In case you missed it, Enverus virtually hosted EVOLVE, our flagship conference, May 16-17. The event included two full days of presentations, panels and keynotes, distilling the most relevant data and thoughts on the industry today.
Below Andrew Gillick, managing director and energy sector strategist at Enverus Intelligence Research, breaks down four key takeaways from the conference for players in the energy industry.
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All eyes on macro
Some of the best attended presentations focused on the macro, as investors and operators alike are trying to figure out how wrong the curve really is – it’s always wrong, but is it wrong by 10%? 50% or more? and which way? When will we see oil demand peak? Does starving hydrocarbons of investment lead to a faster energy transition or worse energy security? The general consensus suggests long-term oil and gas demand will remain intact, although maybe not robust. Shale will be around for a while but don’t expect returns to improve until commodity prices are higher, as core inventory dwindles. PE is seeing compelling opportunity in second and third tier basins; however, at $70WTI/$3HH, public E&P equities are not all that compelling.
Who has the inventory?
For those interested in oil and gas, the focus was on inventory. Who has it and whose is getting worse? Between US Oil Supply – Twilight in West Texas, Tracking Shale Resource Degradation, and E&P Benchmarking – Separating the Best from the Rest, the team gave clients an excellent view of the remaining potential across basins. Names we liked were PXD, OXY, OVV, CTRA, PR, PDCE, CHRD, AR, RRC, TOU, ARX… although post-merger Monday deals, that might change, CHRD for XOM Bakken, working though the math and CVX for PDCE … fine, that’s an easy one. These Day 1 presentations can be found here in the vault. And if you would still like to see the live presentations you can click here.
Energy transition vs. energy security?
The discussions around energy transition vs energy security were also quite robust (my working thesis is energy transition is actually about energy security as Arjun Murti discussed in our fireside chat). And what turned out to have far more consensus than 12 months ago was something about how we are still going to need these hydrocarbons for many years to come. We heard many times that the energy transition is going to be very expensive, difficult to fund (AKA messy) and would take longer than expected. The debate then turned to, will it be worth it? Should we all just learn how to swim? Ok… no one suggested that was the best path, but swimming is a good life skill. The IRA is extremely uneven/inconsistent from a cost of carbon abatement standpoint and investors are skeptical and unwilling to bet on long-term subsidies. But don’t worry, natural gas is here to stay and consumption in power generation will be flat in the U.S. over the next decade even with a strong renewable build, details here.
Investment opportunities abound as renewable generation costs decline
This conference was not all about why hydrocarbons are still king. The ET train has left the station for better or worse, and whether it’s about the environment or energy security there are and will continue to be lots of great opportunities for profitable investment in the new energy economy. This presentation shows how the cost of renewable generation has declined exponentially over the last decade. Battery costs have declined by a factor of seven over the last 13 years (see here). And this NET Power company seems to be getting a lot of attention as technologies that combine fuels with zero carbon initiatives become uniquely attractive. It was really a sort of coming out party for our Energy Transition Research platform.
More to come on the different ways we evaluate the electron and molecule opportunities, but for now, if you are an Enverus Intelligence subscriber, log in to the vault for the presentations or back to the website conference for the replays. Let us know if you have any questions. Not a subscriber yet? Fill out the form below to get started.
NOTE: The content in this post was originally published in the Morning Energy email series written by Andrew Gillick, managing director and energy sector strategist at Enverus Intelligence Research.
