The Only Cure for This Fever

Good morning, this is the Oil Patch. We're the stick pipe you run in after coil's done got stuck.

Here's what the Oilman has for you today:

• CHK's Billion Dollar Blaze

• Saudi Aramco's CEO is Worried

• I Got a Fever

• Tweet of the Day

Billion Dollar Blaze

Chesapeake Energy Corp and WildFire Energy have struck a deal hotter than a Texas summer.

Chesapeake is selling a portion of its south Texas operations for a cool $1.43 billion in cash.

That's billion with a B, folks.

Activist investor Kimmeridge Energy Partners has been pushing Chesapeake to focus more on low-cost natural gas production.

Meanwhile WildFire, backed by a 2019 $1 billion investment from Warburg and Kayne with experience in the Eagle Ford basin, is more than happy to step in and fan the flames.

The sale includes Chesapeake's Brazos Valley operations in the Eagle Ford basin.

The Oilman wishes he could get piece o' that billion. Or an override.

Always take the override.

Saudi Aramco CEO is Worried

The CEO of Saudi Aramco, Amin Nasser, has warned of a potential oil supply shortage due to the expected surge in Chinese demand.

Key takeaways and Considerations:

• Current market dynamics have kept demand relatively subdued, but that is set to change soon.

• Global crude supplies may not have enough spare capacity to deal with the shift in demand.

• Investment in hydrocarbons has decreased, and additional investment is needed globally to meet oil demand.

• The International Energy Agency forecasts global oil demand will increase by 1.9 million barrels per day in 2023.

• Saudi Arabia and many of its partners in the OPEC producers’ alliance have called for simultaneous investment in hydrocarbons and in the energy transition to avoid a future supply squeeze.

Better HODL some barrels, folks.

The Only Cure for This Fever...is MOAR Oil

Looks like the oil market is feeling the burn as prices are soaring in early European trade, thanks to China's reopening and the possibility of major economies avoiding a recession. But, before you go and invest all your savings in oil stocks, hold your horses! Senior Market Analyst Ed Moya is here to put out the fire by warning that the rally may have a little more in it, but could stall out soon.

And if you thought that was a bummer, wait till you hear what ING strategists Warren Patterson and Ewa Manthey have to say. They're also questioning the longevity of the rally, pointing to OPEC numbers that suggest a global market in balance to a small surplus over the first half of 2023, but a tighter market over the second half of 2023 if OPEC production policy remains unchanged.

But don't worry, The International Energy Agency is here to make it all better by predicting that the world's oil thirst will reach a record high of 101.7 million barrels per day in 2023, and China is the driving force behind this thirst. They've even raised their demand estimate for 2023 by 200,000 barrels per day, and China is expected to guzzle nearly half of global demand growth this year.

But, as with any prediction, there are always counter arguments to consider. The EU ban on Russian oil products from February 5 could put a damper on Russian exports and the shape and speed of China's reopening remains uncertain, so hold onto your barrels, the future of the oil market is anything but clear.

In short, investing in oil right now is like playing roulette, you might win big or lose it all.

And, boy, does the Oilman like roulette.

Tweet of the Day

Thanks for reading! If you enjoyed today's Oil Patch, please share with a friend, and be sure to subscribe.

PS – Be sure to check out Energy Builders Podcast today!