This April edition of Glenloch Energy's Oil Market Forecast ("OMF") features a review of Occidental’s acquisition of Anadarko after their first full year together. This edition also sees OPEC+ issue a new supply schedule running through to July, showing an expansion in production, as the IEA raises its full year 2021 oil demand estimate.
A few key points:
- Occidental recorded a loss of nearly $16 billion dollars in 2020
- Occidental’s 2020 cashflow from operations, when recast for oil prices above $45 per barrel, shows improvement against its 2018 performance.
- With the exception of the US Gulf of Mexico, the acquisition appears to have increased Occidental’s size, rather than diversified its operations.
- The acquisition brought deep water production capability, but it isn’t clear to what degree exploration and development capability carried over. The exit from Mozambique LNG looks like a missed opportunity.
- Occidental’s production has doubled, while recast cashflow from operations at a WTI price of $60 per barrel has only increased by 25%. Several smaller asset acquisitions may have satisfied the same objective at a lower premium.
- We expect oil supply from OPEC+ nations to exceed the latest production schedule and the schedule to be relaxed further as the year progresses.
- We expect global oil storage to reach its long term average in the third quarter of the year and remain at around that level through 2022, before drawing down.
- Both Brent and WTI futures prices rose over the last month.
- US rig count continues to grow, but as yet, the growth rate does not show signs of acceleration.
Access Glenloch Energy's April OMF here.