Politics, Geopolitics & Conflict
Deadly protests have ensued following Maduro’s claim of victory in Sunday’s presidential elections in Venezuela. Venezuela has already cut diplomatic ties with Peru for questioning the election results, and Colombia is now also pressuring Maduro, while the opposition is watching its window of opportunity steadily close. Opposition leaders claim that they have had access to 90% of the votes and by their count, Edmundo Gonzalez won twice as many votes as Maduro. The streets of Venezuela are waiting anxiously now to hear how the pro-Maduro electoral council will provide evidence of Maduro’s alleged victory. On Wednesday, Maduro publicly called for the arrest of opposition members and their supporters, demanding 30-year prison sentences. No transparency has been forthcoming in the vote counting as of the time of writing. The opposition continues to dispute the results, and on Thursday, Maduro called on the country’s top court to “audit” the results. Maduro, however, is becoming increasingly isolated, and the situation is not tenable.
Interesting reports from Ukraine have been circulating in which Ukraine claims to have hit, in an airstrike, a key Russian base in Syria. Ukrainian intelligence is being coy, suggesting that they were behind a Ukrainian special forces attack that decimated a Russian airbase in Syria this week. We have not been able to independently corroborate the Ukrainian intelligence…
Politics, Geopolitics & Conflict
Deadly protests have ensued following Maduro’s claim of victory in Sunday’s presidential elections in Venezuela. Venezuela has already cut diplomatic ties with Peru for questioning the election results, and Colombia is now also pressuring Maduro, while the opposition is watching its window of opportunity steadily close. Opposition leaders claim that they have had access to 90% of the votes and by their count, Edmundo Gonzalez won twice as many votes as Maduro. The streets of Venezuela are waiting anxiously now to hear how the pro-Maduro electoral council will provide evidence of Maduro’s alleged victory. On Wednesday, Maduro publicly called for the arrest of opposition members and their supporters, demanding 30-year prison sentences. No transparency has been forthcoming in the vote counting as of the time of writing. The opposition continues to dispute the results, and on Thursday, Maduro called on the country’s top court to “audit” the results. Maduro, however, is becoming increasingly isolated, and the situation is not tenable.
Interesting reports from Ukraine have been circulating in which Ukraine claims to have hit, in an airstrike, a key Russian base in Syria. Ukrainian intelligence is being coy, suggesting that they were behind a Ukrainian special forces attack that decimated a Russian airbase in Syria this week. We have not been able to independently corroborate the Ukrainian intelligence report as of the time of writing but the most likely scenario here is not quite as dramatic as it sounds: Ukrainian intelligence appears to have only provided “intelligence” for an attack, but not actually carried out an attack. At the same time, Tuareg insurgents in Mali said they had repelled an attack by Malian and Russian joint forces in the country’s north this week. (Russia, through Wagner mercenaries) have been shoring up their foothold in various parts of Africa that would allow them to flank Europe (particularly through the Libyan coast, as we have noted previously). This week in Mali, Russian (Wagner) forces suffered significant losses against Tuareg separatists and Jihadists (the latter being Moscow’s justification for its increasingly heavy military footprint in Africa). The defeat in Mali is a fairly significant one for Wagner’s reputation.
Discovery & Development
Hess has initiated production from its Pickerel-1 oil discovery in the Gulf of Mexico via a tieback to the Tubular Bells production complex. The company is also drilling an exploration well on the Vancouver prospect, with results expected later this quarter. In Q2, Hess’ net production in the Gulf of Mexico dropped to 24,000 boe/d due to maintenance activities.
Exxon is seeking environmental approval for its seventh deepwater development on the Stabroek Block in Guyana, aiming for a production capacity of 120,000 to 180,000 bpd by 2029.
The Guyana government is unlikely to extend the exploration license for CGX Energy Inc. and Frontera Energy Corporation in the Corentyne Block, citing dissatisfaction with the companies' responses to government inquiries. CGX and Frontera had discovered oil at the Wei-1 well in 2023 but face challenges in securing more time to appraise and evaluate this find. The companies have no current license, reducing government pressure to address their requests.
Deals, Mergers & Acquisitions
Viaro Energy Ltd. has agreed to acquire multiple gas fields in the UK North Sea from Shell Plc and Exxon Mobil Corp., marking its debut as an offshore operator in the region. The acquisition includes the Bacton onshore gas terminal and 11 offshore facilities, which produced about 28,000 boe last year - roughly 5% of the UK's total gas output. Viaro aims to enhance production and sees this deal as a significant milestone in its strategy, strengthening its role in the UK’s energy production and security. The financial details of the deal, expected to close in 2025 pending regulatory approval, were not disclosed.
Gautam Adani’s power transmission unit, Adani Energy Solutions Ltd., has seen bids exceeding three times the $1 billion target for its share sale. Both Indian and international institutions have oversubscribed to this offering, executed through a QIP. This marks the first equity fundraising by an Adani Group unit since the damaging report by Hindenburg Research in January 2023, which the conglomerate has denied. The sale includes a base issue of $700 million, with shares offered at an indicative price of 976 rupees, and comes shortly after Vedanta Ltd.’s $1 billion share sale earlier in July.
Energy Earnings
BP has raised its dividend by 10% and extended its buyback program after reporting strong Q2 earnings of $2.8 billion. The company's operating cash flow jumped to $8.1 billion, helping reduce net debt to $22.6 billion. Despite earlier warnings about impairments, BP's earnings exceeded expectations, causing a 2% rise in its share price. BP's moves reflect confidence in and a strategic shift back to oil and gas operations.
Phillips 66 reported strong Q2 results, with refining utilization at 98%, its highest in over five years, despite lower refining margins. The refiner's realized margins dropped to $10.01 per barrel from $15.32 a year earlier, and the refining segment's earnings fell by 74.3%. Offsetting some losses, their newly converted Rodeo facility hit its target production, and midstream earnings increased by 23.7%. Phillips 66 plans to reduce refining utilization soon for discretionary maintenance amid market softening.
OMV reported a second-quarter adjusted operating profit of €1.23 billion, slightly below analysts' expectations due to lower energy division profits. The energy segment, impacted by legislative changes in Romania, saw a 9% decline in its adjusted operating result. Meanwhile, OMV's chemicals arm experienced significant growth, with operating results increasing to €114 million, driven by contributions from its Borealis JVs. The company has revised its annual forecast for natural gas prices upward but lowered its refinery utilization expectations to around 90%.
First Solar reported a stellar Q2 with earnings doubling to $3.25 per share and a 25% revenue increase, maintaining its full-year outlook. Despite industry challenges, First Solar's backlog extends through 2030, ensuring strong future demand. The company's stock rose 2.4% following the announcement, with analysts projecting further gains due to potential tariff benefits under a possible Trump administration.
Shell posted a strong Q2 performance with $6.3 billion in adjusted earnings, surpassing expectations despite lower refining margins and weaker LNG trading. The company announced a $3.5 billion share buyback program over the next three months, maintaining its dividend at 34 cents per share. Shell's stock rose 1.4% following the announcement, with shares up over 11% this year.
Cenovus Energy (NYSE: CVE) posted a Q2 net profit of $723 million, up from $626 million a year ago, driven by increased oil and gas production and higher refining throughput at its U.S. refineries. The company's net income rose due to solid upstream production and improved crude throughput at U.S. refineries, which operated at a 93% utilization rate. Total upstream production was 800,800 boe/d, up from 729,300 boe/d in Q2 2023, while refining throughput in Canada decreased due to planned maintenance. Having met its debt reduction target in July, Cenovus plans to return 100% of excess free funds flow to shareholders starting in Q3 2024.
