Energy Market Themes To Watch

Oil fundamentals still lead, growth in energy transition-related investment opportunities on the rise

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byEnverus

Calgary, Alberta (January 11, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its list of themes it expects will shape energy markets in 2023.

“We’re seeing divergent opportunities across commodity and power markets this year. Fundamentals for oil look strong in 2023, we expect returning to $100/bbl, while natural gas prices are anticipated to remain weak around $3.50/MMBtu in North America given limited expected U.S. export growth,” said Dane Gregoris, a managing director at EIR and report author. 

Geography will continue to play a deciding factor and EIR expects oil growth around Deepwater opportunities in Latin America by the middle of this decade, as well as expansion in the Permian, Haynesville and Montney.

“In addition, we expect energy transition-related investments to continue to grow on the back of the Inflation Reduction Act in the U.S. and anticipate other countries will look to compete with accommodative American policy. Policy, technology and profits will be the deciding factors as more nations follow suite. Carbon capture and sequestration (CCS), renewable natural gas (RNG) and hydrogen will continue to capture industry and investor attention. Emissions scrutiny is likely to take another leap forward as E&Ps respond to the call to produce in more efficient and environmentally sound ways.”

Key takeaways from the report:

  • Enverus expects 1 MMbbl/d of Y/Y global demand growth, half driven by China relaxing COVID-19 restrictions and reopening its economy. Conversely, the combination of modest U.S. supply growth (0.4 MMbbl/d E/E), OPEC intervention and Russian sanctions prevents critical OECD crude, product and SPR inventory builds, leaving the market undersupplied if an anticipated pickup in the global economy materializes in the second half of 2023.
  • Enverus estimates L48 dry gas supply will grow another ~1.5 Bcf/d E/E this year, driven mostly by the Permian. Haynesville production is expected to increase at half last year’s pace based on an anticipated slowdown in activity. Together, our supply projections refill inventory to 3.9 Tcf by October, which we anticipate will push prices to $3.50/MMBtu by summer.
  • We believe the recent energy selloff provides a compelling entry point for investors to add exposure to the sector. This year we believe institutional investors are more likely to continue adding energy exposure on weakness given strong commodity fundamentals and low sector leverage. In this new market regime of higher inflation and interest rates, real asset exposure with high dividends should continue to perform relatively well, in our opinion.

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

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with 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 a foreign investment adviser.

Media Contact: Jon Haubert | 303.396.5996

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