O&G Private Equity Investment Picks Up in Europe, Falls Off in US
Even with huge profits the likes of which haven’t been seen since, well, maybe forever–fossil energy companies in the U.S. are still having a tough time attracting private investment money. According to the Wall Street Journal, private equity raised $2.98 billion across seven oil and gas funds in the first half of the year. That is 40% lower than the amount raised in 12 oil and gas funds for the first half of 2021–when prices for oil and gas were half what they are now. But over in Europe, private equity investment in oil and gas is picking up!
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Enverus, a leading global energy data analytics and SaaS technology company, earlier this week released Macro Forecaster, a new report that assesses the continued impact of COVID-19, the Ukraine war, and the weakening global economy on near-term oil and gas balances. Enverus predicts the price of oil will be somewhere in the range of $80s or $90s per barrel by the end of this year. The company also predicts natural gas will slump to about $4.50/MMBtu by next summer.
U.S. Senator Joe Manchin, Democrat from West Virginia, did the country (and his own party) a huge favor when he pushed the temporary pause button on committing trillions of dollars of new inflationary spending on Big Green programs called the Biden Build Back Better bill (see 
You know we’re not big fans of the American Petroleum Institute (API), an organization run by Big Oil companies (like Exxon and Chevron) that actively works against the best interests of smaller independent shale energy producers. API supports an oil and gas-killing carbon tax, as just one example of its fossil fuel heresy. Yet the API has suddenly grown a spine and is attacking President Biden’s pathetic begging trip to Saudi Arabia to ask OPEC to increase oil production. API even released a new video inviting Biden to visit American energy sites following his failed Middle East visit to learn how American energy companies can solve the problem of high gasoline prices.
More than half of the refining capacity in the U.S. is located on the Gulf Coast, where more gasoline and distillate fuel is produced than used. On the other hand, the U.S. East Coast has very little refining capacity but is often the location where the most gasoline is consumed. Consequently, the East Coast receives fuel from other regions, predominantly the Gulf Coast, and imports fuel from other countries. It seems to us that there is a big opportunity to build new refineries along the East Coast.
Next month President Biden is heading to the Middle East and is scheduled to meet with Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS)–the man who allegedly ordered the murder of Saudi Jamal Khashoggi, a reporter for the Washington Post. Biden previously called MBS a “pariah” following the Khashoggi episode. Why is Biden now meeting with him? To beg for more oil production. A group of 27 energy associations, including the American Petroleum Institute (API) and the Marcellus Shale Coalition, sent a letter to Biden inviting him to tour American energy infrastructure before he boards the plane to meet with MBS.
Each month the U.S. Energy Information Administration (EIA) issues a monthly Short-Term Energy Outlook (STEO). Last month, in May, the STEO made the startling prediction that the average Henry Hub price for natural gas (the national benchmark) would hit $8.13 for 3Q22 and $8.59 for the entire second half of this year (see 
We’ve tackled the issue of why there isn’t more oil and natural gas drilling happening in the Marcellus/Utica and beyond even with prices for both commodities through the proverbial roof. Not that many years ago prices were a fraction of what they are now and yet the drilling industry would not, could not stop drilling new wells, flooding the market with product and crashing prices. Now, it’s the reverse! It seems nothing will incentivize drillers to drill any new wells beyond enough to keep production steady. Why? An article in the Wall Street Journal seeks to answer the question, definitively.
It’s been about 3½ years since Encino Energy in partnership with the Canada Pension Plan Investment Board closed on buying Chesapeake Energy’s Ohio Utica assets for $2 billion (see 
According to the Philadelphia Inquirer, refineries in the Greater Philly area are among the biggest importers of Russian crude oil in the U.S. President Biden recently slapped a ban on imports of Russian crude oil. So what happens to the Philly refineries that use it? Where will they get their oil from to keep operating?
The left is so predictable–no matter if they are here in the U.S. or somewhere else in the world. And the left never seems to change. Back in the late 1970s when failed President Jimmy Carter faced an oil shortage situation, he recommended people turn down their thermostats and wear sweaters. The left always operates from a “shortage” paradigm rather than an abundance paradigm. Today, history repeats itself. The leftists that infest the International Energy Agency (IEA) told us last year that new oil and gas exploration should immediately stop worldwide (meaning in the U.S.) to save Planet Earth from Global Warming monsters (see 
President Joe Biden and his surrogates have been blaming U.S. oil and gas producers for not producing more in the face of prices going through the roof. Big Oil & Gas have responded that the Bidenistas refuse to even talk with them about important issues, like onerous new regulations, blocking new pipelines, etc. It looks like the Bidenistas are finally desperate enough to at least sit down and talk. According to Bloomberg (not always a reliable source) Dept. of Energy Secretary Jennifer Granholm is having conversations with several oil companies at the CERAWeek conference.
According to Rystad Energy’s senior oil market analyst, market panic is officially here. Because of the ongoing war of invasion, with Russia invading and attempting to annex Ukraine, world oil markets are unhinged. After the market closed yesterday, Brent crude surpassed $115/barrel to touch its highest level since 2008. West Texas Intermediate (WTI) closed yesterday at $110.60/barrel. The war and its associated chaos and uncertainty is affecting other commodities too, like natural gas (NYMEX up 4% yesterday), agriculture, and precious metals. Supply disruptions are expected. Everyone is hitting the panic button.
In years gone by, when oil drilling in the Texas/New Mexico Permian, Texas Eagle Ford, or North Dakota Bakken picked up, the increase in oil drilling came with an increase in natural gas production–something called “associated gas” because the gas is not produced for its own sake but as a byproduct of oil drilling. With tightening environmental laws that require oil drillers to capture instead of burn off or flare the gas, those oil drillers looked for markets to sell their associated gas. All of that extra associated gas would compete in the market with Marcellus/Utica gas, because our gas and the associated gas often flows to the same Midwest and Gulf Coast markets. Prices crash due to an abundance of supply with the same (or even less) demand. This time around, things have changed.
Get a load of this… Last May, the International Energy Agency (IEA) and its Executive Director Fatih Birol published a nonsensical “report” called “Net Zero by 2050: A Roadmap for the Global Energy Sector” (see