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The Daley Note 11/12/2020

The Daley Note 11/12/2020

  • OXY Targets Net-Zero Emissions: Occidental Petroleum (OXY) announced on November 10 plans to eliminate carbon emissions by 2050 from the oil and gas it extracts and sells. OXY is the first U.S. oil company to announce a net-zero emissions plan, following the lead of European peers like Shell (RDS) and Total (TOT). The OXY announcement continues its prioritization of ESG initiatives, though midstream counterparties could face challenges if more U.S. operators follow. APC, EPD, OXY, RDS, TOT, TRGP, WES
  • Pioneer and Parsley Boost Targa in Permian: Targa Resources (TRGP) is ready to reap gains from recent upstream merger activity in the Permian Basin. From October 25 to November 1, Targa saw four more rigs drilling on its West Texas system in the Midland. East Daley expects Targa to be the main beneficiary in the midstream space once the PXD-PE merger closes, expected in 1Q21 (see our October 22 Snapshot, “Pioneer-Parsley: Midstream Implications of Permian Merger Mania”). In addition to their acreage overlap in the Midland, Parsley is the largest producer on TRGP’s Delaware G&P system. PE, PXD, TRGP
  • Eyeing a Rig Comeback in the Anadarko: The Anadarko Basin averaged 16 rigs in 3Q2020, a historic low, but E&Ps are returning to the basin ahead of expected higher gas prices this winter and in 2021. An average of 18 rigs drilled in October and 21 rigs in the first week of November, with operators including Continental Resources (CLR), Citizen Energy III LLC, Mewbourne Oil Co., and GBK Corp. leading the rebound. Our samples show Anadarko gas volumes increased ~12% W-o-W and by ~5% in 3Q2020. CLR, DCP, ENBL
  • LNG Exports Rise in November: Domestic LNG feedgas deliveries remain strong, with utilization averaging 95% of nameplate export capacity so far in November. Higher gas prices in Europe over $5/MMBtu have created favorable spreads for LNG exports and Sempra is closing out maintenance at its Cameron LNG facility following Hurricane Delta.
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