/d facility, is targeting a FID by early 2021 but has yet to reach any long-term offtake contracts
    • Annova LNG, a 0.8 Bcf/d facility, has also yet to secure any firm offtake agreements despite recently receiving FERC approval to move forward with their project
    • AEGIS notes that, in a low price environment, a lack of firm-offtake agreements could delay FIDs and push back the start of second wave LNG facilities, which were supposed to start coming online in 2H2021

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