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Forward Curves, Part 2: Why Do Traders Need Forward Curves?

Energy trading companies need to know the current market price for all forward deals that were made on their trading desks so that they can properly evaluate every deal and generate a profit and loss (P&L) report and evaluate their risk exposure.

This current market price comes from the forward curve, which is normally owned and generated by the risk team, controlling or other middle office departments, and not by the front office, to prevent potential P&L manipulation by the traders.

In general, the forward curve is generated from the available forward prices.

On very liquid markets, like WTI or Brent crude oil, forwards are traded constantly for many months in the future. To build a forward curve for those products, one could simply extract the currently traded forward prices from a market screen.

But it’s not always that easy. In many markets, you don’t have the luxury of publicly available real-time data for the next 12 monthly forward prices that you would need to easily create a one-year forward curve.

This is where our product CurveBuilder comes into play.

These are some examples where a forward curve generation is more complicated and where we would need the help of math and formulas to generate a forward curve.

  • Trading for a certain product might be done OTC (“over the counter”) under bilateral agreements and not via a trading platform. Price data for those markets is provided by data providers, like Platts, who call market participants to get the latest price information of those markets. That data might have gaps or does not get published regularly.

In this case, one would need to work with interpolation to fill the gaps. And on days where the data was not published, the previous forward curve could be used.

  • A company has been trading crude oil futures on a market with much lower liquidity than the two major crude oil products Brent or WTI. This could be, for example, Nigerian crude oil. Most trading activity is happening on the first two forward months, but not beyond. How would we generate a forward curve for this market?

One solution could be to use a forward curve from a similar market (e.g. Brent) and extrapolate the forwards beyond the two available front months from the Nigerian crude oil market based on the shape of the Brent forward curve.

  • A company has a gas delivery contract that is priced based on a Rhine River oil price index, which is published monthly, but there is no forward market for those prices that could be used to create a forward curve.

In this specific case, the oil gets shipped down the Rhine River from Amsterdam, one would identify a strong price correlation between Amsterdam oil prices and the monthly Rhine River price index. A forward curve could be built by applying a mathematical correlation formula onto the existing Amsterdam oil forward curve to generate the forward curve for the Rhine River price index.

In our next blog on forward curves, we will discuss how CurveBuilder can manage these challenges.

Learn more about how Enverus’ CurveBuilder can revolutionize your forward curve management today.

New Successful Collaboration Between Enverus and Lead Consult-Data

Austin, Texas and and Sofia, Bulgaria (June 17, 2022) — LEAD Consult, a specialist in providing enterprise service bus solutions, business and IT consulting services to the energy and financial sectors, is proud to announce the successful cooperation with Enverus, the leading energy SaaS and data analytics company, on providing the energy companies more robust, quick and easy way to integrate Enverus products MarketView and CurveBuilder into their own systems and services.

Through its ESB – Lead Universal Loader 3, Lead Consult offers a pre-built connector to Enverus’ MarketView and CurveBuilder products that can easily be integrated with any other existing system (ETRM, ERP, Risk) or service solely through configuration, with no additional implementation effort. The stand-alone and system independent platform of Lead Consult turns the heavy implementations and integration into quick and easy no-code task.

The need for system and services integrations grows exponentially with new services and functionalities of the systems which cover more and more aspects of the business and the growing information which is processed every day. The facilitation, acceleration and maintenance of these complex and time-consuming integrations becomes a must for the energy business preventing the need of excessive manpower and keep costs low.

This approach can significantly accelerate any project implementations and results by linking Enverus’ data API with any downstream or upstream systems such as ETRM, CTRM, PFM and many more.

Wendi Orlando, VP Product Management at Enverus said “Through this unique collaboration with LEAD Consult we are able to offer our customers very quick integration of our systems and services into their existing IT Infrastructure, and be significantly more efficient than the competition.”

Dragomir Stanchev, CEO and Founder at LEAD Consult, said: “We are more than happy to work with Enverus, expanding the horizons of both companies, making it easier for existing and future Enverus customers to easily use the company’s excellent Market Data services, especially with regards to Renewables Data, without worry about the time-consuming technical details. Today the energy companies need more than ever good market data which is delivered in a quick and reliable manner and Lead Consult is the right partner to facilitate the delivery process.”

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 LEAD Consult
LEAD Consult is a dynamic, customer-oriented company, specialized in providing software solutions as well as business and IT consulting services in the energy and financial sectors. Our deep industry knowledge together with excellent skills in management consulting, technology and innovation allows us to challenge the conventional thinking and deliver exceptional results that have a lasting impact on businesses and companies worldwide.

Preparing for Summer Load? Don’t miss our 2022 Summer Outlooks

One thing is for sure, it’s going to be a hot one this summer. Our expert power market analysts break down the summer forecasts for ERCOT, PJM and CAISO SP-15 in our recent Summer Outlook Series. Get a first look at the weather forecast and analog years, the load growth or demand destruction, how new builds and policy changes will impact the market, transmission outages and price forecasts.

Our team also takes a closer look at some congestion risks and challenges facing each ISO. Whether you are preparing to site a new project, manage your assets or trade, understanding how to navigate and mitigate these risks is necessary to make better decisions and enhance profitability. We give a quick take below but be sure to check out the full outlook for each ISO and let us know if you need additional support preparing for the summer.

ERCOT Quick Take

Challenges for Summer 2022:

  • Drought conditions could lead to record high temperatures throughout the summer.
  • ERCOT Load Growth nears 10% since 2020 with no new thermal baseload generation.
  • Older marginal thermal units ran more hours earlier in the year and may be at increased risk for unanticipated summer outages.
  • ERCOT sees more significant ramp hour volatility later in the evenings coincident with solar ramp down with not enough battery capacity to arrest the decline.

Operational Tools to Mitigate These Challenges:

  • Demand Response: 4CP programs and Load-Side Reductions will play a critical role in the risk outcomes this summer.
  • Increased Solar Capacity will fundamentally affect base-load summer supply.
  • ORDC curves have a lower maximum, but wider effect at higher Operating Reserve levels.

Full ERCOT Outlook

PJM Quick Take

  • Risks for PJM include the large number of retirements impacting the stack heading into summer and increased forced outages with excessive ambient temperatures (approximately 43 gigawatts of natural gas generation built between 1999-2007).
  • Externally for PJM the risk comes from its neighbor MISO, which will be depending on exports throughout the summer.
  • MISO projected the need for increased, non-firm imports and potentially emergency resources to meet the 2022 summer peak demand with warmer-than-normal temperatures forecasted throughout the MISO footprint. The summer peak forecast is 125.2 gigawatts with 114.9 gigawatts of projected generation within MISO after you consider outages and derates (NERC Assessment Highlights).
  • September 21, 2017, shortage pricing 22 intervals, RTO synchronized reserves & Primary Reserves *shortage of second step of ORDC, partly due to MISO emergency conditions & the need for exports.

Full PJM Outlook

CAISO SP-15 Quick Take

Challenges for Summer 2022:

  • A 2018 type summer temperatures pattern could cause summer capacity issues.
  • Severe to Exceptional Drought conditions could lead to record elevated temperatures throughout the summer.
  • Net loss of 310 MW of thermal units.
  • Supply Chain Disruptions are causing new units to not enter the grid on time. Further delays into the summer would be a problem.
  • Wildfires (especially in the northwest) could cut off local or regional imports of renewable power to the load centers.
  • High Gas Prices are likely to continue through the summer.

Mitigating Factors To These Challenges:

  • Most Analog years show near to below average temperatures especially 2011.
  • COVID-19 has caused demand destruction and SP-15 load still has not recovered to pre COVID levels
  • Net new megawatts vs. retirements over last year is 205 megawatts.
  • Late season runoff and heavy mountain snow in British Columbia and western Montana should provide high summer Hydro-Generation and strong imports from the northwest.

Full CAISO SP-15 Outlook

US Solar Tariff Reprieve — Is Two Years Enough?

Calgary, Alberta (June 14, 2022) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released a report evaluating the impact of the Biden administration’s strategy to invoke the Defense Production Act to maintain solar adoption in the U.S. The act is being used to freeze tariffs for two years in four Southeast Asian countries — Thailand, Malaysia, Cambodia and Vietnam — currently under investigation by the U.S. Department of Commerce. The investigation is focused on whether the countries are being used as “pass through” entities for China to circumvent tariffs. If violations have taken place, solar modules from these countries could see tariffs ranging from 50% to 250%.

“Two years of status quo solar investment sounds good on paper, but unless investment in U.S. manufacturing manifests, we’re just kicking the can down the road,” said Adam Jordan, lead report author and managing director of Enverus Intelligence Research. “Tariffs have little to do with underlying supply chain issues, which have been constraining solar installation since before the Department of Commerce investigation started in April.”

Key takeaways from the report:

  • Enverus Intelligence Research analysis shows waiving tariffs for two years will have a minimal impact to increases U.S. solar production.
  • Supply chain pressure will only increase as the tariff reprieve creates a spike in demand for photovoltaic (PV) components.
  • Shifting U.S. political landscapes in 2024 (next presidential election) might create more unwanted uncertainty in those companies that would otherwise invest in the country’s manufacturing.

Enverus Intelligence Research can quantify how much capacity is under investigation across several companies. Members of the media should contact Jon Haubert to schedule an interview with one of the company’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.

 

Forward Curves, Part 1: What Is a Forward Curve?

Storing big quantities of energy products — gas, oil or even electricity — for later consumption is expensive and a logistical nightmare. However, energy consumers and producers have a desire to lock in the price today for energy that they need to use or produce in the future.

Therefore, in energy markets, it is common to trade in so-called forwards or futures. In both cases, the delivery of the energy and the payment happens in the future while the price is set today. Depending on the actual delivery period of the energy product, the price of every forward is slightly different. In certain market scenarios, the price of the forwards that have a sooner delivery is lower than the price for the more distant forwards. But it could also be the opposite.

A forward curve is basically an array of forward prices for a certain market.

Depending on the market, forward prices can change many times per hour, so a forward curve is always a snapshot of the market prices at a certain time. As such, it is different from a price forecast.

Look out for our next blog in this series where we will discuss why companies need forward curves.

Learn more about how Enverus’ CurveBuilder can revolutionize your forward curve management today.

 

The Interconnection Queue: An Introduction

The interconnection queue is a collection of power generation and transmission projects requesting to connect to the power grid. Generation projects can be pre-construction, construction, built/non-operational and operating.

How do power developers submit projects to the queue?

As power developers start the process of new generation projects, they submit an interconnection request to the ISO to join the queue. An interconnection queue request would include data and documentation surrounding the project. This would include information such as project type, fuel type, net megawatt, location, operating data, synchronization date, point of interconnection, system impact study, builders, suppliers and more.

In addition to the interconnection request, a series of studies are completed to ensure the project that will potentially join the power network meets the ISO’s reliability, safety and facility standards, and is an overall best fit for the network.

What are the types of studies conducted?

  • System Impact Study (SIS) — An engineer evaluation of the point of interconnection.
  • Feasibility Study (FS) — The cost and impact a new project would have on the system.
  • Facilities Study (FAC) — The electrical configuration, price and schedule to complete interconnection.
  • Optional Interconnection Study (OIS) — The odds of other projects in the queue being withdrawn.

What has been approved and joined the power grid recently?

From 2007 to 2021, there has been an increase in renewable energy sources and demand.

Graph Showing Interconnection Queue Projects by Type YOY

 

With the increase in demand and adoption of renewable energy, the current queue is overflowing. Right now, there are more than 700 gigawatts panned across the seven ISOs with projected completion dates from 2022 to 2025.

 

Enverus Oil & Gas 101

To kick off our series on the basics of oil and gas exploration and development, we wanted to answer some fundamental questions on the topic, including:

  • Where do we find most oil or gas, and why?
  • We’re looking for oil. So … why do we like holes in our rocks?
  • Which is objectively better, a jelly donut or tiramisu?

Ingredients

Oil and gas accumulations require five components: source, migration, reservoir, trap and seal. If any of them is lacking, there’s no hope. What are these things, and why are they important?

Figure 1: Elements of a conventional hydrocarbon trap (Source: JOGMEC).

Source Carbon-rich rock that gets heated and squished until hydrocarbons form. Sedimentary rocks, typically shale but can also be limestone.
Migration Hydrocarbons moving from the squished source to an area with more room for them. Faults, fractures and even tiny pores in the rock allow hydrocarbons to move about.
Reservoir The area with more room for the hydrocarbons. Usually sandstone or limestone with pores that hold hydrocarbons.
Trap (Accumulation) Something that causes the hydrocarbons to get stuck as they try to “float” upward in the subsurface. An upside-down bowl — or dome — as shown below, or another kind of dead end.
Seal A rock layer that acts as a lid, keeping the hydrocarbons stuck in the trap. Shale commonly makes a fine seal, but salt, though rarer, is even better.

 

Hydrocarbons? Just a fancy word commonly used to refer to oil, gas and other fossil fuels. It describes their molecular structure, generally a chain of carbon atoms, each of which is surrounded by hydrogen atoms. Firing up the gas grill tonight? You’ll be burning a bunch of these little fellas, C3H8, aka propane.

Propane molecule

Figure 2: Propane molecule (Source: Ben Mills, Wikimedia Commons).

Propane happens to be a gas at atmospheric pressure and temperature, as are other short-chain molecules like methane (the most common constituent of natural gas) and butane (think cigarette lighters). Longer chains form liquids such as the one we commonly call octane, a constituent of gasoline that is known to science nerds as 2,2,4-Trimethylpentane, or (CH3)3CCH2CH(CH3)2. That’s a lot of carbon and hydrogen atoms! Okay, enough chemistry…

Basins

As you can see, sedimentary rocks are our friends when it comes to oil and gas. Because of this, we tend to look for hydrocarbons in sedimentary basins — places that are (or were) big holes in the earth that were filled with sediments. The Gulf of Mexico is a good example, as is the North Sea. Both are still actively filling with sediment. On the other hand, Texas’ giant and prolific Permian Basin and central Europe’s Pannonian Basin (mainly in Hungary and Romania) are ancient basins that are no longer filling with sediment but are already home to many sedimentary rocks full of oil and gas. Sometimes, it gets even crazier, and the ancient basins get caught up in plate tectonic movements that result in their hydrocarbon-rich sedimentary rocks being uplifted into hills and mountains. Many of Southern California’s onshore fields and most of the Rocky Mountain fields are good examples of this. As you can see from the map below, active and ancient basins cover much of the earth with their sediment at this point.

Figure 3: Global Sedimentary Basins (Source: Enverus).

How do these basins — these big holes in the earth — form? Two main ways: extension and compression, illustrated in the figures below. The hole that forms is technically referred to as “subsidence.”

In extensional basins, subsidence usually results from the earth’s crust thinning or faulting (breaking) — the sort of thing that happens when two tectonic plates pull apart from one another. These basins are typically formed along coasts.

Figure 4: Diagram of extensional basins (yellow) on both sides of the Atlantic Ocean (Source: National Park Service).

In compressional basins, subsidence usually results from two tectonic plates colliding. These collisions can pile up mountains of rock so heavy that they push down the adjacent continental crust. Hence, these basins often form adjacent and parallel to mountain belts.

Figure 5: A very, very simple diagram of one kind of compressional basin (Source: Raynaldi rji, Wikipedia).

Dessert

Wait! What about the jelly donuts and tiramisu? For that, dear reader, you will have to wait for the next blog in this series, where we will discuss the two major types of oil and gas plays and whether it is better to be conventional or unconventional …

Summer Signals: Continued Price Volatility for Oil and Gas

Austin, Texas (May 25, 2022) — 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 its five-year supply, demand and price outlook. The report confirms that nearly three months into the Ukraine war, oil and gas markets remain tight with Brent oil trading well above $100/bbl and Henry Hub gas above $8/MMBtu. This edition of FundamentalEdge dives into the company’s medium-term expectations for supply, demand and price for both commodities as well as risks to our forecasts.

“We see a tangible risk that oil markets will become volatile again later this year and into 2023 when the stock releases end. The release of oil from the Strategic Petroleum Reserve buys time for producers in the U.S. to push harder and for Iran nuclear diplomacy to bear fruit,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research.

Al Salazar, co-author of the report and senior vice president of Enverus Intelligence Research, added, “Neither LNG tightness nor a limited capacity to switch power generation from gas to coal seem likely to change quickly in the near term. This in turn implies that prices are likely to remain elevated until U.S. supply infrastructure becomes able to accommodate supply growth sometime next year or demand buckles under the weight of soaring prices.”

Key takeaways from the report:

  • The sharp rally in Henry Hub gas prices has exceeded all early year price forecasts and reflects strong LNG demand as Europe faces up to Russian supply risks as well as limitations for gas-to-coal switching in the U.S. power generation sector.
  • Enverus Intelligence Research has nearly halved its early 2022 demand growth expectation for oil to 1.65 MMbbl/d and see further headwinds from rising interest rates and a marked slowdown in the Chinese economy as the country battles a new COVID outbreak in major industrial and population centers.

Members of the media should 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.

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.

Shifting to the ESG Mindset

Just two years ago, the environmental, social and governance (ESG) conversation was nascent, with general uncertainty as to its staying power. The E in ESG and, more specifically, emissions in the energy value chain have risen to the top of investor concerns. Wall Street and energy companies are now much more focused on ways to measure, monitor and monetize emissions reduction.

These early days for ESG in energy are characterized by a hyperfocus on Scope 1 emissions reduction, where producers are taking action to minimize greenhouse gas (GHG) sources that they directly control or own, including methane and CO2. At the same time, the ESG conversation appears to be unstoppable as public sentiment, investors, government policy and energy companies work out the details of where to prioritize Scope 1.

Tuned into the pulse of the emissions conversation across thousands of investors, energy executives and oilfield services, Enverus is uniquely positioned to provide market participants with a clear view into the current ESG landscape and emerging themes. Leveraging Enverus ESG Analytics, investors gain unprecedented data analysis and visualization capabilities to benchmark operator ESG on multiple dimensions, reveal future emissions reduction potential, assess upside opportunities and navigate risks.

Read on for an analysis of current ESG trends in the energy sector and the roadmap for enriching ESG analysis with new datasets and technology.

ESG themes in the energy sector

More than 70 countries have set a net-zero target, which has a large-scale ripple effect across the global carbon footprint, carbon markets and investor portfolios. There is a clear and consistent global emissions alignment that is driving ESG improvement in U.S. basins.

For the financial sector, this alignment is best seen in the consensus among investors on the crucial role of ESG to drive climate improvement and environmentally responsible portfolio decisions. This consensus has taken the form of the UN’s Principles for Responsible Investments, representing $120 trillion of assets under management across 4,000 firms. Such initiatives also include the Climate Action 100, an investor-led coalition that aims to elevate scrutiny of corporate GHG emissions and take ESG into consideration when allocating capital. And while the recent proposed SEC rules effectively make GHG disclosures voluntary for producers, this is only the first salvo of ESG-related rules that, at a minimum, require energy companies to disclose emissions that have a material impact on their operations.

Alignment on ESG is also demonstrated in the ways it is being monetized, such as the European Union’s Carbon Credit Trading System. Although carbon trading is voluntary in the U.S., new markets are opening around the fringe of emissions control, including responsibly sourced gas (RSG). Gas producers are rushing to obtain RSG certification because it assures natural gas buyers and investors that the commodity has been produced and transported along certified, low-GHG pathways. Enverus expects the RSG market will double in the coming year to 20 Bcf.

Global emissions alignment is most notable in the energy industry’s response to the ESG conversation over the last year. To qualify for RSG certifications, producers are retrofitting with new equipment that tracks GHG emissions and aligns with the industry’s hyperfocus on Scope 1 reduction.

Leading indicators of emissions improvement can be seen in corporate reports from energy companies, most of which have an explicit ESG mention. Growing support for ESG is also evidenced by budget line items that are allocated to emissions reduction. Energy companies are now spending tens of millions to reduce 1 million metric tons of CO2, which is equivalent to approximately $10 of various abatement costs per ton, or about one voluntary credit in today’s market.

No doubt, there is global alignment on reducing oilfield GHG emissions that is starkly juxtaposed with a revitalized and growing understanding that hydrocarbons are still crucial to our way of life as evidenced by strong global demand and record high commodity pricing. The focus is shifting away from an all-or-nothing energy transition to renewables to one of maintaining hydrocarbons’ crucial status in a broader energy mix. As such, the focus is now on rapid supply chain optimization, especially as many countries look to replace Russian oil and natural gas.

In today’s market, energy companies that take the right steps will be rewarded by Wall Street as long as investors have the justification to return capital to the best-in-class operators based on free cash flow, shareholder value and environmental stewardship.

Energy companies and market participants need reliable ESG data to track and meet emissions goals, ensure sound capital allocation and de-risk decisions. Until now, there has been a lack of clarity and universal standards regarding emissions data, limiting analysis and timely decision making.

With a focus on improving ESG data resolution as public data sets, direct-measure data and new technologies come online, Enverus ESG Analytics reduces ambiguity and clarifies oilfield emissions. ESG Analytics pulls in all the best available data, then standardizes and transforms it into useful layers within PRISM. Users can then easily incorporate analytics-ready ESG data into powerful workflows to pinpoint opportunities and risks in context with other PRISM workflows and category-leading Enverus data sets.

Source | Enverus

ESG Analytics: What’s on the horizon?

ESG Analytics is evolving alongside today’s industry and ESG focus. Enverus continues to stay several steps ahead of the trends and technologies that are influencing the market.

Several advancements are coming soon to ESG Analytics, including carbon capture breakeven, a facilities-level emissions data set and ESG events that will combine direct-measure sources with public GHG data.

More than oil and gas, ESG Analytics covers all emissions in the energy sector and extends beyond emissions. Water stewardship is an increasing focus for the environmental dimension of ESG.

ESG Analytics is not just focused on the E in ESG; our data and analytics platform also provide a growing wealth of data for social and governance. This is especially important as socially responsible sources of hydrocarbons open a new front in the market.

Equipped with ESG Analytics and PRISM’s cloud-based workflows, teams gain clear visibility into ESG with intuitive technology that enables you to interrogate data and get rapid answers. Reliable, decision-ready analytics are just a few clicks away, powering unmatched ESG insights that enable you to confidently pinpoint opportunities and de-risk portfolios.

You can learn more about ESG analytics here.

Coal Trips, Congestion Hits: Taking a Look at Blessing – Pavlov Congestion

With the recent heat in Texas, you may have noticed pockets of congestion which result in large price spikes, especially along the coast.

But is the heat the only cause for the congestion? Are there other factors at play? To make better forecasts and confident trades, we need to get a comprehensive understanding of the causes of congestion.

To do so, let’s break down the Blessing-Pavlov constraint with our near real-time generation and congestion monitoring tool, MUSE.

The image below shows the MUSE constraint breakdown of Blessing-Pavlov flo SSTPESP8 over the last 15 days. The top chart displays the constraint flows (green line) and binding hours for RT and DA (red and purple shading, respectively).

First, we used MUSE to look at the impact of any transmission outages. One thing that jumps out quickly is an outage that reduced flows over the weekend. Otherwise there doesn’t appear to be a large impact from transmission outages.

Next, we looked at the impact by fuel type at various aggregations. Looking at the zonal breakdown, we can see that south wind was the top impact at the fuel/zone level. Also, there is the negative or relieving impact from coast weather zone coal. Why is this important? News came out early this week of a fire at a Houston-area coal plant, which led to the unit being taken offline.

Finally, we looked at the load impact on this constraint. Immediately, it is apparent that the coast weather zone load plays an important role in the Blessing congestion.

In just a few minutes, we’re able to see multiple drivers for the Blessing-Pavlov constraint with a quick click through MUSE.

Do you have other constraints you would like to analyze? Want to see how MUSE could help you make faster, more confident decisions? Let us help you be the first to know exactly why new constraints bind. Get started today

Experts Update LNG Demand Growth, Global Oil Demand, EV Adoption and Impact From US SPR Drawdown

Calgary, Alberta (May 11, 2022) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released a trio of reports that update their long-term LNG demand growth, near-term impacts to global oil demand and electric vehicle adoption, as well as the impact of the United States’ strategic petroleum (SPR) draw down in the aftermath of Russia’s invasion of Ukraine.

These three distinct reports, each with unique takeaways, factor in the global energy restructuring taking place and increasingly tighter natural gas and oil supply and demand balances as the western world weighs the possibility of energy sanctions on Russia.

Statement & key takeaways from Long-Term North American LNG Demand Growth | Ukraine War Prompts Surge in Offtake Commitment:

“Russia’s invasion of Ukraine sparked a wave of LNG deals as buyers tried to lock up supply from North American projects. Enverus estimates buyers in March signed up for 19 million tons annually of LNG, nearly equaling the total of deals inked last year. The tightness in global markets changes the outlook significantly for the next tier of projects and less commercially advanced projects likely benefit the most from the current market environment.”

— Al Salazar, Senior Vice President, Enverus Intelligence Research

  • Russia’s invasion of Ukraine and EU certification of low emissions LNG as energy transition option exacerbated the call on LNG with offtakers signing ~19 MMtpa of offtake deals for North American LNG after war and more than 80% secured in March, a record for offtake commitments.
  • The onstream U.S export facilities are fully utilized and have limited ability to add capacity. The only incremental U.S. LNG export capacity this year comes from the remaining trains (~0.9 Bcf/d) at Calcasieu Pass or debottlenecking of existing facilities. NFE targets a 1Q23 in-service date for its 2.8 MMtpa Fast LNG project, ~1.2 Bcf/d of LNG feedgas demand is anticipated to be added relative to March volumes.
  • Plaquemines, Corpus Christi Stage 3 and Woodfibre altogether will add ~32.6 MMtpa of LNG export capacity (~4.3 Bcf/d) by 2025. We now expect U.S. feedgas demand to increase to ~23.5 Bcf/d in 2027. Global tailwinds add ~2 Bcf/d to our March outlook.

Statement & key takeaways from Oil Demand Update | Ukraine, Inflation Headwinds:

“The last time we experienced 3.6% global GDP growth with $100 oil was in 2014, when global oil demand grew by 1.3 MMbbl/d Y/Y. Today, under similar conditions, we are forecasting 1.65 MMbbl/d Y/Y growth this year, which is bearish relative to projections from the IEA and EIA. U.S. oil demand remains steady with little indication that high prices are eroding consumption yet. It appears that drawing oil from the strategic petroleum reserve at a rate of ~0.55 MMbbl/d over the past few weeks has been effective at keeping prices in check.”

— Chetan Sharma, Senior Associate, Enverus Intelligence Research

  • Enverus Intelligence Research cut sharply its oil demand growth forecast for 2022 to 1.65 MMbbl/d as higher oil prices damped consumption and the Ukraine war drives other commodity prices higher.
  • The timing of peak oil demand is less clear. On the one hand, higher oil prices and security of supply concerns will advance the transition to renewables. But policymakers in the near term may also choose to extend the life of coal and other carbon-intensive hydrocarbons as part of a plan to address surging energy prices.

 Statement & key takeaways from PetroLogic | The Biden Band-Aid:

“Had it not been for Joe Biden’s Band-Aid of withdrawals from the Strategic Petroleum Reserve, Russian supply outages and rising demand would have kept balances tight and stocks drawing through the remainder of the year. Aside from the oil being released from the Strategic Petroleum Reserve, U.S. oil production growth will help ease tightness, even if delivering that growth is challenged by oil field constraints such as limited rig crews.”

— Bill Farren-Price, Director, Enverus Intelligence Research

  • Enverus Intelligence Research expects Brent to remain comfortably above $100 in 2022.
  • Last month, Enverus Intelligence Research halved its 2022 forecast for oil demand growth to 1.5 MMbbl/d from 3 MMbbl/d prior to Russia’s invasion of Ukraine. Given the recovery in U.S. air traffic this year and steady gasoline consumption, we nudged up our forecast to 1.65 MMbbl/d Y/Y.
  • Baseline revisions to U.S. supply mean lower outright production despite the upgrade in growth this year to 1.2 MMbbl/d exit-to-exit in 2022 with downside risk given oilfield services constraints.
  • The precise rate at which Russian oil is sanctioned remains key as does the pace of OPEC’s ramp in supply as it nears capacity limits.

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.

Podcast Review: Green Trends and Looking for Winners and Losers

Bill Farren-Price and Morgan Kwan, hosts of Energy Levelized, sit down with Ryan Luther, senior vice president of Enverus’ Power & Renewables Intelligence research team. The energy transition is gaining investment momentum in some areas more than others, and the hosts chat with Ryan about the impacts of “greenflation” and the investment opportunities in this growing sector.

Green energy is considered a vital part of driving, or accelerating, the transition toward net-zero over the next few years. There is, however, some uncertainty in delivering these targets and maintaining momentum on the pathway towards carbon mitigation. Luther believes green energy will inevitably play a significant role, particularly when discussing wind and solar.

“There have been significant commitments worldwide within both industries, but intermittency remains a challenge and it’s unlikely we can reach this net-zero goal by relying on wind and solar alone,” explains Luther.

Other energy sources like nuclear and storage will be critical in following the pathway to eliminating carbon emissions. According to Luther, we have recently experienced an attitude shift in moving away from high carbon-intensive industries toward renewable energy. With the current energy crisis in Europe, we are beginning to experience a radical change, with a decline in dependency on sectors like natural gas. There has been a notable change in the nuclear industry, too. Germany put a halt to nuclear energy after the events in Fukushima, which created a considerable shift in the tone. We are, however, beginning to see a more positive response to nuclear as a carbon-free alternative.

Intermittency, however, continues to be a challenge in the renewables industry. In the discussion, Kwan asks whether we may move closer to a storage solution for green technologies capable of resolving the intermittency issue and enabling us to store some of the power from the energy mix. According to Luther, planned projects in the U.S. could allow some higher carbon energy sources to be retired. Luther believes that we will have to rely on storage more in the future, but this is very dependent on driving down costs. Businesses are continuously exploring new technology and developing batteries capable of reducing prices.

From an investment perspective, Farren-Price questions whether Enverus has noticed a shift in the flow of investments toward green energy and if inflation is impacting investment decisions within the green energy space.

According to Luther, there have been significant changes, especially in the private equity scene. There has been a notable shift in investments toward renewable energy and fuels. The inflation impact has had a significant effect on green energy. The returns on these projects are relatively small and require leveraged finance and a low interest rate to enable better returns on investment in green technologies.

“Low interest rates will inevitably drive investment into this market, but, as pointed out, these rates are continuing to rise. The negative implications of this increase are offset to some extent by the commitment to increase spending and transforming policies to enable further investment and higher returns,” explains Luther.

Governments continue to introduce fiscal policies that enable additional green technology to be created but can cause other assets to be retired before reaching their end of life. When this happens, the companies with retired assets still need to get value. Retired assets then translate into increased costs for the power customer. This process represents one part of the inflation challenge. The other side, which has an equal impact, is the volume of materials required to develop the infrastructure — and this includes battery technology. Transmission is one way to support the storage or intermittency factor, but transmission requires significant quantities of copper.

Wind turbines, for example, require considerable amounts of copper, while solar panels need rare earth minerals obtained via mining activities. “There is a major movement toward green technologies in western economies with plans to expand considerably. The electric vehicle market is a fine example of an accelerated green market, but this rate of progress is adding massive pressure on raw materials,” explains Luther.

The shortages of rare minerals have been part of the supply chain headwinds experienced during the pandemic recovery period of the economy. Inflation has created several headwinds, and the question now is whether the government is prepared to facilitate the investment needed for the industry and whether we will see more subsidies within the green technology market.

Luther believes we will experience growth in areas that currently lack subsidies. Subsidies in the U.S. are being pulled back in some cases as these technologies become more cost competitive. Many countries, however, have a ways to go before transitioning and reaching a point where subsidies are applied to make that investment happen. In terms of the oil and gas industry, inflation doesn’t necessarily impact the cost to the producer, especially bearing in mind the oil and gas prices we have today. Lots of steel is used for drilling wells but the margins on those businesses are based on existing prices being much higher than renewable energy. There has been a big trend toward reducing these costs and forcing margins to be relatively minimal.

During their discussion, Farren-Price asks about the new energy space and the range of different renewable and power projects opening up to the investment sector. He questions whether there is an area that is particularly exciting to Luther and how he would intend to invest today. Luther explains that they are exploring the transition of the green economy and believes there are exciting areas for investment. There are areas with additional new data sets that he believes are yet to be taken advantage of. He mentions the work done on the power generation and storage industry, highlighting the specific research on electric vehicle charging infrastructure and the abundance of unique data to explore market variations.

Green hydrogen — an overhyped Industry?

Farren-Price explains that some industries may be somewhat overhyped. For example, a year or so ago, hydrogen received lots of attention but has since quieted down. He queries whether this is because of a lack of available technology, or a challenge of higher costs compared to other technologies.

“From a share price return, many of these new energy growth sectors like hydrogen, storage or residential solar installation have been affected, but it’s not necessarily that the technology isn’t playing out as expected,” explains Luther. “It has more to do with asset prices creating higher discount rates and very long-dated growth assets.”

Luther refers to some of the work at their conference exploring market expectations, growth rates and the whole total addressable market and how they expect this to grow. In December, the stock prices for many of these sectors were not high enough to reflect that kind of growth. He anticipates a lot of growth over the next 10 to 15 years and believes that growth remains underappreciated within these sectors. In terms of hydrogen, Luther agrees that it may be a little overhyped. Significant policy changes, particularly in Europe, will influence the demand for emerging energy resources. While it may not necessarily be as cost competitive as something like electric vehicles, it is something that will continue developing in the future.

The rise of electric vehicles

Kwan concludes the discussion by asking about the existing technologies on the market and which one stands out. Exploring the currently available technologies and mass adoption, Luther highlights electric vehicles as a prominent industry, particularly new models with lower maintenance and higher ranges, making them very competitive compared to conventionally powered models. Luther stresses the challenge with batteries and the inflation of materials that will create higher costs for the customer. The scale of innovation and investment can enable businesses to overcome these challenges and accelerate further within the electric vehicle manufacturing and charging space. The transition to green energy will be significant for the wind and solar industries but be slightly more challenging to get high returns as these areas are more utility focused.

You can listen to the latest episode of Energy Levelized here, and find previous episodes here.

Information contained in this blog is based on a podcast recording and is provided for information purposes only and is not to be used or considered as investment advice or a recommendation or offer to buy or sell any securities or other financial instruments.

 

Oil Price Forecasting and Geopolitical Risk

Calgary, Alberta (May 3, 2022) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has introduced a new geopolitical risk index built to gauge market sentiment and better understand oil price movements beyond fundamental price forecasting.

“By quantifying the geopolitical premium, we estimate how much of a risk differential is warranted versus the fundamental price forecast,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research. “The current geopolitical premium has eroded materially as Brent appears to have settled around the $100/bbl mark — a value that we feel is fundamentally justified. The geopolitical premium reached its peak when Russia invaded Ukraine and Brent touched $139/bbl.”

Key takeaways from the report:

  • EIR can now project not just global oil supply, demand and stocks, but also explain the spread in forecast oil prices from our fundamental outlook based on a sentiment score generated by a proprietary algorithm fed by open-source keywords.
  • The new index enables us to estimate geopolitical premium or discount in oil prices. The index our geopolitical index can be useful for market participants such as oil option traders, oil price hedgers and geopolitical observers.
  • Looking back through history, we can see those events, such as the Arab Spring tensions, resulted in $10-$15/bbl price premium in 2012-2013, drone attacks at Saudi’s Abqaiq-Khurais facility led to a premium of about $10/bbl in 2019, and an anticipated demand rebound from COVID-19 equated to nearly $20/bbl.

Graph of Oil Price Forecasting Foundation

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.

Still Managing Operations On Paper? You’re Doing It Wrong

Keeping projects running on time is critical for optimal performance. While tracking these projects for cost management purposes isn’t the exciting part of an operating venture, documenting the work correctly is critical to ensure budgets and timelines are met. 

We will wager if you look at this documentation process in your own operations, you’re likely to find bottlenecks that slow your process efficiency. Common challenges include inaccurate coding, insufficient documentation, incompatible systems and redundant, labor-intensive processes. These lead to a lack of visibility into operational spend and wasted time and resources.  

Fear not! These common bottlenecks can be easily fixed by digitalizing all or part of your source-to-pay process. These upgrades will bring significant value to your business. Examples include:  

  • Lowered processing overhead and G&A spend. 
  • Overbilling prevention. 
  • Reduced compliance violations and rogue spend.
  • Access to spend reports for better budgeting and forecasting.
  • Improved collaboration and relationships with suppliers.

Here are five different ways you can digitalize and automate processes to save your staff’s valuable time.   

1. Digitalize invoices for shorter invoice cycles 

 

Digitalizing your invoices is the first major step that will help you become more efficient, both in time and cost. Also, as your organization grows, digitalization and automation sets you up to easily scale with minimal effort. Processing a paper invoice costs between $15-$30, while digital invoices cost between $3-$6. While digitalization is beneficial for an oil and gas business of any size, the benefits are amplified for small- and medium- sized operations because automation allows these businesses to manage large invoice volumes without a large internal staff.  

Stephanie Brittain, AP manager at TEP Barnett says, “With OpenInvoice, we process 10,000 — 15,000 invoices each month with a staff of two.”

Watch the video below to learn how the digitalization of invoices makes it possible for TEP Barnett to manage its high invoice volume without a large internal AP team.

Digital invoices are also easier to track. If you use an AP management system like OpenInvoice, the Enverus AP solution that operates on a connected network of oil and gas buyers and suppliers, you can communicate with your suppliers within the platform for better status tracking and faster dispute resolution, ultimately shortening invoice cycles. If you shorten your invoice cycles enough, you could negotiate more early pay discounts, saving your company even more money.  

When choosing a digital invoicing solution, there are two things to look for: 

  • Connected to a network Ideally, your invoice solution operates using a network of connected suppliers. The larger the community of providers in oil and gas, the better. This makes collaboration and communication much easier and faster.  
  • Flexible and customizable Every business wants to grow, so while you may be considering digitalizing invoices only at this time, it’s wise to plan for how your technology can scale with your business. Ideally, you want a SaaS solution with customizable workflows to fit your business processes. With SaaS, updates and support are typically included in the license fee, so you save money by eliminating support and maintenance fees. All system maintenance work is done by the provider, freeing up IT resources. It should also integrate with various financial and ERP systems 

2. Automate price compliance for improved spend management 

 

Reducing opex and optimizing capex are top of mind for energy businesses across the board. Managing digital price books is a way to support more automation and improve overall cost control through price compliance enforcement. With digital price books, you can empower your suppliers to keep the price book updated before your approval, eliminating overhead.  

Discovery Natural Resources leverages Enverus digital PriceBook with OpenInvoice to systematically enforce compliance while reducing time spent manually reviewing alerts. Discovery estimates a monthly time savings of 12 hours per week by not manually enforcing compliance. Also, vendors have been trained in PriceBook collaboration, reducing the amount of time Discovery spends maintaining more than 120 active price books. Discovery has gone from updating 10 price items per day to less than 10 per week, an estimated savings of eight hours a month.  

3. Auto-approve invoices 

 

Adding automation, removing extra steps, modifying the sequence of steps or changing who performs the steps in these specific areas could make your entire workflow faster and more efficient.  

After examining its OpenInvoice data, one large Permian operator realized invoice approvals were creating a bottleneck in its AP process. Often, in this approval process, the same person that approves the field ticket must also approve the invoice, creating a double touch. After analyzing the data, the company realized approvers averaged eight seconds approving low-value invoices. This indicated the approvers weren’t properly reviewing the invoices due to the volume of low-value invoices requiring approval.  

The company decided to implement invoice auto-approvals.  If the field ticket and the invoice contain the same information, the approver doesn’t need to review the invoice. The operator has since fully automated 40% of its invoice approvals and partially automated between 20-30%.  

This same operator took this another step further, realizing more time savings, using OpenTicket, the Enverus digital field ticket solution, integrated with WellView. The field supervisor enters the cost estimation in the morning report and sends it to the office as part of the daily operation’s routine. The information is then exported into OpenTicket. If the ticket submitted by the supplier matches the morning report information, it is automatically approved. Suppliers can submit their invoices faster and it removes manual work from drilling and completion engineers. Everyone is happy.

About the automation the senior lead accountant at the operator said, “In Q2 2021, we took a daily report from WellView and started matching it up manually against our OpenTicket data with the intention to help our approvers quickly identify which exceptions they needed to review. As soon as we turned on auto-approval, we were able to match 80% of tickets, driving our average approval time from 15 to less than four days.”  

If you were able to match 80% of your ticket volume, we suspect your drilling and completion engineers will thank you. 

Automatic invoice approvals, or touchless invoicing, is just one example of a process improvement opportunity that helps energy companies reduce their overall invoice processing cycle times, which leads to more early pay discounts. By removing repetitive, manual work through process improvement, your team can focus more on high-value activities like cost analysis, forecasting and budget control.  

4. Leverage mobile tracking technology to validate work faster 

 

Workers often work in remote areas or at unsupervised job sites, so validating these jobs can be tricky. New advances in technology allow these workers to track their routes using their own mobile devices or those provided by their employer.   

Mobile devices use GPS coordinates and geofence proximities to automatically capture details for suppliers related to job location and times. OpenTicket Mobile, the Enverus mobile app, even provides detailed views of routes and hours spent on the entire job on the work ticket.  

Ticket details that match mobile data provided by the supplier are automatically validated. Alerts signal approvers if the number of hours or service locations entered on the ticket don’t align with GPS and geofencing records. This allows you to switch to a manage-by-exception model for more time savings. 

This use of mobile technology is particularly valuable for LOE operations. Your operations teams in the field can turn more focus on maximizing production and managing job safety. Suppliers can leverage IoT technology to accurately track the work performed so they can focus on the work at hand.

NEW! OpenTicket Mobile uses GPS and geofencing technology to track job time and routes, making work validation much easier, especially at unmanned locations.

5. Digitalize the ordering process

 

If you want to maximize spend and time efficiency, managing the order-receive-invoice process digitally in one platform ensures consistency for cost objects and GL codes. This means orders can be referenced to field tickets and invoices, saving significant time with automated compliance checks and three-way matches. Also, automated three-way matching allows you to automate invoice payments without manual intervention. 

When considering solution options, it’s important to remember that energy is unique as 80% of the industry’s spend is on services, so the scope and quantity of deliverables aren’t known until after work is performed. Procurement solutions that work on a discrete PO model only make processing services spend extremely painful and time-consuming. The best solution is one that is built specifically for energy workflows. Discrete POs are great for managing goods procurement, services require more flexibility. One example of this is Grayson Mill.    

Grayson Mill Energy, an operator with assets in the Williston and Powder River Basins, digitalized their procure-to-pay process with the Enverus source-to-pay solution to automate the three-way match. Due to the many services the company sources, purchase orders were not always fit for purpose, but are often necessary for supply chain and accounting governance.  

Mary Atkinson, director of Supply Chain at Grayson Mill said, “One of the things that I’ve found is while the three-way match is an easy concept, it’s very hard to execute. Now we have all the information: your cost centers, chart of accounts, your supplier information, your well ID, your AFE number, etc. That information is in the system already, and it all matches.  

When you have a purchase order with approval, with coding upfront, it’s much easier to validate as a goods receipt. Then when a supplier submits an invoice, there is your match right there, all in the same system with the same information.”  

Operations teams benefit from this digital workflow because by linking purchases and call-outs to coding and AFE line items, they can track against estimates before a field ticket or shipment is received,  sometimes well in advance. 

This advanced insight into spend, coupled with automated compliance checks and workflow automation, provides greater insight and control over the procurement process, saves time and significantly improves spend management on projects. 

We’ve shown you different options on how you can accelerate and improve operations. To find opportunities in your own company, first, evaluate your workflows. Are there specific areas where there are bottlenecks? Due to high volumes, are there long ticket approval times, long payment cycles, or delayed invoice approvals?  

Once you begin your own audit, you’ll likely uncover ideas. You’ll want to create a list of potential initiatives, and do a strategic analysis by determining the estimated time and cost of each initiative compared to the impact it will have on your organization. Based on this analysis, you can determine what makes sense to implement first. It doesn’t have to be an all-or-nothing approach. In fact, many customers that use Enverus solutions to streamline their source-to-pay processes tackle implementation in a phased approach.

The two important things to remember are: 

  1. It’s not all or nothing  Taking just one of these steps, whether it’s digitalizing your invoices or your entire source-to-pay process, will improve your business’ efficiency.
  2. Incremental digitalization amplifies value — If you choose to digitalize your processes over time, each addition will only further improve operating efficiency and cost management, providing you demonstrable results that position your company as an operation worthy of investment. 

Ready to level up your operations with automation? Fill out the form below to speak to one of our experts!

Enverus’ MineraliQ Offers Greater Transparency, Digital Management for Individual Mineral Owners

Austin, Texas (April 19, 2022) – Enverus, the leading energy SaaS company, has released MineraliQ, a free product that empowers mineral owners with a simple, easy-to-use portfolio management tool. These individual or family-owned mineral owners typically have ties to a small number of wells and royalty income under $100,000 annually. MineraliQ brings together everything from production data and well locations to post-production costs and expenses, providing a perspective on mineral assets rarely available to anyone other than big investors. This first-of-a-kind product is also the first consumer-focused product Enverus has released to the public.

With the price of oil above $100/bbl, calls for increased U.S. energy production continue to grow. Many economists point to a great transfer of wealth with 10,000 Americans reaching age 65 every day and facing retirement. This population controls an estimated $59 trillion in wealth that is being passed down to their children and heirs. In addition to a population and economic shift, this generational “silver wave” will likely pose a significant information gap and history of investments for many of the 12 million mineral owners receiving $50 billion in royalties each year. Unfortunately, tools to access, monitor and effectively manage these interests are severely limited, with small mineral owners often suffering from limited information to properly manage their assets.

“Individual or family-owned mineral owners often rely on mailed royalty checks as a key source of income and information. In time, that valuable information can be lost, overlooked or misunderstood. By tailoring this product to consumers and creating an online tool that is as easy to use as popular money management tools that many consumers use today to track budgets or investments, we’re providing the same transparency that large mineral owners and royalty companies take for granted. It gives non-institutional mineral owners a one-stop, overall view of their mineral portfolio, making it easier to manage their assets,” said Lindsey Artman, vice president of product management for Enverus.

Once an account is created, an owner enters their information to connect them to their mineral assets. Then MineraliQ automatically links revenue statement details to wells from the Enverus database, providing information in a format that’s well-organized and easy to digest. The product includes an interactive map displaying well locations and nearby oilfield activity, a feature of interest to the many mineral owners who are physically removed from their mineral interests and have difficulty keeping track of drilling and completion activities taking place around their property. Royalty mailing data confirms that mineral owners with a stake in the Permian’s vast oil and gas patch often live elsewhere, like Jacksonville, FL, Tucson and Phoenix, AZ, or San Francisco and Los Angeles, CA. Enverus’ MineraliQ will serve as both a financial management tool and education center, tackling common questions on topics like post-production charges, how to read a check stub, mineral leasing options and useful information for selling mineral interests.

“Many royalty owners find themselves using paper spreadsheets to track their oil and gas interests, due to lack of a better system. MineraliQ allows them to digitize their own financial information and enables options that may have previously been seen as out of reach,” noted Phillip Dunning, director of product management for Enverus.

Visit MineraliQ.com to learn more.

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.

 

US Upstream M&A Opens Strong in 2022

Austin, Texas (April 13, 2022) — Enverus, the leading energy data analytics and SaaS technology company, is releasing its summary of 1Q22 M&A activity. As the M&A market marched into the new year, $14 billion in deals were announced during the first quarter of 2022. The $6 billion transacted in January 2022 was the strongest M&A market launch in five years. However, the last significant transaction occurred in early March before a spike in commodity prices temporarily halted activity.

“All the factors that kept upstream deals resilient in 2021 carried over into the new year,” said Andrew Dittmar, director at Enverus. “That included a need for inventory by public companies, ready private sellers and favorable pricing. However, the volatility in energy prices caused by Russia’s invasion of Ukraine stalled nearly all deals in March.”

Table showing top five U.S. upstream deals of Q1 2022

Overall, deals were most active in the Rockies region (more than 50% of total 1Q22 value) driven particularly by buyer interest in North Dakota’s Williston Basin and Colorado’s DJ Basin. The always consistent Permian Basin captured a bit under 30% of deal value and one big deal in the Marcellus drove the roughly 20% of value allocated to the Eastern region. A lack of deals in the previously active Haynesville and a continued slow pace in the Eagle Ford meant transactions in Ark-La-Tex and the Gulf Coast were sparse.

Private company exits remained a primary theme accounting for four of the five largest deals of the quarter. Chesapeake continued its buildout of core gas-focused inventory in the northeast Marcellus by acquiring private Chief Oil & Gas and associated Tug Hill interests in a $2.6 billion transaction. While that deal was more focused on building inventory runway and Chesapeake was willing to pay for it, other buyers like Earthstone Energy in the Midland Basin and PDC Energy in the DJ Basin sought acquisitions that could be purchased solely for the value of existing production while still adding future drilling locations.

“Buyers have been cautious about raising the offer price in deals to match the rise in commodity prices. Even before the latest bout of volatility, upstream assets were pricing cheaply on most metrics relative to historical averages,” Dittmar said. “The quick surge in commodity prices that accompanied the war in Ukraine has particularly blown out the gap between what buyers are willing to pay and sellers expect to get. And because they are so far apart, we have seen a pause in upstream deals.”

One of the deal types less susceptible to commodity pricing risk is the so-called corporate mergers of equals. In these mergers, two public companies of similar size combine with little to no premium paid to the acquired company. These types of deals, targeted at creating a larger and hopefully more stable platform for investors, were more common in the early innings of the post-COVID market. The combination of Oasis Petroleum and Whiting Petroleum in the Bakken in early March was a return to this type of transaction and the first public-public company merger since August 2021. The two mid-sized producers are likely hopeful that a larger company will give them the scale to better pursue further consolidation and add inventory in the maturing Bakken.

“There should still be plenty of upstream deals to be had,” Dittmar said. “Those can come from further private exits, non-core sales by the big producers like ConocoPhillips and ExxonMobil, or the remaining smaller E&Ps finding merger partners. We just need some stability in commodity pricing and an acquisition or two to benchmark deals to reignite what should be an active market.”

Members of the media can contact Jon Haubert to request a copy of the full report or 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.

 

Global Oil Supply, Demand & Prices Become Clear Despite the Fog of War

Calgary, Alberta (April 4, 2022) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest PetroLogic report, The Fog of War. In it, EIR assesses the outlook for oil supply amid sanctions on Russian energy and what that could mean for prices in the near term.

“With oil prices persistently high since Russia’s late February invasion of Ukraine, we have pared by more than 50% of our expectations for demand growth this year. We now expect global oil demand to grow about 1.5 MMbbl/d Y/Y in 2022, subject to further revision as GDP forecasts are adjusted lower,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research. “Faced with technical challenges and potential reputational damage, European buyers are avoiding Russian cargoes, which were down by ~1.5 MMbbl/d in early March.”

Key takeaways from the report:

  • EIR now project stock draws through 2022 until Q4, which is mostly in balance as demand growth eases, reflecting lower supply and easing demand as higher prices bite. Our Brent price forecast is now anchored above $100/bbl, reflecting tighter balances on the back of the Ukraine war.
  • The March surge in Brent prices towards $140 brings a focus onto the risks to oil demand. EIR has halved its forecast for oil demand growth in 2022 and GDP downgrades will erode that view further in the coming month.

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.

5 Ways Attending the EVOLVE Conference Will Elevate Your Energy Business Strategy

The energy industry is feeling pressure from all sides — from a growing demand for energy diversification and a focus on production levels fueled by geopolitical events, to price inflation driving up costs while investors stand firm on their demand for capital discipline and more free cash flow. The stakes have never been higher than right now.

This year’s EVOLVE Conference, hosted by Enverus, takes place April 25-27 and offers the rare opportunity to immerse yourself in three days of knowledge sharing, discussions and exposure to new technologies that will equip you with new ideas on how your business can plan for change, exceed investors’ expectations, lower opex and streamline operations.

Here are the top five reasons you should attend EVOLVE 2022:

1. Learn new ways to de-risk investment decisions and optimize capital to maximize asset ROI

While M&A will remain an important part of overall business strategy for many, gone are the days of land rush activity that occurred between 2010-2018. Market maturation combined with constrained capital has caused operators to shift their focus to developing and optimizing existing assets.

Maximizing returns on these assets requires advanced analytics and current market intelligence so you can de-risk decisions and optimize every step of the asset lifecycle: evaluation, purchase, initial design, development, execution and monitoring. The EVOLVE agenda includes several sessions that explore methods and new ideas to apply to your own asset development and optimization strategy. Sessions such as “Get Ahead of Price Changes With Should-Cost Modeling” and “Price Inflation’s Impact on Economic Activity,” provide insight and ideas to counteract rising inflation in the oilfield and improve capital management. Other sessions, such as “The Secret Sauce: Ingredients for Upstream Asset Development, Optimize Your Asset by Integrating Proprietary Data” and “Measuring Out the Last Leg,” address new solutions to optimize other phases of the asset lifecycle. At EVOLVE, you will find solutions for better asset evaluation, design, development, operations execution and optimization.

2. Expand your knowledge, no matter where you play in the energy space

Our industry is an ecosystem of businesses that combine their expertise, working together to extract resources from the ground, harness the power of wind and water or capture sunlight to bring affordable energy to the world. EVOLVE offers informational sessions that can help you develop your specific expertise further, whether you manage a minerals portfolio, run drilling and completions, or transport oil and gas to refineries.

OFS and midstream professionals curious about their role in the power and renewables landscape can check out “Energy Evolution for All: OFS & Midstream in Power & Renewables.” Other sessions, such as “A Conversation: The Future With Storage, Alternative Ways To Monitor Field Activity” and “Mineral Valuations: An Analytics-Intensive Approach,” are just a few examples of how EVOLVE spans the energy value chain.

3. Gain in-depth understanding of how ESG and renewables will shape the future of energy

EVOLVE offers numerous sessions on the topic that is top of mind for everyone in our industry. In the session “Four Forces of the Energy Evolution,” our analysts will discuss how political, consumer, investor and microeconomics are driving the energy evolution and provide an overview of this complex topic, so you’ll be prepared to navigate the future of renewables. Other sessions build on this critical topic, including the two-part series “Responsible Sourcing: ESG & Risk in Supplier Sourcing” and “From RFx to Contract Award, Renewable Project Finance: What Matters?,” “Picking the Winners: The Renewable Project Pipeline and Energy Evolution for All: OFS and Midstream in Power and Renewables. “

4. Get the knowledge you need to plan your path forward

Several market forces have converged in the energy industry at one time. To create a sustainable business strategy that paves the way for long-term success, it is critical that energy professionals understand the implications of these forces on our industry now and in the future.  Sessions led by Enverus analysts and other industry thought leaders will paint a picture of the road ahead, so you better understand how to respond. For example, the session, “Global Energy Perspective 2022 – How Energy Demand Will Evolve to 2050,” led by Luciano Di Fiori, a partner at McKinsey & Company, will provide the latest long-term energy outlook that examines recovery from COVID-19 and the long-term effects triggered the perfect storm of shifts in technology, regulation changes, evolving consumer preferences and investor sentiment.

5. You don’t know what you don’t know … until you attend EVOLVE

There are forces influencing our industry beyond geopolitics and investors that you should know about but don’t know about … yet. This is another reason to attend EVOLVE.

We’ll dig into these questions:

  • How will satellite technology change how we track global emissions?
  • What actually changed after the unprecedented winter storm that occurred deep in the heart of Texas? How will these changes impact power markets in the future?
  • Can we eliminate both energy poverty and net carbon emissions?

Sessions including “Eyes in the Sky: How Satellite Technology Will Change the Game, ERCOT: What has Changed?” and “Super-Spiked: ESG 2.0 & Energy Transition Framework” are just some examples of valuable content featured at EVOLVE 2022 that will provide you with new knowledge and perspectives.

So, you shouldn’t be asking yourself, “Why should I attend EVOLVE?” The real question is, “Why wouldn’t I attend EVOLVE?”

We hope you can join us for this once-a-year opportunity where we bring together our network of experts to share critical energy insights. After two years of powering the world while maintaining physical distance, EVOLVE provides a chance for us to enjoy each other’s company face-to-face, to reconnect with peers, trade knowledge and learn. Ultimately, as we face the road ahead, we know we are better and stronger together.

Click here to view EVOLVE’s full agenda and register.