Enterprise, Oxy plan CO2 project along Texas Gulf Coast

Enterprise, Oxy plan CO2 project along Texas Gulf Coast

MOSCOW (MRC) -- Enterprise Product Partners and Occidental Petroleum plan to forge a carbon dioxide sequestration and transportation system that could sell carbon management services to emitters along the Texas Gulf Coast, they said in a statement, said the company.

They plan to combine the pipeline company’s transportation network with carbon sequestration hubs under development by Oxy, an oil producer expanding into the carbon management business. The idea is to focus initially on capturing emissions along the industrial corridor from Houston to Beaumont and Port Arthur.

“For many years, Enterprise and Oxy have successfully collaborated in developing traditional oil and gas projects," Enterprise co-CEO Jim Teague said, “We are excited to evolve that relationship." Oxy announced plans last month to spend up to USD1 billion on a facility that could remove 500,000 tons of carbon dioxide directly from the air. It would be the world’s largest direct air capture project.

The energy transition is driving interest in carbon capture projects, which are on track to increase tenfold by 2030, Norwegian energy consultancy Rystad Energy said Tuesday. Still, it said the planned influx is not aggressive enough — planned carbon capture capacity falls short of what is needed to meet the International Energy Agency’s net-zero scenario.

We remind, Enterprise Products Operating LLC, a subsidiary of Enterprise Products Partners L.P. (EPD), and Oxy Low Carbon Ventures, LLC (OLCV), a subsidiary of Occidental (OXY), have announced they have executed a letter of intent to work toward a potential carbon dioxide (CO2) transportation and sequestration solution for the Texas Gulf Coast. The joint project would initially be focused on providing services to emitters in the industrial corridors from the greater Houston to Beaumont/Port Arthur areas. The initiative would combine Enterprise’s leadership position in the midstream energy sector with OLCV’s extensive experience in subsurface characterization and CO2 sequestration.
mrchub.com

BP boosts returns as oil refining and trading drive profit beat

BP boosts returns as oil refining and trading drive profit beat

MOSCOW (MRC) -- BP hiked its dividend and accelerated share buybacks to the fastest pace yet after an “exceptional” result in oil refining and trading lifted profits above even the highest expectations, said Houstonchronicle.

The oil and gas industry is boosting returns to shareholders as the cash rolls in, even while the energy crisis triggered by Russia’s invasion of Ukraine threatens the global economy. BP said it expects prices to remain high and highlighted its investments in additional supplies.

“Today’s results show that BP continues to perform while transforming," Chief Executive Officer Bernard Looney said in a statement on Tuesday. The company is “providing the oil and gas the world needs today -- while at the same time investing to accelerate the energy transition."

Following in the footsteps of most of its peers, the London-based company said it will repurchase USD3.5 billion of shares over the next three months, adding to the USD3.8 billion it already bought back in the first half. It also increased its dividend by 10%.

The dividend was increased to 6 cents a share, an improvement from a previous commitment to raise the payout by around 4% annually through to 2025. Net debt fell to USD22.82 billion at the end of the period, down from USD32.7 billion a year ago.

The results showed BP is “delivering across all three key areas: earnings/cash, capital discipline and shareholder distributions,” Redburn analysts wrote in a research note.

BP’s second-quarter adjusted net income was $8.45 billion, the highest since 2008 and comfortably beating even the highest analyst estimate. This wasn’t just driven by high crude and natural gas prices -- the company’s refineries earned strong margins and its oil traders delivered an “exceptional” performance.

The company never discloses how much profit its oil traders generate, but did say that adjusted earnings before interest, taxation, depreciation and amortization for its refining and trading unit was USD3.73 billion, compared with just USD301 million a year ago.

Gas trading fared worse, delivering an “average” result for the quarter, the company said. That in part was a result of a halt to operations at the Freeport liquefied natural gas facility in the US, which will lead to significant reduction in the number of cargoes it expects to receive.

The oil sector’s sky-high profits come at a politically tricky time for an industry accused of profiteering from the fallout from Russian President Vladimir Putin’s aggression, while also failing to invest enough in new drilling. Alongside its earnings statement, BP published an extensive list of investments it is making in the UK, where the rising cost of energy has become a hot political issue and the North Sea oil and gas industry has already been hit by a windfall tax.
That hasn’t stopped calls for further taxation. Friends of the Earth campaigner Sana Yusuf said that a much tougher windfall tax on oil and gas profits is needed. “It beggars belief that these companies are raking in such huge sums in the midst of a cost-of-living crisis,” she said in a statement.

Collectively, the world’s five major international oil companies made more money in the second quarter than ever before, raking in more than USD60 billion. With recession fears gathering pace, there has been speculation that the second quarter could end up marking the high point for Big Oil this year. BP said it expects oil and natural gas prices, and refining margins, to stay high in the third quarter because of disruptions in Russian supply, relatively low inventories and reduced spare capacity.
mrchub.com

LyondellBasell refinery could undergo a big transformation after it closes

MOSCOW (MRC) -- The planned closure of LyondellBasell’s refinery could make way for “a very large investment” at the site along the Houston Ship Channel, said Houstonchronicle.

The multinational chemical company with headquarters in Houston said it is making progress with molecular recycling technology and with other forms of advanced recycling that could be “a very good fit” for the site. "The more we look at it the more we are inspired by it," Vanacker said of the site’s post-refinery future, "we have a lot of equipment we could then use."

The company announced in April that it planned to close the refinery next year despite soaring gasoline prices and a refining shortage that is boosting refiners’ bottom lines. The refinery employs 550 people and is among the nation’s largest, capable of refining 268,000 barrels of oil per day of crude into transportation fuels.

To keep the aging refinery open would require a “huge” investment of its own, Vanacker said, estimating it could cost more than USD1 billion to bring the refinery to safe operating standards. "We will not at the expense of safety keep operating the refinery," he told analysts during the call.

The tight refining market during the first half of 2022 has helped pull the refinery out of a slide dating to at least 2016. The only refinery in LyondellBasell’s global portfolio of chemical and plastics plants had annual operating losses for at least the past six years. During the first half of 2022, the refinery’s operating income jumped to USD570 million from a USD225 million loss during the first half of 2021. The company said it expects to begin incurring costs related to the refinery’s closure this quarter.

We remind, LyondellBasell Industries announced net income for the second quarter 2022 of USD1.6 billion, or USD4.98 per share. The company recognized a USD69 million non-cash impairment charge during the quarter related to the exit from our Australian polypropylene business that impacted earnings by USD0.21 per share. Second quarter 2022 EBITDA was USD2.4 billion, or USD2.5 billion excluding LCM and impairment. Second quarter 2022 EBITDA was further impacted by a USD94 million non-cash pension settlement charge.
mrchub.com

Marathon Petroleum posts bumper profit on soaring fuel prices

Marathon Petroleum posts bumper profit on soaring fuel prices

MOSCOW (MRC) -- Marathon Petroleum smashed quarterly profit estimates on Tuesday, the latest U.S. refiner to benefit from a surge in fuel prices sparked by tight capacity and low inventories, said Reuters.

The company's refining and marketing margins tripled to USD37.54 per barrel in the April-June quarter, mirroring similar gains at rivals such as Phillips 66 and sending Marathon's shares 4% higher in premarket trading.

Global refining capacity has declined in the past two years because the pandemic-driven demand hit forced several less profitable operations to shut shop, while Western sanctions against Russia have tightened an already-supplied market.

Marathon's refineries ran at nearly full capacity in the second quarter, resulting in a total throughput of 3.1 MMbpd, compared with utilization of 94% and a total throughput of 2.9 MMbpd a year earlier. For the third quarter, the company expects a throughput of 2.9 MMbpd.

The company posted an adjusted income of USD5.69 B, or USD10.61 per share, the largest in at least five years, according to Refinitiv data. The figure sailed past the average analyst estimate of USD8.04 per share.

We remind, Marathon Petroleum’s first-quarter (Q1) sales and income shot up on the back of healthy operations at its Refining & Marketing (R&M) division. The jump in income and earnings before interest, taxes, depreciation and amortisation (EBITDA) was possible due to healthy results at Marathon's R&M division, with the segment reporting adjusted EBITDA of USD1.4bn compared with USD23m in the Q1 2021.
mrchub.com

How chemical manufacturers can navigate inflation

How chemical manufacturers can navigate inflation

MOSCOW (MRC) -- Last year was a bounce-back year for chemicals mergers and acquisitions (M&As) after the challenges of COVID-19, said Hydrocarbonprocessing.

Both deal value and volume returned to historical highs, surpassing pre-pandemic levels. Market valuation multiples also remain elevated. This level of activity has continued in 2022, but there are storm clouds on the horizon beyond the war in Ukraine, including further geopolitical tensions, global supply chain disruptions and inflation levels not seen in more than 40 yr.

Nearly all Q4 2021 chemical sector earnings calls included significant time discussing raw material, packaging, transportation and wage rate cost inflation, as well as pricing action to offset rising costs. It is a topic that is top of mind for most executives. Comparing earnings call transcripts for the top 32 chemical companies from Q1 2019–Q4 2021, the mention of the word “inflation” increased roughly 300%. According to the authors’ company’s 2022 CEO outlook survey, 87% of executives have seen significant increases in input prices. How will inflation affect the chemical M&A market going forward and what should executives do differently?

Winners, losers and due diligence. Nearly all companies are experiencing input cost inflation. The winners will maintain and improve growth and profitability through a combination of dynamic pricing strategy and new productivity initiatives to mitigate cost pressure. While customers are generally receptive to price increases in this environment, strategic pricing is a skillet some companies must relearn. Some sales teams are hesitant to be bold or are restricted by competitive dynamics. Even when customers are receptive to price increases, demand cannot be entirely inelastic to price. On the operational side, many are still struggling with labor scarcity and their innovation model in a post-COVID-19 world, which is restricting productivity initiatives. The losers will witness slower growth and compression in margin and cash flow.

On the M&A front, certain sub-sectors may need to consolidate or sell to survive, resulting in increased activity. Conversely, potential sellers that have been temporarily dislocated by inflation may defer an exit until after they can successfully implement pricing and productivity initiatives to right the ship and improve resiliency in the long term. This is already happening in the market. For example, in March, Spanish energy company Cepsa announced that it has put a planned sale of its chemicals business on hold while it examines the potential impact of spiraling energy prices from the war in Ukraine.

In this new environment, buyers and sellers must refine their approach to due diligence when evaluating a company and its prospects.

As per MRC, the two largest U.S. oil companies, ExxonMobil and Chevron, posted record revenue on Friday, bolstered by surging crude oil and natural gas prices and following similar results for European majors a day earlier.
The U.S. pair, along with UK-based Shell and France's TotalEnergies, combined to earn nearly USD51 B in the most recent quarter, almost double what the group brought in for the year-ago period. All four have ramped up share buybacks in recent months, capitalizing on high margins derived from selling oil and gas.
mrchub.com