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Global coal demand to stay steady through 2025
Global coal demand is expected to remain stable in 2024 and 2025, as rising electricity needs in major economies balance out the effects of increased renewable energy and recovering hydropower. That’s according to the latest […]
Highlights of the Podcast
00:00 – Intro
01:02 – Global coal demand to stay steady through 2025
05:01 – US Democrats launch bill holding oil firms accountable for any work with OPEC
09:35 – Markets Update
11:25 – U.S. Crude Oil Inventories Continue to Fall
12:43 – Matador Resources Company today reported record financial and operating results for the second quarter of 2024
16:22 – Outro
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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.
Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Thursday, July 25th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up global coal demand to stay steady through 2025, according to the IEA. Interesting story. Next up U.S. Democrats launch bid to hold oil firms accountable for any work they do with OPEC. Super interesting I got a lot of thoughts here. We’ll then jump over to the oil and gas finance. I cover what happened with oil prices and get a look at Matadors earnings which actually all markets were down today. Matador was up though off some some really good results. So we’ll cover all of that. And a bag of chips guys. As always I am Michael Tanner rocking a solo show today. Stu, got the night off. [00:01:02][47.6]
Michael Tanner: [00:01:02] So let’s go ahead and kick this off. Global coal demand to stay steady through 2025. The most interesting part about this entire article is that it’s part of a study from the IEA. So, you know, they wanted to do everything they can to make sure that cold demand didn’t come out the way it did. But hey, at least they’re being honest here. Global. I mean, straight from the article. Now, global coal demand is expected to remain stable in 2024 and 2025 as rising electricity needs in major economies balance out efforts of increased renewable energy and recovering hydropower. I are guy of the week right there. Gotta get in some renewable stuff there. That’s according to the IEA, which is basically calling out the electrical consumption both in China and India. They continue to drive coal use some of the numbers. In 2023, global coal consumption rose by about 2.6 percentage points to reach a record high, again off that strong demand from China and India. Something super interesting is China is now accounting for over half of the world’s coal consumed. And is there coal demand in 2024 is expected to say high, due to a forecasted 6.5% increase in total electric demand, despite a recovery in all three of the key renewable energy categories, which is hydro, solar and wind energy. We also go ahead and they look at India a little bit and sort of say that early 2024 had a bunch of extreme weather events, which caused them to use a lot more coal. We actually did see coal demand and coal use drop in Europe as they, you know, continue to roll off fossil fuels in an attempt to roll in renewables. They had a decline of over 25% in 2023. They’re expecting the same amount in the end of 2024. Japan and South Korea also who have been migrating off or did see their coal like slip a little bit, but at a smaller pace. One of the this is a hilarious quote. I’m going to butcher this name. Keisuke sama. Dori IEA Director of Energy Markets and Security. This is an actual quote from him. The continued rapid deployment of solar and wind, combined with the recovery of hydropower in China, is putting significant pressure on coal use. What you just told me there was record coal demand. Listen to the next sentence. But the electricity sector is the main driver of coal demand, and electricity consumption is growing very strongly in several major economies. Without such rapid growth in electricity demand, we could be we would be seeing a decline in global coal use this year. As structural trends at work in the global cold, man is set to reach a turning point and start declining. So wait a second. So what you’re telling me is that the more electricity we consume, the more all we use isn’t that opposite of what everybody’s told us. Wait. In order to meet growing energy demands aka electricity demand. Because I love that. It’s that sleight of hand they’re talking about electricity demand, you know, wouldn’t want third world economies getting access to electricity. So we can’t give them coal. I mean, it’s hilarious. We all current first world economies use coal to get them to the point where they are at now. And now they’re telling other people who are trying to make the same joke, no, no, no, you can’t use that. But what they’re telling you is that as electricity demand rises, so Will called me. So this whole, you know, scheme they’re trying to throw is that renewables are working. Well, it’s really not because if you’re turning on renewables, you’re actually lowering your electricity demand. It’s absolutely insane. The word salad that they’re throwing at, they can’t even come out and say there’s we use more electricity, we’re going to need more coal. We’re going to need more fossil fuels. No, no no no, no. It’s it’s you know, it’s it’s absolutely unbelievable. I find it hilarious that, you know, it’s I mean, listen to that quote again. Without such rapid growth in electricity demand. Well, isn’t that isn’t that good. Isn’t that a demand is it. That means that economies are booming. Is that means more people are getting access to electricity, more the economies are doing better. I mean, energy demand is is is a key indicator for a rising economy. Well, no, that’s not good. We would not want people to start using more energy. You know, we need to get them using less energy and get them on wind. And so I mean, that’s basically what they’re saying in here. We need you to use less energy and get on wind and solar. Unbelievable. Again, Stu was right about this. The more the greener we try to go, the more fossil fuels we use. IEA’s even telling us coal demand is up. [00:05:16][254.3]
Michael Tanner: [00:05:17] Let’s move over US Democrats to launch bill holding oil and gas firms accountable for any work with OPEC. This is super interesting here. I’m going to be straight from the article. Democratic U.S. lawmakers on Wednesday introduced a bill to hold energy companies accountable if they are found by federal regulators to have colluded with with OPEC to raise oil prices. The bill, which was introduced by Senator Ed Malarkey and Representative Nannette, a bargain. Again, sorry if I butchered the name, says if any energy company is found by the FTC to have colluded with OPEC, it would no longer be eligible for new oil and gas leases on federal lands and water. There’s a quote in here, the malarkey, he said in a statement that this bill is the first step towards ensuring big Oil gets big consequences when they profiteer off the back of hard working Americans. Of course, there’s some other co-sponsors, including our favorite, Alexandria Ocasio-Cortez and Raul and and Raul Grijalva. This comes off the heels of the US Senate Budget Committee launching a probe last month into basically all domestic oil producers to see if they’ve been colluding with OPEC. The American Petroleum Institute came out and said this was a, quote, election year stunt, which is probably true. It’s also important to note that this is not really going to pass. We’ve got U.S. House, the US House of Representatives is controlled by the Republicans. So it’s very unlikely that this would pass the House. If it did ever make it to the president’s desk, he would most likely sign it. So obviously that’s it. This all again, all comes off the heels of the FTC accusing Scott Sheffield, who at the time was the CEO of Pioneer Natural Resources, of colluding with OPEC in order to artificially inflate oil prices. They went ahead and let that merger go through, but barred him from being on Exxon’s board, which is which is pretty unbelievable. You know, Exxon ended up submitting about 1.1 million documents and other information as part of that probe to the FTC, and they said that they raised no concern with these business practices. So, I mean, again, it’s all just a political stunt. What I find interesting here is, again, this is all just hand-waving. This is to say, hey, we’re standing up to Big Oil. You know, if you look at the cover image, of course, you got Elizabeth Warren standing behind again. There’s there’s very little substance to this in terms of the image. The FTC doesn’t necessarily have the same rulebook. There’s no defining what collusion is is a little bit subjective. And that’s part of what the FTC is. The FTC doesn’t have a rulebook to say what’s collusion and what’s not. It’s a little bit like, well, there’s a you know, it looks like collusion. They’re text. And what does texting mean. You know, we we all text a lot of people that was liable for everything I ever said in the text. Holy smokes we’d all be done. So the fact that, you know, they got Scott Sheffield for app for texting somebody or communicating with people in OPEC, it’s like, well, duh, he’s in the oil and gas business. And you know, the funny part is I think what they don’t understand is that OPEC doesn’t care about U.S. shale and they don’t actually like it. Remember back in 2014 when they turned on the taps and tanked U.S. shale? I mean, it’s the same OPEC. They haven’t changed. They there’s no incentive for them to work with the United States. It’s two different. It’s two different. It’s two different markets really I mean you’ve got Brant and WTI. Yes there’s some there’s definitely a correlation there. But I think the part that these these these these you know, this this US Congress people are missing is the fact that they think OPEC will do what U.S. shale. No no no they won’t trust me. They may say it upfront in order to, you know, for whatever reason, but they’re going to do what’s in their best interest and they’re already holding back production. So what are you well, what’s more to do? Hey, we need you to, you know, hold back more oil. I mean, no, that’s that’s definitely not I mean, again, I think what’s also all getting lost in the tap here is that if President Trump, former President Trump wins, which is looking highly likely that he will, that’s going to do more, in my opinion, damage quote unquote to the to oil price than any quote unquote collusion that’s going to happen. So what’s funny is if Ed Malarkey wants oil prices to go down, rather we should elect Trump. But you can’t tell him that because that’s, you know, threat to democracy, all that. We’re just going to get mad if someone gets caught emailing anybody associated with OPEC. Pretty unbelievable. [00:09:34][257.5]
Michael Tanner: [00:09:35] Let’s go and cover oil prices today. And look at EIA crude oil inventories. Before we do that guys we got to pay the bills. As always thank you for checking out us at www.energynewsbeat.com. All the quote news and analysis that you hear is brought to you by that website. Doing the team do a tremendous job making sure that stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. You can hit the description below for all the links, timestamps, and all other things surrounding. You can hit us up on Substack where you can actually see these articles early. And, you know, we record this in afternoon. Up in the morning. So if you sign up for a subject, you can actually see all of these articles a lot, lot quicker. Again check us out www.energynewsbeat.com. [00:10:17][42.3]
Michael Tanner: [00:10:20] You know overall markets today. Pretty tough day for the markets S&P 500 down 2.3 percentage points. Nasdaq down 3.65 percentage points. Mainly off the back of both Ford and Tesla having pretty horrible earnings reports. Both of them missed their expected guidance. So specifically on Tesla. And that’s going to drive both the Nasdaq and the S&P 500 down. We saw two and ten year yields fairly flat dollar index down about a 10th of a percentage point. Bitcoin down about 6/10 of a percentage point 65,000. Crude oil basically flat actually closed up currently down as we record this year about 515 in the afternoon. 7749. But it actually closed a little bit above 7990, which was, you know, basically a couple percentage points higher than it was during the open. We did see Brant Oil 8176. That did close a little bit higher. Natural gas $2.12. That’s up about 3/10 of a percentage point relative to the close. You know, oil prices that you know we saw them trading down. You know in the low 70s yesterday things opened up and overnight rolled over a little bit. [00:11:25][65.1]
Michael Tanner: [00:11:25] EIA crude oil inventories did drop. You know we saw some interesting stuff here about a 3.7 million barrel draw from the strategic or from the crude oil inventories. Analysts expected about a 1.6 million barrel draw. So a little bit a little bit more than what was expected. We did see gasoline stocks drop by about 5.6 million barrels. We can go and throw out that chart if we want. We also did see distillate stockpiles, which include diesel and heating oil, fell by about 2.8 million barrels versus about a 250 barrel increase, according to the IEA. Bob Yeager, he’s a director of energy futures over at Mizuno in New York. Demand is better than anticipated. We like that as long as gasoline demand is doing well, that will support the rest of the market in the short term future. Higher distillate demand was also an icing on the cake. You know, it’s going to be very interesting what happens this summer. We’re expecting as we roll into earnings season here. Specifically U.S. oil refiners are going to spark are going to most likely report lower second quarter earnings versus a year ago versus, you know, mainly due to the fact that driving season was a little bit down and we had multiple week refining margin. That’s according to a bunch of analysts. Obviously China things going on there. So I think oil prices are a little bit in a shaky spot. But but nothing bad with with $77. We’ve got our first earnings report this year. We also did see range resources drop. [00:12:43][77.5]
Michael Tanner: [00:12:43] But I do want to focus on Matador. They go ahead and report a record second quarter results and do a full increase of their 2024 production guidance. So a pretty pretty good you know, pretty good press really I mean you talk overall markets were down as I said about 2.3 percentage points in the S&P 500. Your actual contract let me pull it up here was down I think one one percentage point. Yeah. 6/10 of a percentage point. And Matador was up 1.25 percentage points. So Street really really liked this. Total average daily production about 160,000 boe per day 95,000 barrels of oil net cash provided by operating activities. About $600 million 592 to be exact. Adjusted free cash flow. So I mean, again, now we’re talking non-GAAP numbers, 167 million, net income of about $228 million, adjusted net income $255 million, or about $2.05 per share. EBITDA came in at about $578 million, and their midstream asset came in at about $58 million, and EBITDA spent about $314 million of capital expenditures on their upstream assets. And midstream came in about 45 million. I mean, pretty crazy, though they upped their guidance from 153,000 to 159,000 boe per day to about 158, or 158,000 to 163,000. That’s an increase of about 3.2 percentage points. You know, a lot of their stuff is that northern Delaware basin. We’re still waiting on their MRA dev asset to close. So all of these numbers are still exclusive of that. I find it really interesting though. They turned on a record 47 wells within order two, which was actually the most they’ve ever done. I want to pull up. Pull up. Where is it? Here. Oh right here. Okay, so that included 21 gross wells and the Dagger Lake, South Wells. And they also saw the Antelope Ridge asset, which was part of the advanced acquisition they saw. What was it that they did a 21. Oh that was that 21 Wells was part of that Antelope Ridge asset. Those wells are exceeding their quote unquote, expectations. 24 our IP rates are about 1700 boe per day at about 83% oil cut, which is, you know, pretty, pretty good. Well, there we’ll take that, you know, hey, you know, the northern Delaware Basin as we’ve seen has really become the new it has really been, you know, and honestly has been surpassing the Midland Basin in terms of, of, of tremendous wells. We’re seeing really high IPS, really high oil cuts, a lot of water. But. A lot of that infrastructure is fairly built out. Overall, oil production was up about three percentage points better than their expectations. So continue. Continue to do good for Matador there. You know, considering the fact that they, you know, started you know, they go on to South that they were started with $270,000 in all of those family and friends are still shareholders today. So it’s pretty crazy. They mentioned that in their report. So, you know, matadors doing some really good work. They talk a lot about their they’re doing a refracts now. You want a bunch of U-turn wells down there. So doing a really doing a lot of efficiency stuff there. I highly recommend checking out the entire press release. But the Street really liked what Matador did. And and I’m sure they’ll continue to add that a Deb acquisition is expected to add about 25,000 boe per day sometime in the third quarter, with about 117 million of barrels of oil in reserve. And about, you know, they’re talking about 370 net locations, which is pretty good. So good for Matador. We’ll continue to see a lot of these earnings per point pile up. Probably going to be a good earnings season considering there was, you know, basically a consistent $80 oil during quarter two. So we’ll probably see a lot of this stuff as we roll through. Be interesting to see how this layers in with the overall economy. [00:16:21][218.0]
Michael Tanner: [00:16:22] But that’s really all I’ve got guys. Appreciate everybody checking us out here on the world’s greatest podcast Energy News Beat for Stuart Turley and Michael Tanner. Have a great day. We will be off tomorrow. We’ll have something. One of the conversations in energy with Stuart Turley will run on Friday. You’ll hear the weekly recap on Saturday, and then we will be back in the chair on Monday to keep you up to speed, guys. So we appreciate you hanging with us. We’ll see you Friday, Saturday and then we’ll be back on Monday. [00:16:22][0.0][962.4]