New Enverus Knowledge Hub | Get Energy Insights On Demand!
Learn More

Will the Omicron Variant Lead to the Collapse of Oil Prices?

With the Omicron variant continuing to spread around the world, will a drop in oil prices follow? Maybe, but probably short term.

Equity markets tanked last Friday, Nov. 26, on fears that the Omicron variant would sharply impact worldwide economic output. The nearly 1,000-point loss in the Dow wiped nearly $90 billion of value in Dow equities. Oil prices were particularly hit hard, dropping nearly 10% from Thursday’s close.

That drop, however, is minor compared to what happened to prices in early 2020 when at the end of April oil prices had dropped nearly 70% in value. This was frightening and was a combined pessimistic response to fears of demand destruction due to coronavirus and the price war initiated by OPEC and Russia to counter rising production from U.S. shale oil producers.

As a world economy, we had not faced a major health crisis since 2014 when Ebola fears gripped the world and, according to the Centers for Disease Control and Prevention (CDC), the 2009 H1N1 flu sickened 60.8 million and killed 12,469 in the U.S.

If we go back to the 1918 Spanish flu, the graph below shows the gross U.S. demographic impact of these pandemics.

US Pandemic Demographics

The 1918 Spanish flu infected about 28% of the U.S. population but didn’t impact oil prices to any great degree. COVID-19 has infected about 15% of our fellow citizens but has caused nearly 125,000 more deaths because our population is about three times larger than it was in 1918.

In our current COVID-19 pandemic, images of first responders desperately improvising to save lives, and stories of grief-stricken children and partners forced to provide remote comfort to isolated and suffering elders tested our confidence that there would ever be a “normal” American life in the future.

How did oil markets react?

Spot Oil - Cushing

The pre-COVID price of oil (CLF) in late 2019 dropped by 73% to its low in April 2020. Fears of demand destruction due to COVID dropped the price from $63/bbl to around $40/bbl — a 36% drop.

Price pressure was further exacerbated by OPEC’s price war with Russia, with OPEC increasing their output by a factor of four during a short window going into and lasting through April 2020. This dropped the price of oil another 40-50%.

Once OPEC ended its price war, the baseline price of oil was around $40/bbl.

When Moderna and Pfizer announced their vaccines, and the CDC authorized their emergency use, prices recovered until late July 2021 when the U.S. entered its third wave of increasing case counts and rising death counts.

Prices dropped about 16% before staging an astounding recovery to a four-year high of nearly $84/bbl in mid-October.

Now we have the Omicron variant. We do not have enough information yet about its transmissibility or lethality, but the market’s virus fears resulted in a drop from $74/bbl on its Nov. 26 opening to midday pricing of $65/bbl on Nov. 30 — a three-trading day drop of about 12%.

Our first pandemic oil price drop occurred when nothing about the potential impact of COVID, or treatments for it, was known. If we were in the same state of unpreparedness now, we could see the previous pandemic fear factor of 36% drop the price from here to the low $50/bbl, high $40/bbl range.

However, given that we have vaccines, monoclonal antibodies, new therapies and better testing, my guess is that our original fear discount won’t apply now, and that we would see some, but not a lot, of price weakness from here.

The bigger fear would be that planned incremental OPEC production increases would increase supply and range bind prices. Given that the recent OPEC-Russia price war dropped prices about 50%, supply increases do more to depress prices than virus fears.

As is always the case with oil prices, tomorrow always delivers surprises.

Supermajors Pile Into Low-Carbon GOM Acreage

Offshore Gulf of Mexico (GOM) is becoming the destination of choice for international oil companies seeking new, low-carbon acreage to explore and develop. Lease Sale 257 on Nov. 17 garnered $192 million in winning bids, about double the average of the previous seven auctions, across 170 deep- and 140 shallow-water blocks. The sale went ahead after a court blocked the Biden administration’s lease moratorium imposed early this year. The moratorium was to allow the U.S. Department of the Interior to review the environmental impacts associated with oil and gas activities on public lands and in offshore waters.

Unsurprisingly, the sale drew criticism from environmentalists despite the basin offering the lowest Scope 1 greenhouse gas emissions intensity in the U.S. at 8 kg CO2e/boe (Figure 1). The GOM’s Scope 1 emissions are even competitive on a global scale. The Oil and Gas Climate Initiative (OGCI), whose members include the so-called supermajors responsible for 30% of total world oil production, has a 2025 emissions target of 17 kg CO2e/boe from its members’ operated upstream assets, more than double the GOM average.

We mostly attribute the low emissions profile to a well-developed gas offtake infrastructure and market that reduces the need for flaring. In addition, the GOM has strict ESG regulations, relatively young infrastructure and significant discovered but undeveloped hydrocarbon resources. The continued investment by supermajors confirms the basin’s global top-tier status despite their commitment to reduce oil production and emissions. Chevron, Shell and BP accounted for half of money spent at Sale 257, strengthening their positions in the basin. Other U.S. operators are following suit, with Occidental spending 33% more this year than its total spending in the region for all sales since 2019.

With global demand for oil and gas still increasing, the GOM looks set to attract a growing proportion of the supermajors’ development capital spending, allowing them to produce more oil and gas but still improve their overall carbon intensity scores. Using our PRISM data platform, Enverus clients are readily able to benchmark U.S. ESG metrics at a basin, play, operator or asset level, helping them make smarter and faster investment decisions during the energy transition.

Figure 1 | U.S. GHG Emission Intensity by Basin

Offshore Gulf of Mexico (GOM) is becoming the destination of choice for international oil companies seeking new, low-carbon acreage to explore and develop. Lease Sale 257 on Nov. 17 garnered $192 million in winning bids, about double the average of the previous seven auctions, across 170 deep- and 140 shallow-water blocks. The sale went ahead after a court blocked the Biden administration’s lease moratorium imposed early this year. The moratorium was to allow the U.S. Department of the Interior to review the environmental impacts associated with oil and gas activities on public lands and in offshore waters. Unsurprisingly, the sale drew criticism from environmentalists despite the basin offering the lowest Scope 1 greenhouse gas emissions intensity in the U.S. at 8 kg CO2e/boe (Figure 1). The GOM’s Scope 1 emissions are even competitive on a global scale. The Oil and Gas Climate Initiative (OGCI), whose members include the so-called supermajors responsible for 30% of total world oil production, has a 2025 emissions target of 17 kg CO2e/boe from its members’ operated upstream assets, more than double the GOM average. We mostly attribute the low emissions profile to a well-developed gas offtake infrastructure and market that reduces the need for flaring. In addition, the GOM has strict ESG regulations, relatively young infrastructure and significant discovered but undeveloped hydrocarbon resources. The continued investment by supermajors confirms the basin’s global top-tier status despite their commitment to reduce oil production and emissions. Chevron, Shell and BP accounted for half of money spent at Sale 257, strengthening their positions in the basin. Other U.S. operators are following suit, with Occidental spending 33% more this year than its total spending in the region for all sales since 2019. With global demand for oil and gas still increasing, the GOM looks set to attract a growing proportion of the supermajors’ development capital spending, allowing them to produce more oil and gas but still improve their overall carbon intensity scores. Using our PRISM data platform, Enverus clients are readily able to benchmark U.S. ESG metrics at a basin, play, operator or asset level, helping them make smarter and faster investment decisions during the energy transition. Figure 1 | U.S. GHG Emission Intensity by Basin

Source | Enverus

An OPEC Cut Just Got Closer

Calgary, Alberta (December 1, 2021) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest PetroLogic report covering oil price expectations for the near-to medium-term. With the United States announcing a release from the Strategic Petroleum Reserve (SPR), the emergence of the Omicron COVID variant and an OPEC+ meeting, Enervus’ report analyzes a major inflection point for oil prices.

“The Nov. 23 announcement of a U.S. release of strategic oil stocks to dampen high prices and blunt inflation was long expected. Overall, the SPR release alleviates some near-term pressures and only takes roughly a dollar off our price forecast in the first half of next year. Now the focus is on OPEC’s response, especially if our robust expectations on U.S. supply growth materialize,” said Bill Farren-Price, director of Intelligence at Enverus Intelligence Research. “We continue to expect that OPEC will have to cut production sometime in 1H22 in the face of surging U.S. supply growth and weaker seasonal oil demand to keep prices supported above $65/bbl. OPEC could now move sooner, forcing oil prices significantly higher than our forecast.”

Al Salazar, vice president of Intelligence at Enverus Intelligence Research added, “Bullish bets have been based on a colder-than-normal winter propping up oil demand. However, such bets forgot about the COVID boogieman. Markets are now pricing the worst for global oil demand as there is extreme uncertainty about the Omicron variant. Travel restrictions combined with knock-on economic effects are now shifting the risk on oil prices decidedly to the bearish side.”

Key takeaways from the latest Petrologic report:

  • The SPR release has a modest impact on our oil balances and price expectations. Instead, the focus now shifts to how OPEC will manage the agency consensus of an oil market surplus in Q122. Specifically, how will OPEC address robust US supply growth, weaker seasonal demand and the release of SPR barrels?
  • OPEC’s response is the biggest risk to 1H22 balances and prices. We expect OPEC+ to pause supply additions and possibly cut output from January. If OPEC moves sooner, oil prices will be significantly higher than our forecast.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus Intelligence Research’s expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Enverus Named a Top Workplace in Austin and Houston

Austin, Texas (November 22, 2021) — Enverus, the leading energy SaaS and data analytics company, has been awarded a Top Workplaces distinction by both the Austin American-Statesman and Houston Chronicle for 2021. The lists are based solely on employee feedback gathered through a third-party survey administered by employee engagement technology partner Energage LLC. The anonymous survey uniquely measures 15 culture drivers that are critical to the success of any organization: including alignment, execution and connection, just to name a few.

“Much like the industry we serve, energy is in the midst of a transformation, and Enverus is constantly innovating and evolving to serve the needs of our customers while providing an incredible work environment for our employees. We believe the assets of a software company are the people, not the products and this award is confirmation that our own employees also believe that to be true. The Enverus team is spread across the globe and this honor transcends city, state and national borders. I am humbled to accept this award on behalf of both the Austin and Houston offices and its reflection of the hard work of the company as a whole no matter where they sit,” said Jeff Hughes, CEO of Enverus.

“During this very challenging time, Top Workplaces has proven to be a beacon of light for organizations, as well as a sign of resiliency and strong business performance,” said Eric Rubino, Energage CEO. “When you give your employees a voice, you come together to navigate challenges and shape your path forward. Top Workplaces draw on real-time insights into what works best for their organization, so they can make informed decisions that have a positive impact on their people and their business.”

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Energage
Energage is a purpose-driven company that helps organizations turn employee feedback into useful business intelligence and credible employer recognition through Top Workplaces. Built on 14 years of culture research and the results from 23 million employees surveyed across more than 70,000 organizations,  Energage delivers the most accurate competitive benchmark available. With access to a unique combination of patented analytic tools and expert guidance, Energage customers lead the competition with an engaged workforce and an opportunity to gain recognition for their people-first approach to culture. For more information or to nominate your organization, visit energage.com or topworkplaces.com.

Put an End to Project Delays and Overspending With OpenOrder Procurement Automation

“Insanity is doing the same thing over and over again and expecting different results.” — Albert Einstein

Energy companies continue to manage the procurement process using tedious, manual workflows that result in the same issues over and over limited visibility to accounting teams on committed spend, duplicate invoices and payments, delayed payment to suppliers, manual verification and matching of documents, to name a few.

For operations, this could mean missing your bonus because the lack of spend reporting caused the project to go way over the budget.  For supply chain teams, this could mean purchasing happens outside of pricing agreements. Accounting teams face dreaded, time-consuming manual processes like the three-way match and invoice approvals.

While these pain points are enough to drive these teams crazy, there’s an unsatisfied resignation that this is how things are for two reasons.

1) Different companies have their own ways of managing and documenting this process, so there isn’t one solution flexible enough to meet everyone’s unique needs.

2) The existing procurement solutions used by our industry today are either:

  • Not solutions, but a combination of email and spreadsheets used to manage purchasing.
  • Not designed for the energy industry’s unique procurement needs.

Introducing streamlined, efficient ordering with OpenOrder

OpenOrder, a new solution by Enverus, allows companies to create and process purchase and job orders for dispatching services and ordering materials through the entire procurement process. The solution integrates seamlessly with OpenInvoice, PriceBook and OpenTicket, allowing you to manage the order-receive-invoice process in one platform while ensuring consistent coding (cost objects and GL codes). This means you can reference the orders to both field tickets and invoices, saving significant time with automated compliance checks and three-way matches. Also, automated three-way match allows you to make automatic invoice payments without manual intervention.

OpenOrder is also less expensive than using multiple systems. By managing ordering on the OpenInvoice network, it’s much easier and faster to collaborate in real time with your connected suppliers. Buyers and suppliers transacting in the same environment results in better communication, more transparency and fewer processing delays.

Watch this brief demo video to see the OpenOrder experience.

 

Want to see a live demo of OpenOrder? Request one with the form below.

Now let’s take a look at how OpenOrder creates time savings for every group involved in the ordering process.

  • Improve procurement control: Supply chain teams can monitor and regulate purchases with insights into what and how much you purchased and from which supplier.
  • Optimize spend: Digital procurement workflows provide operations a view of costs before they are incurred through receipts and invoices for companies to stay on top of project budgets and overall spend. With access to digital spend data, supply chain teams can conduct spend analysis to identify future cost saving opportunities.
  • Streamline dispatch: Operations can keep projects moving on time. Automation and centralization of dispatch allows a single team to manage the match and dispatch process in a single platform.
  • Save time: Fully integrated ordering, receiving and invoicing allows for automatic references and matching between a contract, order, receipt and invoice, saving accounting teams significant time processing invoices for payment. By eliminating payment delays, companies can pay suppliers on time, creating better supplier relationships.

Below is the OpenOrder workflow:

Chart showing the OpenOrder workflow

Grayson Mill Energy, currently using OpenOrder, OpenInvoice, OpenTicket and PriceBook, uses POs for inventory items and engineering services. Their main driver with OpenOrder was capturing procure-to-pay and automating the three-way match to create lean, efficient operations.

“On other systems, a three-way match is hard to execute. With OpenOrder, we had all the back info – well id, supplier info, etc. When you have a PO with approval and coding up front, it’s much easier to validate with the goods receipt. When the supplier submits the invoice, there’s your match all in the same system, in one place. It really automates your approval process,” said Mary Atkinson, the director of supply chain at Grayson Mill Energy.

The Enverus team continues to develop OpenOrder to include more functionality in the near future. An RFx module will be developed in early 2022 that provides integrated sourcing and bids out of goods and services. The results of the “sourcing event” will allow for the conversion of the bid results into a commercial agreement within OpenContract, a new smart contract management solution launching in early 2022, a purchase order within OpenOrder, or both depending on company processes and requirements.

Bring back sanity and make Einstein proud


If the definition of insanity is doing the same thing but expecting different results, OpenOrder will bring the sanity back to your procurement process. You won’t have to work in your cumbersome ordering system that creates manual work, confusion and frustration. Instead, you’ll be trying something different and, we believe, you’ll experience different, better results. Einstein would be proud.

Request your live demo of OpenOrder by filling out the form below.

Attacking Methane Emissions Beyond Oil and Gas

A recent Associated Press article titled “Biden’s climate plan aims to reduce methane emissions” states, “The centerpiece of U.S. actions is a long-awaited rule from the Environmental Protection Agency to tighten methane regulations for the oil and gas sector.”

It also says, “The oil and natural gas industry is the nation’s largest industrial source of methane.”

The logic seems straightforward, that drilling for hydrocarbons produces methane, the infrastructure for moving that product stream around the country will naturally have less than perfect containment, ergo, regulate.

In 2020, the U.S. produced 8,288,717 metric tons of methane. The sum of all the categories in Enverus’ greenhouse gas data set that represent both upstream oil and gas and midstream — production, pipelines, compression gathering and boosting, for example — accounts for about 37% of total 2020 methane. That’s a significant source of methane, to be sure, and one that operators in oil and gas must work harder to minimize.

But the data show underground coal mines are responsible for nearly 14% of methane production in the U.S., and municipal landfills account for nearly 41% of our methane emissions footprint. Together, coal and landfills are responsible for 55% of our methane problem, and are a bigger source of methane pollution than oil and gas.

To get a sense of the scope of the problem, it’s important to realize there are 1,121 municipal landfills in the EPA data set. The screenshot below shows methane points of emission in North Carolina binned and colored by total emitted volume. The most burdensome emitters are the dark red dots, and they are all municipal landfills.

Source: Enverus coded EPA data; screenshot of Enverus PRISM GHG data.

The screenshot below of southwest Pennsylvania shows a concentration of coal mines, two onshore production emitters and power plants.

The mines in the screenshot accounted for more 2020 methane emissions than all U.S. offshore oil and gas methane generation or natural gas processing emissions.

Source: Enverus coded EPA data; screenshot of Enverus PRISM GHG data.

Setting aside the costs to reduce emissions in mines for a moment, coal mines will be a difficult problem to tackle, because unlike other sources of methane emissions, there is a higher percentage of problem mines than in other sectors.Chart showing Total CH4 emissions - underground coal mines

On the plus side, however, there are only 62 mine facilities, and 10 of those are responsible for over half the sector’s emissions. If we look at other sectors, it’s clear that their problematic emission impacts are concentrated in relatively few places.

Charts displaying Total CH4 emissions

Focusing remediation on the top 20 problem sites within a sector will have major impacts without being too disruptive.

Sector No. of Entities Total CH4 in Metric Tons % of Total U.S. CH4 % From Top 20 Top 20 — % of Sector
Municipal Landfills 1121 3,392,882 41 12 2
Gathering and Boosting 744 792,661 10 46 3
Onshore Production 946 1,523,103 45 35 2
Underground Coal Mines 62 1,202,698 15 81 32

Assuming the EPA writes smart guidance, focusing methane remediation efforts in areas that also have CO2 problems would be an efficient way to deploy administrative and technical resources to execute on this plan.

Remediation in upstream oil and gas should be relatively straightforward — find the well with the leaking casing, or the gas compressor with a bad seal, or the pipeline that drones have identified as leaking, and go fix the emitting infrastructure. It’s easily identifiable and mostly mechanical in nature. Upstream and midstream operators should embrace leak detection and quickly eliminate those leaks. It’s good politics and ultimately improves the bottom line.

I don’t know what the process would be for capturing leaking methane from a coal mine or a landfill. My guess is that it’s much more complicated and probably expensive.

Perhaps the best course of action for the Biden administration — especially post-Virginia election — would be to broaden their focus from just oil and gas and tackle a couple of smaller landfill and coal mine projects.

Project costs would be smaller and climbing the learning curve will be quicker. Deploy those lessons learned to larger emitters and get a bigger impact, quickly.

Instead of using a federal sledgehammer, limited but targeted interventions by regional federal teams using both carrots and sticks could go a long way toward reducing the U.S. warming curve. Judiciously applied funds from the Build Back Better bill, when passed, could help the administration truthfully claim it is staying true to its climate policies by using smart money to make a noticeable difference in our national methane footprint.

Oil & Gas’ Latest Rally Encourages Growth Within Cash Flow

Calgary, Alberta (November 10, 2021) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest FundamentalEdge report focusing on the company’s five-year supply, demand and price outlook.

“Current price levels support production growth of more than 10% even while spending well within cash flow, but investor definitions of ‘capital discipline’ are evolving through the run-up in prices. Recent commentary from public operators suggests the growth discussion has returned, but investor pressure to focus on cash returns remains unyielding,” said Farzin Mou, vice president of Enverus Intelligence Research.

Jen Snyder, managing director and head of North America Macro Intelligence Research, who co-authored the report, added, “We expect oil and gas production growth to outpace demand growth in 2022 and 2023 — a return to normal weather conditions in key markets and a recovery in upstream activity levels this year will restore some balance — yet operators should plan for shorter cycles in prices.”

Key takeaways from the report:

  • OPEC shows no signs of wanting to arrest the price rally ahead of weaker balances in 1H22, and the resulting strong prices set up an increase in market share for North American liquids. We believe U.S. production will grow ~600 Mbbl/d and ~890 Mbbl/d exit-to-exit in 2021 and 2022 before moderating in the medium term.
  • Enverus believes the Permian will continue to drive growth, accounting for ~96% of 2022 exit production growth before moderating thereafter.
  • North American gas markets head into winter without much cover against colder-than-normal weather with: storage inventories below five-year averages, weather-normal injection rates below norms, coal-fired power plants at capacity and global gas prices too high for economically feasible cuts in U.S. LNG feedgas demand.
  • Dry gas production growth of nearly 4 Bcf/d exit-to-exit in 2022 remains concentrated in the Haynesville and Permian. Moderation in oil-weighted activity slows Permian volumes to less than 0.7 Bcf/d growth exit-to-exit per year thereafter while the Haynesville’s growth trajectory follows the LNG export outlook, ebbing in 2023-24 and accelerating in 2025-26.

Download Preview

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus Intelligence Research’s expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Enverus: Hurricane Ida Recovery Boosts U.S. Supply Expectations

Calgary, Alberta (November 9, 2021) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest PetroLogic report covering price expectations for the near-to medium term.

“We are upgrading our 2021 Y/Y U.S. oil supply growth forecast to 600 Mbbl/d on the back of an earlier-than-expected recovery in oil production affected by Hurricane Ida. As a result, our 2022 projection for the country’s increased dropped to 890 Mbbl/d, a somewhat conservative view that could be upgraded by year-end to guidance by public U.S. operators,” said Farzin Mou, vice president of Enverus Intelligence Research.

Bill Farren-Price, director at Enverus Intelligence Research and co-author of the report, added, “Despite the stronger 4Q21 U.S. supply forecast, we lifted our price view for the quarter by $6/bbl. The higher outlook acknowledges OPEC shows few signs of wanting to cap the price rally. Nigeria and Angola remain well below production targets with other producers hardly making up the shortfall. We believe OPEC may be prepared to defend Brent in the $70s rather than $60s, a tacit inflation of the base for its preferred Goldilocks price range.”

Key takeaways from the report:

  • U.S. operators affected by Hurricane Ida shut-ins are bringing back oil output faster than we expected last month and we now expect significant volumes to recover by year-end.
  • Despite our expectations for strong 4Q21 U.S. supply growth, we revised our price view for the quarter by $6/bbl to reflect OPEC’s lack of willingness to cap the price rally.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus Intelligence Research’s expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Attractive E&P Yields Are Becoming Difficult for Investors To Ignore

Finding high-yield investments has become more difficult in recent years. One reason why E&P stocks have outperformed all sectors year-to-date (XOP up 88% versus S&P up 23%) is because of attractive free cash flow (FCF) yields, even after the sector has rallied. Nearly all E&P stocks continue to offer double-digit FCF yields — based on our estimates in 2022 — and screen attractive versus stocks in other sectors.

2022E FCF Yields (Assuming Strip Commodity Prices)

Chart displaying 2022E FCF Yields (Assuming Strip Commodity Prices)

Source: Enverus Valuation Analytics. “FCF Yield” is calculated as 2022E Free Cash Flow/Market Cap. Commodity-price assumptions and market caps are based on market values as of Oct. 28, 2021.

Even in lower price scenarios that are more representative of the market’s long-term expectations, E&Ps’ FCF yields still screen attractive.

2022E FCF Yields at Lower Price Scenarios

Chart displaying 2022E FCF Yields at Lower Price Scenarios

Source: Enverus Valuation Analytics. Each data point represents a company’s annualized FCF yield in each quarter during 2022. WTI/HH price scenarios include $50/$2.50, $60/$3, $70/$3.50 and Base Case (Strip).

But short-term FCF yields can only reveal so much about a sector’s overall value. The market is ascribing value to potential growth — or long-term yield sustainability — as indicated by a positive correlation between higher valuation multiples and our estimates for high-quality well inventory lives.

However, accurately estimating inventory remains difficult for investors. We see significant dislocations between market value and intrinsic value at the individual stock level. Attractive relative-valuation opportunities exist for investors willing to invest the time and effort.

Valuation Multiples Versus High-Quality Inventory Life by Basin Peer Group

Chart displaying Valuation Multiples Versus High-Quality Inventory Life by Basin Peer Group

Source: Enverus Valuation Analytics. Basin peer groups represent groups of E&Ps tagged to a primary basin. “Inventory Life” is calculated as inventory of un-completed wells with a sub-$45 WTI (or sub-$2.25 Henry Hub) half-cycle breakeven/wells completed in next 12 months. “EV / CPV” is calculated as (market enterprise value/current production valuation).

COP26 and the Long Road to Decarbonization

We were curious to see what would happen during this week’s 2021 United Nations Climate Change Conference, or COP26. After all, commitments to net zero emissions need to be coupled with realistic pathways for their delivery, and so far, they have not been.

Previous pledges on climate action have gone unfulfilled and governments have struggled to agree on joint rules for carbon markets. Meanwhile, financial contributions to allow developing countries to move away from carbon-intensive industry have fallen short, prompting deadlines to be extended.

The absence of key heads of state at the conference has caused the prospect of a comprehensive new plan to fizzle. Heads of state from Russia, China and Saudi Arabia have stayed away, aware that in nearly any outcome they will be painted as the villains of the piece. The U.S., the world’s biggest greenhouse gas emitter, is struggling to get key climate measures through congress, undermining President Biden’s capacity to encourage joint action on the international stage.

However, there are reasons for climate campaigners to be hopeful. Net-zero commitments may be distant, but they provide investors with a framework to work with. European commitments to phase out the sales of new internal combustion engine vehicles has prompted the auto industry to reconfigure manufacturing in favor of electric vehicles, and sales have outstripped forecasts, including our own. Europe’s shift to green power generation has produced the same trend, although country by country, the results are uneven.

The shift to decarbonize industrial activity is a rocky road, but the first steps are being taken. Watch how public policy translates into investor behavior because this will be the real test of COP26 in the months and years ahead.

What Drives Exploration Acreage Bid Valuations at Lease Sales?

Accurately understanding bid prices at lease sales is an arduous task for exploration teams. Several variables contribute to a block’s risk and cost, such as the presence of de-risked play concepts, an operator’s confidence in prospect interpretation, proximity to infrastructure, macro environment and political landscape, among others. While some of those factors are subjective and non-disclosed, Enverus analysts explore the objective data points to identify areas and scenarios in which operators are more likely to pay a premium.

As an example, in the Gulf of Mexico 70% of all blocks won at lease sales since 2016 have been within 20 miles of existing production hubs, placing a premium on acreage exposed to the infrastructure-led exploration strategy. Additionally, we estimate tieback acreage is more than two times likely to have multiple bids per block and garners an average of 1.3 times higher bonuses paid than non-tieback acreage. Using Enverus’ GOM lease, geologic, production and economic data sets, we help clients navigate lease sales.

Gulf of Mexico Lease Sale 257 will take place Nov. 17, 2021, the first since the temporary federal lease moratorium was lifted earlier this year.

Automation and Operations Excellence in Energy: Five Things You Should Know

In five years, the invoice as we know it today won’t exist.”

This is just one example of the many thought-provoking statements presented during the 2021 SPARK Conference. Since its inception, the SPARK Conference’s driving purpose has been to help energy professionals navigate present and potential future challenges with thought leadership focused on process automation, analytics and digitalization that will transform how supply chain, operations and accounting teams collaborate and drive value for the business.

This year’s event showcased innovative approaches to these challenges through industry thought leadership, customer-led sessions demonstrating solution impact for companies of all sizes and new product launches from Enverus Business Automation. If you weren’t able to attend the conference, or you missed some sessions, you can access the on-demand sessions here.

Below are our top five highlights focused on automation and driving operations excellence from this year’s SPARK Conference.

1. Success in this new environment requires energy supply chains to shift to a proactive, data-driven approach, making the supply chain a source of strategic value.

The environment of volatility in commodity markets and the macroeconomic situation created by COVID-19 have thrust the importance of a strong, strategic supply chain to the forefront of everyone’s awareness. Historically, the energy supply chain has been viewed and treated as tactical and reactive. Companies now look to transform it into a strategic value chain through improved processes and cost-efficiency. Accurately forecasting expenses in a volatile price environment is critical for capital discipline. Access to accurate, current spend data, filterable at the category and attribute level, empowers supply chain organizations to implement a data-driven strategic sourcing strategy.

During the customer-led session, OpenInsights: A Customer Perspective on Supply Chain Analytics, Enverus customers Matthew Morrow, manager of Finance and Treasury at Spur Energy Partners and Ellen Heflin, strategic sourcing manager at Endeavor Energy Resources, shared how their organizations are shifting their supply chain mindset.

Ellen says:

“There’s been a shift in supply chain on the operator side. Where before, supply chain organizations weren’t as common, now supply chain organizations have become more formalized. At Endeavor, we work hand-in-hand with operations to try and find areas of opportunity for strategic negotiations and work those negotiatons for the betterment of operations overall.”

Matthew weighs in on Spur Energy:

“After we made some acquisitions, our operations team started looking for ways to lower service costs and more accurately predict that. But operations needs to focus on drilling good wells. So, at Spur we are excited to put focus on the supply chain side to assist operations. Across the industry, investors are pushing for stronger hedging in portfolios. This is good because it keeps companies being disciplined with capital. But that only locks in one side of your income statement. If we aggressively hedge our revenue that’s great but our service costs are fluctuating due to commodity pricing and prices go up as they have recently, your forecast is thrown off. That’s why we’ve put focus on our supply chain, because we are locking in our revenue side, but we need to make sure we are accurately forecasting the expenses that go with it.”

When asked how Spur Energy’s supply chain is using Enverus OpenInsights spend analytics, Matthew replied:

“For us, we’ve focused in on a unit basis, trying to compare per truckload or a specific part, has been very helpful. It takes a process that’s very manual and makes it not manual. The low hanging fruit for us is being able to pull data historically by AFE or job and see how prices are fluctuating, if a service provider is more expensive, are we getting a benefit somewhere else? We love to compare our spend numbers to the OpenInsights Market Price Indices by basin. We are excited about comparing pricing for the Permian Basin to understand if our pricing is above or below the market average.”

SPARK 2021 banner linking to on-demand sessions

2. Managing the source-to-pay process on the Enverus platform allows companies to realize the benefits of automation and data visibility much faster.

In the session, Building Source-to-Pay: A Digital Transformation Story, Mary Atkinson, director of Supply Chain at Grayson Mill Energy, discussed how the private equity-backed company put a focus on automating processes via digitalization after acquiring Equinor assets in the Williston Basin.

“We had to think through a strategy of moving from a small company with manual systems and processes with low automation to more presence in the digital space. The driver — lean, efficient operations. That’s why we decided to implement the Enverus Source-to-Pay solution. It includes OpenInvoice, OpenTicket, OpenOrder and PriceBook.”

Mary highlighted the value of the Enverus buyer-supplier network by confirming that from day one of go-live on OpenInvoice, Grayson Mills was able to transact with 210 registered vendors that were already on the OpenInvoice network, 63 of which were also registered on OpenTicket.

Grayson Mills was the first client to issue a purchase order with the new OpenOrder solution. They are using POs for inventory items and engineering services. Their main driver was to capture procure-to-pay and automating the three-way match.

“On other systems, a three-way match is hard to execute. With OpenOrder we had all the back info — well ID, supplier info, etc. When you have a PO with approval and coding upfront, it’s much easier to validate with the goods receipt. When the supplier submits the invoice, there’s your match all in the same system in one place. It really automates your approval process.”

Want to learn more about Enverus Business Automation solutions? Fill out the form for more details.


3. Enverus’ OpenContract, a new smart contracting solution, will transform contract management for the industry.

At SPARK 2020, Enverus announced a collaboration with Marathon Oil. The vision was to remove the manual workaround contract management by co-developing an e-contracting solution that reduces manual touchpoints, speeds execution and improves data accuracy.

Shared vision for Source-to-Pay

This solution would allow a workflow between the operator and the supplier, keeping that contract up to date and ultimately shortening the turnaround time from agreement initiation and ready-to-invoice. And because OpenContract leverages the existing platform and network, there’s no more converting and uploading the pricing agreements. You can do the entire thing in the tool, and it allows customers to leverage the protection of the price book without all the overhead administration.

List of Product Goals

The new solution will provide more clarity to operators on what they are spending, ensuring that the spend matches the contractual structure. It will require less effort from suppliers to create invoices and will speed up payment cycles.

At this year’s conference, Tracy Sloan, VP of Supply Chain at Marathon Oil, said this solution will be a reality in early 2022:

In a matter of less than 12 months, we have gone from concept to almost reality. In early 2022 we’ll have a fully-functioning system that will be able to start trialing in that collaborative commercial environment. I think as we think about where this front-end source concept could take us, I really do believe if you can get an environment that’s easy to use for both the operators in the industry as well as the suppliers in the industry, that translates these negotiations and commercial terms into a living systematic document. It does create a foundation that I believe will allow the industry for the first time to truly be able to do real-time ticketing, real-time price ticketing and real-time conversion of ticketing to payable.”

You can watch the session Building Source-to-Pay: Smart Contracting for details on this exciting development.

4. The new OpenTicket Mobile app shows how IoT will drive new automation in the field and the back office.

The new OpenTicket Mobile app, showcased during the session Transforming Source-to-Pay: Verified Tickets With OpenTicket Mobile, allows operators to see the route a supplier takes and track the movement of goods. The app is included in the OpenTicket subscription and is free for suppliers to use. The mobile solution will focus on visibility into field operations and capturing digital ticketing.

OpenTicket customers will now be able to see the route that a supplier took, the time that it took to complete the route and a list of geofence locations that they traveled. This solution will support general tickets, everything from complex services for DNC to LWE operations and hauling tickets, tracks the movement of goods and fluids produced, and focuses on contract labor equipment and materials. This is included at no charge for suppliers and existing OpenTicket customers.

OpenTicket Mobile with GeoFencing

5. Enverus is solving major challenges with joint venture accounting and minerals management.

Sessions like JIBFlow: Highlights of Customer Success, Owner Relations Managed Services: Outsource Solutions To Drive Growth and Next Level Owner Relations With MineraliQ, demonstrated the innovation and investment Enverus is using to solve challenges for joint-venture accounting.

The acquisitions of Oildex, EnergyLink and MineralSoft united competing platforms. Enverus has since migrated all former Data Exchange joint venture data to EnergyLink. Owners now have a single portal to get their statements. This single platform also accelerates data delivery in MineralSoft. Finally, EnergyScan, a new solution, allows customers to upload data and have it automatically reviewed for duplicates. It provides seamless visibility into the job progress with status updates, within one network.

In closing, the global pandemic couldn’t dampen the excitement and anticipation the Enverus team felt around hosting this year’s conference. As Chris Dinkler, general manager of Enverus Business Automation, shared during his Executive Kick-off session:

This year’s SPARK is the most exciting thing we’ve done. We rebranded this event a couple of years ago. You remember the acquisition of Oildex and EnergyLink and Cortex was about three years ago. We’re rolling out more innovation this year than some of those companies have done in 10 or 15 years. It is truly the most exciting time to be a part of Business Automation.”

Want to learn more about Enverus Business Automation solutions? Fill out the form for more details.

Project Tracking Review: Top 10 US Energy Storage Developers

As renewable power generation accelerates and concerns around the capacity and resiliency of energy grids grow, companies are increasingly exploiting and developing energy storage systems. But grid-connected energy storage systems are not a novel concept and have existed for years.

Why is energy storage important?

In its simplest form, energy storage is best thought of as an enabling technology; it enables producers to store excess energy for use in periods of low production, making the grid more dynamic and responsive. Unlike fossil fuels, which require transportation and storage and allow power generators considerable control over the rate of energy produced, energy generated by solar and wind is intermittent and depends on uncontrollable elements. As renewables grow in prominence on the electrical grid, the need to store and manage intermitted energy grows.

The benefits of energy storage?

Beyond enabling the increased use of renewable electricity generation, improved energy storage technologies have several other benefits:

  • Responsiveness: Storage solutions can rapidly respond to large fluctuations in demand, making the grid more responsive and reducing the need for backup power plants.
  • Flexibility: Energy storage allows greater grid flexibility as distributors can buy electricity during off-peak times when energy is cheap and sell it to the grid when it is in greater demand.
  • Environment: Greater use of renewable electricity will lead to decreased emissions.
  • Economic: The cost of energy storage, solar and wind energy have dramatically decreased, making solutions that pair storage with renewable energy more competitive.

Types of energy storage?

Energy storage can refer to a wide range of technologies and approaches to power management. Below are some of the most common systems used:

  • Compressed air: Usually located in large chambers, surplus power is used to compress air and store it. When energy is needed, compressed air is released, passing through air turbines to generate electricity.
  • Lithium-ion batteries: Lithium-ion batteries are by far the most popular battery storage option today and control more than 90% of the global grid battery storage market. Compared to other battery options, lithium-ion batteries have high energy density and are lightweight. New innovations, such as replacing graphite with silicon to increase the battery’s power capacity, are seeking to make lithium-ion batteries even more competitive for longer-term storage.
  • Flywheels: Flywheels are rotating mechanical devices used to store rotational energy. In simple terms, a flywheel contains a spinning mass in its center driven by a motor — when energy is needed, the spinning force drives a device like a turbine, producing electricity and slowing the rotation rate. Excess electricity is then used to drive the motor, which increases the rotational speed, recharging the flywheel for later use.
  • Pumped-storage hydropower: Pumped-storage hydro (PSH) facilities are large-scale energy storage plants that use gravitational force to generate electricity. Water is pumped to a higher elevation for storage. When electricity is needed, water is released back to the lower pool, generating power through turbines.

Top energy storage developers in the U.S.

Below is a chart of the top 10 U.S. energy storage developers by megawatt available within our Enverus Foundations Power & Renewables platform. It’s important to note that not every company listed operates exclusively in the energy storage sector, but they are all significant players in the growth and development of the energy storage industry. The future looks bright for battery storage systems and these companies will undoubtedly play a prominent role in the evolution of both energy storage systems and renewable energy projects.

Figure 1 | Top 10 U.S. Energy Storage Develops by Megawatt

Figure 1 - Top 10 US Energy Storage Develops by Megawatt

By introducing more flexibility into the grid, energy storage can help integrate more solar, wind and distributed energy resources. It can also improve the efficiency of the grid, increasing the capacity factor of existing resources. We hope that we can show you how our analytics and insights will benefit your workflows. You can access your preview of Enverus Foundations™ | Power & Renewables here!

 

Enverus Knowledge Hub: On-Demand Energy Insights

In the rapidly evolving energy industry, staying on top of market trends can be complex and overwhelming. As difficult as it is to stay up to speed with so many moving pieces, having a comprehensive view of the energy market is critical to making the best business decisions.

Now, there’s a way to stay plugged into energy insights with engaging, live and on-demand content whenever, wherever. The new Enverus Knowledge Hub has everything you need to stay on top of the latest information and advancements across the entire energy industry.

Enverus Knowledge Hub users have immediate and unlimited access to business-critical information all in one place. Access content specifically curated to your interests, role and focus. Watch replays of hundreds of webinars, presentations and more, gaining knowledge and harnessing the power needed to transform your business, minimize spend and maximize profit.

Have a question and need an answer now? The Enverus Knowledge Hub has chat access to energy experts live or on demand. Leverage our industry veterans to answer your questions and drive success in today’s competitive market.

Subscribers also get premier event access. Enverus hosts diverse and exciting events where attendees hear from industry leaders, network with peers and leaders, and leave with actionable strategies and insights. Be the first to know and sign up to attend.

Ready to see this on-demand content covering the latest information on today’s rapidly changing energy industry? Watch the video below for a quick introduction to the Enverus Knowledge Hub and click here to get access and start watching! 

Inspiring Our Oil and Gas Workforce

We all understand the motivations that drive folks who hunt for treasures. Whether it’s buying extra Powerball tickets, trying to pick the next crypto or biotech winner in the stock market, or even using a metal detector at the beach to find a lost Rolex, we understand.

It’s the allure of making a risk pay off in a big way.

The careers of many oil and gas geoscientists have been made on the foundation of the inherent risk in conventional resource exploration.

Work up a hunch in an area no one’s worked before. Try to confirm it by pulling a bunch of logs and mapping out reservoir thickness and trap structure.  Assess that source, reservoir, seal and trap conditions are satisfied, and then lease the acreage. Confirm it with seismic if need be. Sell it to management or your investment group and then line up a rig.

Get your morning reports on drilling rates, samples and tops, and as you get close to your target pay zone, start looking for reports of oil and gas shows.

Finally, when the well reaches total depth, head out to the location and watch in anxious anticipation as the logging company shows the down log and you get your first look at the log response of the thing you’ve been chasing for months — or maybe even years.

Experience elation. You’ve found producible hydrocarbons that will make money greater — maybe much greater — than your workup, lease and drilling costs.

Or, experience dejection. You, your company or your investment groups risked a bunch of money and came up with nada.

In a weird way, the process was the perfect expression of the digital age — ones and zeroes — before the digital revolution even occurred.

The experience of exploring for oil and gas was both brutal and immensely satisfying. Brutal in the sense that there were no shades of gray. You either made tons money or you lost a lot of money.

But we kept doing it because we were totally captivated and enthralled by the idea of thinking in four dimensions and putting our minds deep in the earth to ferret out where Mother Nature had hidden and locked up hydrocarbons.

And the fundamental assumption that kept prospect generators engaged in the world’s greatest treasure hunt was that our societies always needed more oil and gas.

Fast forward to 2021. Unconventional reservoir development has become firmly entrenched as the dominant method of producing oil and gas in the U.S. Instead of discrete traps of various sizes ranging up to hundreds or even a few thousand acres requiring careful research to identify, unconventional plays like the Eagle Ford in South Texas are prospective over nearly 4 million acres.

And unlike conventional exploration, there are many shades of gray in these plays, ranging from wells with modest returns on investments to money-making superstar wells.

By now, we’re probably all familiar with the current mantra imposed on the industry by the investment community — deliver free cash flow, reduce your debt and live within your means.

So, my question is this: How can that possibly be inspirational for the exploration-minded geoscientists in the upstream workforce that have traditionally been guided to find more?

Maybe they can find inspiration in developing really detailed reservoir models that guide development plans. Perhaps this kind of incremental advancement of reservoir petrophysics and facies developments synchs up with the younger generation’s reported aversion to risk.

Or maybe the fact that they are getting great paychecks to support their future plans is enough.

But from my limited perspective, I always wanted to be inspired to do great things, to work against long odds and succeed. And it’s hard to see how management and C-suites can be truly inspirational for their workforce if they’re messaging management rather than risk taking.

Maybe we can close the circle by inspiring this upstream geoscience workforce to come full circle to identify the best places to store, rather than extract, the fluids and gases that we recognize as harmful to our planet’s climate.

Perhaps creation of true free cash flow will allow some companies to start adding incremental risk to their strategy portfolios by stepping back into conventional exploration to find exceptional fields like Utah’s Covenant Field — nearly 38 million barrels estimated ultimate recovery (EUR) with a median measured depth of 7,150 feet, most of it produced from just over 700 acres.

Chart showing EUR Oil vs Measured Depth

However accomplished, it’s essential for company leadership to clearly define inspirational goals to keep their workforce engaged, because without an engaged workforce a company can only look forward to long term decline.

Oil Price: What Goes Up …

Low inventories, recovering demand and a muted supply response are behind surging energy prices and rising stock values of producers. Today’s picture looks similar to late 2018, when Brent spiked to ~$85/bbl and prompted bullish calls for $100/bbl oil. But that year, a wave of OPEC and U.S. supply growth hit and U.S./China trade tensions undercut demand expectations. Stock markets sold off heavily and oil prices collapsed into the $50s (Figure 1).

Are high oil prices sustainable this time around? We don’t think so for several reasons. First, OPEC still has plenty of spare production capacity to bring back. Sanctioned Iran has spare capacity in spades. Iraq and the UAE are still pursuing upstream growth plans. Whether through consumer pressure or self-interest, high oil prices will mean more OPEC supply at some point. Second, while the post-COVID-19 recovery is well underway, it’s a bumpy affair. Roughly 70% of populations in emerging economies remain unvaccinated, meaning the pandemic remains a threat to demand recovery. A new wave of infection looks more probable than a colder-than-normal winter. Last, high oil prices will accelerate the transition away from oil to alternatives such as electric vehicles.

So, where are oil prices headed? Forecasting is as much art as science, but we don’t believe $100/bbl is attainable, let alone sustainable. The combination of OPEC+’s effective management of supply and a more disciplined U.S. producing sector suggests a supply-driven collapse that mimics 2018 is unlikely. In conclusion, we think this time around is different. Oil will fall, but barring catastrophic COVID-19 news, the decline should be a soft landing rather than a belly flop.

Learn more about Enverus’ Intelligence solutions here.

FIGURE 1 | Oil Prices in 2018 Versus 2021

M&A Cools in Q3 From Last Quarter’s Scorching Pace

Austin, Texas (October 12, 2021) — Enverus, the leading energy data analytics and SaaS technology company, is releasing its summary of 3Q21 U.S. upstream M&A activity. While M&A slid 44% from last quarter’s record-setting deal value, the $18.5 billion transacted still topped the five-year quarterly average for M&A value of about $16 billion (excluding Occidental/Anadarko).

“We have seen a red-hot market for upstream M&A since the industry recovered its footing from the initial shock of COVID-19,” said Andrew Dittmar, director at Enverus. “It was inevitable that the hungriest buyers and sellers would find their deals and activity would revert back toward the average. We seem to be hitting that inflection point.”

Top 5 US Upstream Deals of 3Q21

Capping the quarter was ConocoPhillips’ late September move to solidify its position as a leading Permian producer by acquiring Shell’s position in the Delaware Basin for $9.5 billion, a deal that moved Conoco into second place for total Permian production. In contrast with all the other large deals from the last 12 months that involved buying a company using equity, Conoco paid cash in this asset deal. Combined with a few more modest sized deals, the acquisition drove $12 billion in total Permian M&A in Q3, with the basin easily retaining its top position as most active for deals and most competitive for acreage.

While Shell’s sale was the most prominent example, there was a broader uptick in asset deals collectively. The boost in asset sales is a natural outgrowth of corporate consolidation as buyers comb through their expanded portfolios and find assets that don’t fit their development plans. These assets, which often fall outside the core development areas for public companies, create opportunities for private equity investors. Privately funded buyers increased their share of acquisitions to about one-fifth by value.

“Private equity still has dry powder for deals,” stated Dittmar. “They are using this to target assets being tagged as non-core by public companies. Once you step out of the core of the Permian Basin and a few other key areas, competition for deals drops, and these positions are often available at buyer-friendly price points. That said, private equity is still a net seller in the space and likely to remain so for the foreseeable future given the number of investments outstanding and how long that capital has been deployed.”

A few other private equity investments found satisfactory conclusions in Q3. That includes Blackstone-backed Primexx Energy Partners, which sold its position in the Delaware Basin to Callon Petroleum for nearly $800 million. Like nearly all other recent private equity exits, the deal included a healthy dose of buyer equity to the sellers. With tailwinds from strong stock price performance for public E&Ps, that has been an additional source of value for sellers as shares have generally appreciated in value after the deals close.

One exit option that hasn’t been broadly pursued by private companies is an IPO; the lone new public upstream E&P, Vine Energy which went public last March, ended its short-lived run as a standalone public company when it agreed to be acquired by Chesapeake Energy for $2.2 billion in the largest corporate deal of Q3. The acquisition enhanced Chesapeake’s holdings in the Haynesville play as part of its shift toward natural gas. The Haynesville is seen by producers as having more room to grow relative to Appalachia because of its infrastructure. While Chesapeake already had exposure in both plays, other companies that are only in Appalachia may look to add a Haynesville position, like Southwestern did last quarter.

“There are still opportunities for public company consolidation as well as potential private sellers looking to capitalize on price levels for both gas and oil not seen in years,” concluded Dittmar. “But the sense of urgency seems to have left the deal market. Through the end of the year, we are likely to see mostly smaller sized asset deals as companies trim their portfolios with the chance of an occasional larger public company merger or private E&P sale.”

Members of the media can contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

Enverus’ SPARK Continues To Ignite Innovation in Energy

Austin, Texas (October 7, 2021) — Enverus, the leading global energy data analytics and SaaS technology company, is inviting members of the media to SPARK, its free, virtual, two-day conference taking place Oct. 13-14, 2021. SPARK attendees will learn industry developments and trends that affect supply chain, operations, accounting and finance teams and minerals management.

Of particular importance will be discussions around Enverus Source-to-Pay. Underpinned by the industry’s largest network of operators and suppliers, Enverus has created a connected experience across operations, supply chain and procurement, accounting and finance teams, combining historically disparate data and processes in a single platform. This complete digital transformation improves cost control and operating efficiency, enabling operators to maximize cost savings and generate more internal cash flow.

“Over the last 18 months, businesses have lumped financial decisions into two categories: where to spend and where to save,” says Chris Dinkler, general manager of Business Automation at Enverus. “The evolving energy industry has brought cost savings into focus as companies aim to maximize free cash flow. In analyzing the labor and supply chain, for example, it’s clear that, traditional oilfield key performance indicators just won’t cut it anymore when it comes to decisions on who to work with or who to hire. Data and hard-hitting numbers around more efficient operations, building highly successful sourcing strategies and realizing economies of scale faster by uncovering and implementing best practices across an organization matter more than ever before. It’s not about individual decisions or divisions within a company — it’s about the sum of its parts.”

Building upon last year’s successful SPARK conference, Enverus will magnify its virtual environment and expand the invitation to a broader group in the oil and gas industry spanning senior executives, particularly within E&P companies, accounts payable, joint venture accounting, supply chain and operations, and media.

SPARK is an immersive virtual event platform that will feature an interactive “Innovation Hub,” networking sessions with peers and Enverus experts, and partner booths alongside the auditorium and breakout rooms for hosted sessions.

  • Who: Employees of the oil and gas industry and members of the media.
  • What: Two-day virtual conference on new ways for the oil and gas industry to leverage digital technology to innovate through the downturn.
  • Where: Online, virtual conference.
  • When: Oct. 13-14, 2021 from 8 a.m.-5p.m. CT

View the full agenda here.

Register Now

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

Exploring the CCUS Opportunity Set

Over the past few quarters, interest has surged in carbon capture, utilization and storage (CCUS) technology. Policy enhancements are providing a pathway to viable carbon capture business models and have spurred a string of announced projects across the value chain. As companies begin screening for the most compelling opportunities for carbon capture, offtake and storage operations, we believe it is critical to understand emission profiles. This information helps locate and quantify cheap-to-abate emission volumes and identify profitable CO2 reduction opportunities using CCUS.

FIGURE 1 | Carbon Capture Headline Mentions by Quarter

OK, wait … what is CCUS?

CCUS, or carbon capture, utilization and storage, is the process of capturing CO2 from industrial point sources and either sequestering it permanently underground or using it for EOR or the production of other materials, fuels or chemicals. The value chain can be thought of in three segments: carbon capture, transportation and storage in an appropriate sink. Today, CCUS technology is used to capture CO2 emissions from industries such as power generation, natural gas processing, fertilizer production and oil refining.

FIGURE 2 | CCUS Value Chain

 How do we characterize emission profiles?

 The following factors allow us to grade point sources to identify attractive CCUS opportunities:

  • Location of point sources.
  • Density of point sources.
  • Point source CO2 volumes.
  • Purity and concentration of CO2 in gas streams.

Why is understanding emission profiles important to CCUS deployment?

At the sector and projects levels, significant deviation in capture cost estimates reflect the varied concentration and purity of CO2 in the processed gas stream. Natural gas processing and ammonia production screen, on average, as some of the lowest capture cost subsectors because CO2 is inherently produced in the process. Iron and steel, power generation and cement manufacturing, on the other hand, are typically the hardest to abate due to the lower concentration of CO2 in the gas streams.

The size and density of stationary sources are also important considerations. CCUS typically favors facilities with higher emissions as economies of scale are more easily reached through lower per-unit transportation and storage costs.

How do these projects actually make money?

Earlier this year, the U.S. federal government expanded and extended its 45Q tax credit to provide increased stability and certainty for CCUS developers and investors alike, and to enhance the economics for both CO2-EOR and permanent sequestration. The tax credit flatlines in 2026 at $35/tonne for CO2-EOR applications and $50/tonne for permanent sequestration. The credit value must be shared across the capture, transportation and storage entities.

FIGURE 3 | Summary of the Internal Revenue Code Section 45Q Credit

In Canada, the carbon tax provides a strong incentive for emission reduction. The regulated price is C$40/tonne CO2 in 2021 and escalates towards C$170/tonne CO2 in 2030.

What’s the size of the prize?

 In 2019, the U.S. and Canada combined emitted nearly 3 billion tonnes of CO2 from stationary sources, about 9% of the global total. As of September 2021, operational CCUS projects capture roughly 23 million tonnes per year (Mtpa) of CO2 across both countries, or less than 1% of 2019 emissions. We believe significant opportunities exist to scale the technology to meet emission reduction objectives.

FIGURE 4 | 2019 CO22 Point Source Emissions by Country

Got it! So how do we locate these opportunities?

Through the combined efforts of Enverus ESG Analytics and Enverus Intelligence, we analyzed emission profiles across more than 9,000 facilities to identify top opportunities for CCUS deployment. Factors such as facility location, CO2 volumes and sector were all key considerations leveraged in our analysis. This information is invaluable for infrastructure players, operators and low-carbon investors interested in understanding the CCUS landscape and seeking out the most compelling projects in the space.

We hope that we can show you how our analytics and insights will benefit your workflows. You can book a preview of our solutions with us here. Or fill out the form below and an Enverus Expert will reach out to you!

Eka and Enverus Team to Speed Energy Trading Risk Management and Decision-Making

New York, NY and Austin, TX (October 5, 2021) — Eka Software Solutions, the leading cloud platform for digital innovation, today announced a collaboration with Enverus, the leading global energy data analytics and SaaS technology company to provide energy traders new solutions for improved risk management and decision-making.

Eka will offer a pre-built connector on its Energy Trading and Risk Management Platform for seamless access to Enverus’ MarketView and CurveBuilder data, including forward curves, settlement prices and foreign exchange. The combination can accelerate project implementations and results by linking Enverus’ data API with a cloud data warehouse to integrate disparate data, tools and analytics into one repository.

“Customers trading in energy markets need timely market data to manage their P&L, settlements, run risk reports, and more,” says Manav Garg, CEO, Eka. “We’re excited to work with Enverus to help energy businesses make more informed decisions and improve risk reporting.”

“Instead of building a one-off interface that would have to be managed by an in-house IT team, we have rolled out a pre-built connector between Enverus’ Trading & Risk Solutions and Eka,” said Simon Crisp, Enverus Trading & Risk General Manager. “For an energy business, a pre-built connector expedites and de-risks implementation and reduces the long-term support requirements of their market data and ETRM connection.”

The speeds at which energy traders can access and understand data is crucial to their ability to respond to disruptive events, set strategy and achieve growth.

About Eka Software Solutions
Eka Software Solutions is a global leader in providing innovative, cloud solutions that unify a whole range of workflows from procurement to payments. Its platform driven solutions for commodity and supply chain management, source-to-pay, treasury and sustainability help customers to overcome complex challenges and accelerate their digital journey in an environment of continuous change. See: eka1.com. 

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

Media Contacts:
Eka: Sharmita Mandal
Enverus: Jon Haubert | 303.396.5996