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Glenloch Energy April Oil Market Forecast

April 29, 2021

Glenloch Energy April Oil Market Forecast

Occidental – Anadarko in the Spotlight

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:

  1. Occidental recorded a loss of nearly $16 billion dollars in 2020
  2. Occidental’s 2020 cashflow from operations, when recast for oil prices above $45 per barrel, shows improvement against its 2018 performance.
  3. With the exception of the US Gulf of Mexico, the acquisition appears to have increased Occidental’s size, rather than diversified its operations.
  4. 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.
  5. 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.
  6. We expect oil supply from OPEC+ nations to exceed the latest production schedule and the schedule to be relaxed further as the year progresses.
  7. 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.
  8. Both Brent and WTI futures prices rose over the last month.
  9. 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.


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