Mar 24, 2023·edited Mar 24, 2023Liked by Arjun Murti
Hi Ajurn,
A question on planning CAPEX: we had a negative price, then a huge run up to above $100, then a fall back down (so far) of nearly 50%, Granholm has said the SPR refill will take years thereby not giving any price floor support at the $65 range, and so on. Wouldn't these all contribute to an atmosphere where it makes sense to minimize CAPEX, 'hunker down' as you say, and focus on working existing assets rather than risking expansion?
And if so, doesn't this volatility breed more volatility as companies are reluctant to invest in new production which prolongs this supercycle?
(Note: Anas Alhajji was recently saying that there is a lot of growth in CAPEX in the last 12 months, but maybe he meant growth percentage from a very low base, rather than absolute spending dollars.)
Another great episode, Arjun. I hope you're enjoying your new role and, once again to reiterate, your notes are really helpful for energy investors in terms of managing expectations and developing an investing process given volatility is structurally higher. Cheers John.
Arjun You are right to focus on insurance capacity. As a career analyst and executive in the insurance and reinsurance industry, European Re/insurers are very much in the camp of cutting hydrocarbon producers off as a means to reducing CO2 levels.
Oh my goodness! Your analysis and presentation was extremely valuable for me. I cannot thank you enough and I will look forward to all of the information that you offer.( I secretly wish we would be invited to the same cocktail party.)
Arjun, great analysis and your personal note at the end about your new role is encouraging to me and a wise choice in my opinion. Engaging with policy makers to get them to understand the truth about energy is critical. If I remember my economic's history correctly, back in Adam Smith's time, his area of study was called "political economy". That's because markets are shaped by government policy and laws. In the U.S., I believe that public oil companies will continue to be whipsawed by policy changes depending on which political party has control of the Administration/Congress, since they presently have polar opposite views on traditional energy. Not a good scenario for committing to long term investment in conventional oil, like deep water projects, which will be needed if shale production has reached or is close to its zenith. So I understand why you see privates and NOCs as the entities that have the best chances going forward. However, I sincerely hope that in your new role, you can change some policy maker's minds. Best of luck!
Hi Ajurn,
A question on planning CAPEX: we had a negative price, then a huge run up to above $100, then a fall back down (so far) of nearly 50%, Granholm has said the SPR refill will take years thereby not giving any price floor support at the $65 range, and so on. Wouldn't these all contribute to an atmosphere where it makes sense to minimize CAPEX, 'hunker down' as you say, and focus on working existing assets rather than risking expansion?
And if so, doesn't this volatility breed more volatility as companies are reluctant to invest in new production which prolongs this supercycle?
(Note: Anas Alhajji was recently saying that there is a lot of growth in CAPEX in the last 12 months, but maybe he meant growth percentage from a very low base, rather than absolute spending dollars.)
Another great episode, Arjun. I hope you're enjoying your new role and, once again to reiterate, your notes are really helpful for energy investors in terms of managing expectations and developing an investing process given volatility is structurally higher. Cheers John.
Arjun You are right to focus on insurance capacity. As a career analyst and executive in the insurance and reinsurance industry, European Re/insurers are very much in the camp of cutting hydrocarbon producers off as a means to reducing CO2 levels.
Thanks for highlighting the benefits of being private for oil and gas right now.
We always enjoy your videopods. Thanks Arjun.
Oh my goodness! Your analysis and presentation was extremely valuable for me. I cannot thank you enough and I will look forward to all of the information that you offer.( I secretly wish we would be invited to the same cocktail party.)
Arjun, great analysis and your personal note at the end about your new role is encouraging to me and a wise choice in my opinion. Engaging with policy makers to get them to understand the truth about energy is critical. If I remember my economic's history correctly, back in Adam Smith's time, his area of study was called "political economy". That's because markets are shaped by government policy and laws. In the U.S., I believe that public oil companies will continue to be whipsawed by policy changes depending on which political party has control of the Administration/Congress, since they presently have polar opposite views on traditional energy. Not a good scenario for committing to long term investment in conventional oil, like deep water projects, which will be needed if shale production has reached or is close to its zenith. So I understand why you see privates and NOCs as the entities that have the best chances going forward. However, I sincerely hope that in your new role, you can change some policy maker's minds. Best of luck!