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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
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  • Aug 23, 2021 8:52 pm GMT
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The last three months earnings in oil & gas sector has lent further support to the industry’s efforts to pay down debt and reward investors. But some long-term investors have concluded that the old energy of the past — oil and gas extraction, is just that — old, with a sell-by date that is moving closer by the day.  

TRENDS TO WATCH

  1. The world’s largest oil and gas majors are seeking to lure back investors by returning more cash to shareholders,
  2. The Super-majors are seeing a “very strong” cash flow following a sustained rebound in oil prices, but many are choosing to keep spending relatively tight rather than invest in future production projects.
  3. The US & European super majors, all have announced share buyback or increased dividend payout
  4. Analysts and market participants, particularly those looking to the long term, remain highly skeptical.
  5. Energy analyst are warning of continued uncertainties and increased shareholder activism, investor skepticism and intensifying pressure to massively reduce fossil fuel use.
  6. Institutional investors, once determine that demand has peaked — which likely has already happened — they will abandon the sector permanently
  7. Savvy long-term investors would shy away from oil and gas majors “unless and until” they fully acknowledge the climate crisis and take necessary actions
  8. At 2C climate target 59% oil & gas assets will be stranded (remain in ground); at 1.5C nearly 84% will be stranded. Investors don’t want to be left holding the bag.

BOTTOMLINE

  • The recent IEA findings that no additional oil & gas infrastructure is possible to meet a 1.5 [degrees Celsius] scenario. U.N. Secretary-General, António Guterres, described the report’s findings as a “code red for humanity,” and said it “must sound a death knell” for coal, oil and gas.  Energy majors are still overwhelmingly reliant on oil and gas revenues for their earnings — a concept that is irreconcilable to the demands of the climate emergency.
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