Oil Archives - Page 4 of 6

Shell Oil to Announce Scrapping Targets on Oil and Gas Output

Posted on June 9, 2023June 9, 2023 by phoffman@channelchek.com

Oil and Gas Will Remain Central to Shell

Shell has looked at its unimpressive returns on renewable energy and the booming profits in its oil and gas divisions and has decided to pivot from its previous course. In an effort to regain investor confidence, Shell’s (SHEL.L) CEO, Wael Sawan, is expected to make a formal announcement of the revised strategic direction of the oil company on June 14, according to an exclusive report in Reuters.

Shifting Gears

Shell’s CEO Sawan, who previously headed the company’s oil, gas, and renewables divisions, is expected in New York next week to formalize the details of his vision, it will include updates on capital allocation, shareholder payouts and “strategic choices we’re making,” according to Sawan.

What is known before the full announcement is that Shell expects it will keep company oil output steady or slightly higher into 2030. This would represent a change from an ongoing deemphasis on oil and gas production that Shell (and other large oil companies) had previously committed themselves to. Shell has been struggling with poor returns and is looking to regain investor confidence.

On June 14^th, Sawan will reportedly make the announcement at an investor conference that they are scrapping a target to reduce oil output by 1% to 2% per year. The company is already near its goal for production cuts, which it attained through selling oil assets, including its U.S. shale business.

Returns from oil and gas typically range between 10% to %20, while those for solar and wind projects tend to be between 5% to 8%.

About Shell’s New CEO

Sawan rose to the level of CEO in January. As the new head, with solid experience in both oil and gas, and the renewable division, vowed to improve Shell’s stock performance as it lagged other energy companies. He now plans to improve company performance by keeping oil and gas central to the company’s business at least through the end of the decade – Sawan says that efforts to shift to low-carbon businesses cannot come at the expense of profits.

Shell’s former CEO, Ben van Beurden introduced the carbon reduction targets and the energy transition strategy. Sawan’s more cautious approach to the energy transition is a reversal of his predecessor’s direction.

Sustainability and Profits

In recent months the company intentionally stalled several sustainability and renewable projects, including those involving offshore wind, hydrogen and biofuels, it pointed to weak returns. Shell is also exiting its European power retail businesses, which had been thought, only a few years ago, as key to its energy transition.

Oil Company Profitability

As with many of its competitors, Shell reported record profits last year, driven mainly by strong oil and gas prices. However, the company produced 20% fewer barrels-per-day over 2019 production. Output is now expected to be flat to up slightly into 2030. New projects would have to meet internal profitability thresholds, and also depend on the success of exploration.

The shift away from further cuts in oil and gas production at Shell is similar to a move by rival BP (BP.L) made earlier in 2023. At BP, CEO Bernard Looney exited further plans to cut oil and gas output by 40% (by 2030).

A true global company, Shell Oil, headquartered in Hague, Netherlands, is a leading supplier of refined petroleum products and remains one of the world’s largest producers of oil and natural gas.

Investor Focused

According to Reuters, “a key concern for Sawan has been the significantly weaker performance of Shell’s shares since late 2021 compared with its U.S. rivals Exxon Mobil (XOM.N) and Chevron (CVX.N), which both plan to grow fossil fuel output.” Shell’s formal announcement next week is expected to include no change in Shell’s target of becoming a net zero emitter by mid-century as part of the Powering Progress energy transition strategy it announced in 2021, which he has described as “still the right strategy.”

Paul Hoffman

Managing Editor, Channelchek

Sources

Reuters – hell Pivots Back to Oil

Shell Oil – Who We Are

Hemisphere Energy Corporation (HMENF) – Hemisphere completed year full of growth

Posted on April 21, 2023April 21, 2023 by cpatches

Friday, April 21, 2023

Michael Heim, Senior Energy & Transportation Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Results demonstrate strong production growth and a sharp increase in cash flow and earnings. Production rates (preannounced) increased 55%. Increased production was partially offset by a drop in energy prices. Lower-than-expected prices were partially offset by a decrease in royalty rates. Production costs (excluding transportation costs) remain somewhat elevated as they were in the September quarter. We look for production costs per barrel to decrease modestly as new production comes on line in 2023.

As netbacks rose, so did the company’s Adjusted Fund Flow (AFF). The margin between prices and costs is high. Operating netbacks (realized prices less royalties and operating costs) is leading to strong cash flow which management is turning their focus toward returning to shareholders now that debt is virtually eliminated and drilling programs have been accelerated.

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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.

The Decision By OPEC Isn’t Bad News for All Investors

Posted on April 5, 2023April 5, 2023 by phoffman@channelchek.com

Could Small Oil Companies Perform Especially Well With OPEC’s Reduced Output

Earlier this week, OPEC+ announced the cartel’s plans for production cuts. Saudi Arabia and other oil-producing members of OPEC+ defied expectations by announcing they would implement production cuts of around 1.1 million barrels a day. Prices of WTI and Brent crude quickly moved higher in the futures market – energy stocks followed. The increased cost of petroleum directly impacts the price of fuel and plastics and indirectly impacts goods that involve transportation – which is mostly all goods.

The decision by OPEC+ is highly likely to put upward pressure on CPI and PPI inflation measures as early as April. The CPI report for April will be released on May 10, and PPI on May 11. Id there good news for investors in the OPEC decision? What stocks might investors look at as potentially benefiting, assuming the OPEC countries adhere to the new production levels?

Background

U.S. markets were not open when the Organization of Petroleum Exporting Countries announced the large cut of over one million barrels per day. When regular trading resumed in the U.S. on Monday, oil prices jumped up 6.3%, and crude oil prices breached $80. Energy stocks, as measured by the Energy Sector SPDR (XLE) rose 4.5%. The price of crude based on futures contracts and the XLE have remained near these levels.

With change comes opportunity. Investors and traders are now trying to determine if this is the start of a new upward trend for the energy sector and, if so, what specific moves may benefit investors most.

One consideration they may have is that, although OPEC is cutting production, the members aren’t the only producers. Historically, domestic production was increased in N. America when prices climbed. This has been less so in recent years as the number of U.S. rigs operating hasn’t increased as might have been expected.

Will this dramatic price spike now prompt action from domestic producers? In his Energy Industry Report published on April 4, titled Why Domestic Producers Cannot Offset OPEC Production Cuts, Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, says that oil is produced in the U.S. at around $30-$40 per barrel. Heim says in his report, “If producers had the ability to ramp up drilling, we would have thought they would have done so even at $60/bbl. prices.”

Possible Beneficiaries

According to the Noble Analyst, large producers have been constrained from growing their oil operations which stems from political and even shareholder pressures to move away from carbon-based energy products. However, Heim says in his report, “Smaller producers face less pressure. Companies with ample acreage and drilling prospects are best positioned to take advantage of a prolonged oil price upcycle.”

In a conversation with the analyst, he shared that when oil prices spiked during the second half of the pandemic and later had added upward movement with the start of the Russia/Ukraine war, many small oil companies took in enough additional revenue to strengthen their finances. Some even began paying dividends for the first time, while others increased their regular dividend to shareholders.

These smaller oil producers not in the political spotlight that may reap additional benefits from OPEC’s cut could include Hemisphere Energy (HMENF). This company increased production by 55% in 2022. According to a research report by Noble Capital Markets initiating coverage on Hemisphere (dated April 3, 2023), “proven reserve findings and development costs are less than C$12/barrel, providing an extremely attractive return on investment for drilling.” It continued, “Hemisphere’s finding and development costs are among the lowest of western Canadian producers and reflect its favorable drilling locations and the company’s experience drilling in the area.” The increase in price per barrel could enhance cash flow for this North American producer, allowing it to expand production.

Permex Petroleum (OILCD, OIL.CN) is a junior oil and gas company that already had a significant upside potential before the jump in per-barrel prices. This boost in cash from higher oil prices and a possible uplisting to the NYSE, could work to benefit shareholders.

InPlay Oil (IPOOF) increased annual production last year by 58%. InPlay is an example of a smaller producer that has been able to increase drilling when prices rise. It has used increased cash flow to lower debt levels by 59% and pay shareholders with its first dividend payment.

Indonesia Energy Corporation Ltd. (INDO) is an oil and gas exploration and production company operating in Indonesia. The company plans on drilling 18 wells in the Kruh Block (four have been completed). Covid19 steps in the region where Indo Energy operates have pushed back drilling that was expected in 2023-2024 one year.

Take Away

With change comes opportunity. Higher oil prices will impact all of us that must still occasionally stop our internal combustion engine vehicles at gas stations. But the oil price increase may lead to a melting up of some stocks.

There are arguments that can be made that smaller, more nimble producers, not burdened by the political spotlight and perhaps enjoying a better financial position from the last run-up in oil, are worth looking into. A Channelchek search returned over 200 companies that may fall into this category. This search result is available here.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.channelchek.com/research-reports/25689

https://www.channelchek.com/research-reports/25307

https://www.channelchek.com/news-channel/energy-industry-report-why-domestic-producers-cannot-offset-opec-production-cuts

Gold in the Face of a Multipolar World Order

Posted on March 30, 2023March 30, 2023 by phoffman@channelchek.com

Petrodollar Dusk, Petroyuan Dawn: What Investors Need To Know

While most investors were trying to gauge the Federal Reserve’s next moves in light of recent bank failures last week, something interesting happened in Moscow.

During a three-day state visit, Chinese President Xi Jinping held friendly talks with Russian President Vladimir Putin in a show of unity, as both countries increasingly seek to position themselves as leaders of what they call a “multipolar world order,” one that challenges U.S.-centric alliances and agreements.

Among those agreements is the petrodollar, which has been in place for over 50 years.

In case you’re wondering, “petrodollars” are not a real currency. They’re simply dollars being used to trade oil. Early in the 1970s, the U.S. government provided economic aid to Saudi Arabia, its chief oil-producing rival, in exchange for assurances that Riyadh would price its crude exports exclusively in the U.S. dollar. In 1975, other members of the Organization of Petroleum Exporting Countries (OPEC) followed suit, and the petrodollar was born.

This had the immediate effect of strengthening the U.S. dollar. Since countries around the world had to have dollars on hand in order to buy oil (and other key commodities such as gold, also priced in dollars), the greenback became the world’s reserve currency, a status formerly enjoyed by the British pound, French franc and Dutch guilder.

All things must come to an end, however. We may be witnessing the end of the petrodollar as more and more countries, including China and Russia, are agreeing to make settlements in currencies other than the U.S. dollar. This could have wide-ranging implications on not just a macro scale but also investment portfolios.

This article was republished with permission from Frank Talk, a CEO Blog by Frank Holmes of U.S. Global Investors (GROW). Find more of Frank’s articles here – Originally published March 27, 2023

Dawn For The Petroyuan?

Putin couldn’t have been more explicit. During Xi’s state visit, he named the Chinese yuan as his favored currency to conduct trade in. Ever since Western sanctions were levied on the Eastern European country for its invasion of Ukraine early last year, Russia has increasingly depended on its southern neighbor to buy the oil other countries won’t touch.

In just the first two months of 2023, China’s imports from Russia totaled $9.3 billion, exceeding full-year 2022 imports in dollar terms. In February alone, China imported over 2 million barrels of Russian crude, a new record high.

Except that now, the yuan is presumably being used to make these settlements.

As Zoltar Pozsar, New York-based economist and investment research director at Credit Suisse, put it recently: “That’s dusk for the petrodollar… and dawn for the petroyuan.”

U.S. Dollar Still The World’s Reserve Currency, But Its Dominance Is Slipping

Before you dismiss Pozsar’s comment as an exaggeration, consider that other major OPEC nations and BRICS members (Brazil, Russia, India, China and South Africa) are either accepting yuan already or strongly considering it. Russia, Iran and Venezuela account for about 40% of the world’s proven oilfields, and the three sell their oil in exchange for yuan. Turkey, Argentina, Indonesia and heavyweight oil producer Saudi Arabia have all applied for admittance into BRICS, while Egypt became a new member this week.

What this suggests is that the yuan’s role as a reserve currency will continue to strengthen, signifying a broader shift in the global power balance and potentially giving China a bigger hand with which to shape economic policies that affect us all.

To be clear, the U.S. dollar remains the world’s top reserve currency for now, though its share of global central banks’ official holdings has slipped in the past 20 years, from 72% in 2001 to just under 60% today. By contrast, the yuan’s share of official holdings has more than doubled since 2016. The Chinese currency accounted for about 2.8% of reserves as of September 2022.

Russia Diversifying Away From The Dollar By Loading Up On Gold

It’s not all about the yuan, of course. Gold has also increased as a foreign reserve, especially among emerging economies that seek to diversify away from the dollar.

Last week, Russia announced that its bullion holdings jumped by approximately 1 million ounces over the past 12 months as its central bank loaded up on gold in the face of Western sanctions. The bank reported having nearly 75 million ounces at the end of February 2023, up from about 74 million a year earlier.

Long-Term Implications For Investors

The implications of the dollar potentially losing its status as the global reserve are numerous. Obviously, there may be currency risks, and a decrease in demand for U.S. Treasury bonds could result in rising interest rates. I would expect to see massive swings in commodity prices, especially oil prices, which could be an opportunity if you can stomach the volatility.

Gold would look exceptionally attractive, I think. A significant decrease in the relative value of the dollar would be supportive of the gold price, and I would be surprised not to see new highs. It’s for reasons like these that I always recommend a 10% weighting in gold, with 5% in physical bullion and the other 5% in high-quality gold mining equities. Be sure to rebalance at least on an annual basis.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Arctic Drilling Approval – More than Meets the Eye

Posted on March 17, 2023March 17, 2023 by phoffman@channelchek.com

Three Reasons the Willow Arctic Oil Drilling Project Was Approved

For more than six decades, Alaska’s North Slope has been a focus of intense controversy over oil development and wilderness protection, with no end in sight. Willow field, a 600-million-barrel, US$8 billion oil project recently approved by the Biden administration – to the outrage of environmental and climate activists – is the latest chapter in that long saga.

To understand why President Joe Biden allowed the project, despite vowing “no more drilling on federal lands, period” during his campaign for president, some historical background is necessary, along with a closer look at the ways domestic and international fears are complicating any decision for or against future oil development on the North Slope.

More Than Just Willow

The Willow project lies within a vast, 23 million-acre area known as the National Petroleum Reserve-Alaska, or NPR-A. This was one of four such reserves set aside in the early 1900s to guarantee a supply of oil for the U.S. military. Though no production existed at the time in NPR-A, geologic information and surface seeps of oil suggested large resources across the North Slope.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of, Scott L. Montgomery, Lecturer, Jackson School of International Studies, University of Washington.

Proof came with the 1968 discovery of the supergiant Prudhoe Bay field, which began producing oil in 1977. Exploratory programs in the NPR-A, however, found only small oil accumulations worthy of local uses.

Then, in the 2000s, new geologic understanding and advanced exploration technology led companies to lease portions of the reserve, and they soon made large fossil fuel discoveries. Because NPR-A is federal land, government approval is required for any development. To date, most have been approved. Willow is the latest.

Caribou in the National Petroleum Reserve-Alaska are important for Native groups. However, Native communities have also been split over support for drilling, which can bring income. Bob Wick/Bureau of Land Management

Opposition to North Slope drilling from conservationists, environmental organizations and some Native communities, mainly in support of wilderness preservation, has been fierce since the opening of Prudhoe Bay and the construction of the Trans-Alaska Pipeline in the 1970s. In the wake of 1970s oil crises, opponents failed to stop development.

During the next four decades, controversy shifted east to the Arctic National Wildlife Refuge. Republican presidents and congressional leaders repeatedly attempted to open the refuge to drilling but were consistently stifled – until 2017. That year, the Trump administration opened it to leasing. Ironically, no companies were interested. Oil prices had fallen, risk was high and the reputational cost was large.

To the west of the refuge, however, a series of new discoveries in NPR-A and adjacent state lands were drawing attention as a major new oil play with multibillion-barrel potential. Oil prices had risen, and though they fell again in 2020, they have been mostly above $70 per barrel – high enough to encourage significant new development.

ConocoPhillips’ Willow project is in the northeast corner of the National Petroleum Reserve-Alaska. USGS, Department of Interior

Opposition, with Little Success

Opposition to the new Willow project has been driven by concerns about the effects of drilling on wildlife and of increasing fossil fuel use on the climate. Willow’s oil is estimated to be capable of releasing 287 million metric tons of carbon dioxide if refined into fuels and consumed.

In particular, opponents have focused on a planned pipeline that will extend the existing infrastructure further westward, deeper into NPR-A, and likely encourage further exploratory drilling.

So far, that resistance has had little success.

Twenty miles to the south of Willow is the Peregrine discovery area, estimated to hold around 1.6 billion barrels of oil. Its development was approved by the Biden administration in late 2022. To the east lies the Pikka-Horseshoe discovery area, with around 2 billion barrels. It’s also likely to gain approval. Still other NPR-A drilling has occurred to the southwest (Harpoon prospect), northeast (Cassin), and southeast (Stirrup).

Young protesters in Washington in 2022 urged Biden to reject the Willow project. Jemal Countess/Getty Images for Sunrise AU

Questions of Legality

One reason the Biden administration approved the Willow project involves legality: ConocoPhillips holds the leases and has a legal right to drill. Canceling its leases would bring a court case that, if lost, would set a precedent, cost the government millions of dollars in fees and do nothing to stop oil drilling.

Instead, the government made a deal with ConocoPhillips that shrank the total surface area to be developed at Willow by 60%, including removing a sensitive wildlife area known as Teshekpuk Lake. The Biden administration also announced that it was putting 13 million acres of the NPR-A and all federal waters of the Arctic Ocean off limits to new leases.

That has done little to stem anger over approval of the project, however. Two groups have already sued over the approval.

Taking Future Risks into Account

To further understand Biden’s approval of the Willow project, one has to look into the future, too.

Discoveries in the northeastern NPR-A suggest this will become a major new oil production area for the U.S. While actual oil production is not expected there for several years, its timing will coincide with a forecast plateau or decline in total U.S. production later this decade, because of what one shale company CEO described as the end of shale oil’s aggressive growth.

Historically, declines in domestic supply have brought higher fuel prices and imports. High gasoline and diesel prices, with their inflationary impacts, can weaken the political party in power. While current prices and inflation haven’t damaged Biden and the Democrats too much, nothing guarantees this will remain the case.

Geopolitical Concerns, Particularly Europe

The Biden administration also faces geopolitical pressure right now due to Russia’s war on Ukraine.

U.S. companies ramped up exports of oil and natural gas over the past year to become a lifeline for Europe as the European Union uses sanctions and bans on Russian fossil fuel imports to try to weaken the Kremlin’s ability to finance its war on Ukraine. U.S. imports have been able to replace a major portion of Russian supply that Europe once counted on.

Europe’s energy crisis has also led to the return of energy security as a top concern of national leaders worldwide. Without a doubt, the crisis has clarified that oil and gas are still critical to the global economy. The Biden administration is taking the position that reducing the supply by a significant amount – necessary as it is to avoid damaging climate change – cannot be done by prohibition alone. Halting new drilling worldwide would drive fuel prices sky high, weakening economies and the ability to deal with the climate problem.

Energy transitions depend on changes in demand, not just supply. As an energy scholar, I believe advancing the affordability of electric vehicles and the infrastructure they need would do much more for reducing oil use than drilling bans. Though it may seem counterintuitive, by aiding European economic stability, U.S. exports of fossil fuels may also help the EU plan to accelerate noncarbon energy use in the years ahead.

Oil Prices Could Have a Huge Impact on These Sectors

Posted on March 15, 2023March 15, 2023 by phoffman@channelchek.com

Which Way is Oil Going, and What it Could Mean for Investors in Related Sectors

Whether the sudden and severe decline in oil prices is an opportunity to invest in sectors that will benefit from cheaper fuel, a sign of further problems in the economy, or transitory, remains to be seen. It may depend on two overriding factors – and there are strong arguments supporting each. Below we look at the different scenarios and the sectors that are impacted.

Background

Energy futures and oil-related stocks like Chevron (CVX) and Exxon (XOM) gapped down at the open two days this week as concern about the overall health of the financial sector as two banks were closed and a major rating agency downgraded the banking sector Since Friday. U.S. oil futures remained below $70 per barrel midweek, as prices of WTI have now dipped 13% to levels not seen since December 2021.

These downward price moves are a reaction to thinking that demand will wane in a slowing U.S. economy. Also that it may take longer for the Chinese economy to rise to expected levels. Although far less impactful, approval of the Willow oil drilling project by the White House demonstrates a reversal of the ‘no more drilling’ policy by this administration.

A report by the International Energy Agency (IEA) this morning suggests the price decline may be temporary. The IEA anticipates that the oil markets will switch from a supply overhang in the first half of 2023 to a deficit later in the year. This is expected as OPEC continues its plan to cut production, and that the increased air traffic, along with an economic rebound in China will push global oil demand to a record high, according to the IEA.

*Image: President Joe Biden meets with staff in the Oval Office, Monday, January 23, 2023, to discuss the Willow oil project. (Official White House Photo by Cameron Smith)*

Oil remains one of the most crucial commodities to the modern world. Its price has a significant impact on various industries and investment sectors. Below are the sectors that stand to benefit if the recent decline in prices remains intact or declines further:

Transportation Industry is a significant beneficiary of lower oil prices. The reason of course is because fuel costs are a significant expense for airlines, trucking, and shipping companies. When the cost of fuel follows the decline, the transportation industry enjoys a reduction in operating costs. This can result in wider margins on tickets sold for air travel, lower shipping costs for businesses including retailers, and lower prices for cruise lines.

The Chemical Industry is another sector that benefits from declining oil prices. Many chemicals are derived from crude oil, and a decrease in oil prices means a decrease in the cost of raw materials. This, in turn, can lead to lower prices for chemical products such as fertilizers, plastics, and other materials.

The Consumer Goods Industry is also a significant beneficiary of declining oil prices. This is because many consumer goods are made from oil-based materials such as plastics, rubber, and synthetic fabrics. When oil prices decline, the cost of these materials decreases, resulting in lower production costs and, ultimately, lower prices for consumers.

The Renewable Energy Industry is not directly related to oil prices, a decline in oil prices can benefit this sector indirectly. Renewable energy sources such as wind and solar power are becoming increasingly competitive with traditional fossil fuels, and a decrease in the price of oil can make it more challenging for the fossil fuel industry to compete. This can result in increased investment in renewable energy and a shift toward cleaner, more sustainable sources of energy.

Emerging Markets, particularly those that are oil-importing countries, can benefit significantly from declining oil prices. These countries rely heavily on imported oil, and a decrease in oil prices can result in significant cost savings for these countries. This can lead to increased economic growth, as businesses have more money to invest in other areas and consumers have more disposable income to spend.

Take Away

Oil has dropped considerably this year. This is in part because economic activity is expected to become lower, and problems in the banking sector. This may not last through the year as indicated by the IEA. Others believe this is the start of further declines. Should oil prices not track higher, stock market investors could look at the transportation, chemical, and consumer goods industries, as well as the renewable energy sector and emerging markets. As with any economic change, it is essential to carefully analyze the potential effects on different industries and sectors to make informed investment decisions.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.iea.org/topics/oil-market-report

https://www.investing.com/news/commodities-news/oil-sinks-as-moodys-banking-downgrade-drops-another-shoe-on-crisis-3030407

Release – Permex Petroleum Issues Shareholder Letter and Provides Corporate Update

Posted on February 16, 2023February 16, 2023 by aweinsoff@channelchek.com

Research News and Market Data on OILCF

February 15, 2023 14:55 ET | Source: Permex Petroleum Corporation

DALLAS, Feb. 15, 2023 (GLOBE NEWSWIRE) — Permex Petroleum Corporation (CSE: OIL) (OTCQB: OILCF) (FSE: 75P) (“Permex” or the “Company”), an independent energy company engaged in the acquisition, exploration, development, and production of oil and natural gas properties on private, state and federal land in the United States, today issued a letter to shareholders from its President & CEO, Mehran Ehsan.

Dear Fellow Shareholders:

Building upon the strong foundation laid in prior years, our team continued to advance our evolving position in the North American oil and gas market during 2022, executing our strategy to add sustainable marginal production through low risk, low cost recompletions while preparing for drilling programs for continued growth.

Within our current portfolio of 78 oil and gas wells, our near-term focus remains on recompletions and stimulations of approximately 30 wells that we believe have the potential in coming online at an average of 5 to 10 barrels of oil equivalent per day (BOEPD). Across our properties in west Texas and southeast New Mexico, we successfully recompleted seven wells in 2022 that have collectively stabilized at a rate of 71 BOEPD.

In January 2022, we began the pilot re-entry on the West Henshaw well #15-3 in New Mexico. The recompletion was successful, came online at an initial rate of 30 barrels of oil per day (BOPD), and has stabilized at 15 BOPD. We believe production rates from this mature, long-life well will continue with less than 10% decline year over year.

We also successfully recompleted the West Henshaw well #6-10 in the first half of 2022 with production coming online at an initial rate of 15 BOPD and stabilizing at 10 BOPD, a rate which we also believe can continue with less than 10% decline year over year.

The Railroad Commission of Texas approved our permit application for drilling on our flagship property in Martin County, Texas, in August 2022, reviewing and approving our request for well development.

Also in 2022, we continued our re-entry and stimulation program on our Henshaw Premier Unit and Oxy Yates properties situated in Eddy County, New Mexico. The re-entry and stimulations involved targeting the Grayburg formation in the Henshaw well numbers 107, 2L, 3B, while targeting the Yates formation in Oxy yates 14-3 well. We also recompleted the Mabee Breedlove Clearfork Unit #12 on our Breedlove field within the Clearfork formation located in Martin County. The recompletions were successful, came online at a combined initial production rate of 50 BOPD, and have stabilized at a rate of 35 BOPD. In addition to the re-entry and stimulation of the wells, we have begun an extensive enhanced oil recovery study on the Clearfork formation for our Martin County asset. This includes a review of all injection wells, downhole pressure, and communication between injectors and receiving wells.

In August, we commenced drilling our Martin County flagship property – the 7,780 gross acre Breedlove oilfield in September 2022 with two initial wells permitted. In November, we announced the successful completion of the first phase of drilling on our Eoff PPC#3 well which is the formation test on a vertical basis. We achieved a target depth of 8,100 ft (2468 meters) with the casing run to total depth. It is worth noting that the hole is pre cased with 8 5/8 casing which prepares the wellbore for lateral drilling and converting it to a horizontal well. The electric wireline logging sequence of the wellbore was also completed, and we believe the results to be positive and favorable as all indications from the drilling show multiple zones which allows us to proceed with the next steps of perforation, conversion, and completion.

We believe that there is significant value to be created by drilling the identified undeveloped opportunities on our properties in conjunction with the stimulation and rework of our shut-in wells. While our near-term plans are focused on drilling wells on our existing 11,700 acres to develop the potential contained therein, our long-term plans also include continuing to evaluate acquisition and leasing opportunities that can earn attractive rates of return on capital employed.

Looking at our financial position, we closed a $7.5 million brokered private placement in the first half of 2022 enabled us to considerably strengthen our balance sheet and ending us to end the fiscal year with $3.3 million in cash and cash equivalents, up more than tenfold year-over-year.

Turning to the broader markets, oil prices began rallying off their lows at year end, after declining for much of the second half of 2022, in part due to OPEC+ production cuts that began in November. Importantly, OPEC+ pledged to continue to support the market at a recent meeting in early February, with producers reconfirming their commitment to cut production by 2 million barrels per day (BPD) through the remainder of 2023. While fears of global recession remain a drag on prices, a potential rebound in Chinese demand could further support an upward trajectory on prices moving forward.

Finally, we further strengthened our team in 2022 with great additions to both our management and board. On the management side, we welcomed Greg Montgomery as our new Chief Financial Officer in May. Greg has served on our board since 2020 and provided our leadership team with invaluable guidance. In addition to his existing knowledge of Permex’s operations, he has vast experience in the oil and gas industry, including prior CFO and management roles with public companies. This makes Greg uniquely qualified to lead our financial strategy. In October, we also welcomed Melissa Folz P.E. as the newest member of our board. Melissa brings an extensive background from the oil and gas industry, and I believe she will contribute meaningfully to our strategic plans and growth as an organization.

Looking ahead, we are focused on the drilling and development of our unique asset base while redeploying the expected strong cash flow from completed wells back into further drilling and development programs. Additionally, we continue to evaluate acquisition opportunities of undervalued, low-risk opportunities that support building a strong portfolio with strategic development upside.

Thank you to all our shareholders, partners, and staff for your support on our journey. As we continue to work diligently to execute on our methodical approach to sustainable, long-term growth, I am confident that Permex will thrive in the years ahead.

On Behalf of your Permex Team,

Mehran Ehsan

Chief Executive Officer

About Permex Petroleum Corporation

Permex Petroleum is a uniquely positioned junior oil and gas company with assets and operations across the Permian Basin of West Texas and the Delaware Sub-Basin of New Mexico. The Company focuses on combining its low-cost development of Held by Production assets for sustainable growth with its current and future Blue-Sky projects for scale growth. The Company, through its wholly-owned subsidiary, Permex Petroleum US Corporation, is a licensed operator in both states, and owns and operates on private, state and federal land. For more information, please visit www.permexpetroleum.com.

Forward-Looking Statements

Statements in this press release may constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 and other federal securities laws as well as applicable Canadian securities laws. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of management, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in Company’s reports that it files from time to time with the U.S. Securities and Exchange Commission and the Canadian securities regulators which you should review. When used in this press release, words such as “will,” “could,” “plan,” “estimate”, “expect”, “intend”, “may”, “potential”, “believe”, “should” and similar expressions, are forward-looking statements. Forward-looking statements may include, without limitation, statements relating to the Company’s plans to list on NYSE American, financial condition and operating results, legal, economic, business, competitive and/or regulatory factors affecting Permex’s businesses and any other statements regarding events or developments Permex believes or anticipates will or may occur in the future. These forward-looking statements should not be relied upon as predictions of future events, and the Company cannot assure you that the events or circumstances discussed or reflected in these statements will be achieved or will occur. If such forward-looking statements prove to be inaccurate, the inaccuracy may be material. You should not regard these statements as a representation or warranty by the Company or any other person that it will achieve its objectives and plans in any specified timeframe, or at all. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any obligation to publicly update or release any revisions to these forward- looking statements, whether as a result of new information, future events or otherwise, after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law.

Contact Information

Permex Petroleum Corporation

Mehran Ehsan
President, Chief Executive Officer & Director
(469) 804-1306

Gregory Montgomery
CFO & Director
(469) 804-1306

Or for Investor Relations, please contact:

Dave Gentry
OILCF@redchip.com

Release – InPlay Oil Corp. Confirms Monthly Dividend for February 2023

Posted on February 2, 2023February 2, 2023 by aweinsoff@channelchek.com

Research News and Market Data on IPOOF

CALGARY AB, Feb. 1, 2023 /CNW/ – InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to confirm that its Board of Directors has declared a monthly cash dividend of $0.015 per common share payable on February 28, 2023, to shareholders of record at the close of business on February 15, 2023. The monthly cash dividend is expected to be designated as an “eligible dividend” for Canadian federal and provincial income tax purposes.

About InPlay Oil Corp.

InPlay is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

SOURCE InPlay Oil Corp.

For further information: Doug Bartole, President and Chief Executive Officer, InPlay Oil Corp., Telephone: (587) 955-0632; Darren Dittmer, Chief Financial Officer, InPlay Oil Corp., Telephone: (587) 955-0634

Release – InPlay Oil Corp. Named to 2023 OTCQX Best 50

Posted on January 19, 2023January 20, 2023 by aweinsoff@channelchek.com

Research News and Market Data on IPOOF

NEWS PROVIDED BY

InPlay Oil Corp.

Jan 19, 2023, 08:00 ET

CALGARY, AB, Jan. 18, 2023 /CNW/ – InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to announce it has been named to the 2023 OTCQX® Best 50, a ranking of top performing companies traded on the OTCQX Best Market last year.

The OTCQX Best 50 is an annual ranking of the top 50 U.S. and international companies traded on the OTCQX market. The ranking is calculated based on an equal weighting of one-year total return and average daily dollar volume growth in the previous calendar year. Companies in the 2023 OTCQX Best 50 were ranked based on their performance in 2022.

Doug Bartole, President and Chief Executive Officer of InPlay, commented: “We are very pleased with InPlay’s inclusion in the OTCQX Best 50 list. InPlay was the fifth best performer on the OTCQX Best Market based on 2022 total return and average daily dollar volume growth and this is the second consecutive year placing in the top five on this list. This ranking is a stong acknowledgement of the value we have created for shareholders through measured per share growth, free adjusted funds flow generation and delivering sustainable returns to shareholders. It is also evidence of the commitment of our employees and management team, strong leadership from our board of directors and the support of our lenders and shareholders. As outlined in our recently announced 2023 capital budget and guidance, InPlay finds itself in an extremely enviable financial and operational position allowing the Company to continue to forecast strong results in the upcoming year.”

For the complete 2023 OTCQX Best 50 ranking, visit
https://www.otcmarkets.com/files/2023_OTCQX_Best_50.pdf

The OTCQX Best Market offers transparent and efficient trading of established, investor-focused U.S. and global companies. To qualify for the OTCQX market, companies must meet high financial standards, follow best practice corporate governance, and demonstrate compliance with applicable securities laws.

About InPlay Oil Corp.

SOURCE InPlay Oil Corp.

Oil Producers Had a Great Year; They Could Repeat in 2023

Posted on January 6, 2023January 8, 2023 by phoffman@channelchek.com

Can Oil Companies Continue Their Outperformance?

If you predicted that oil prices would go up last year, you were correct. If you predicted they’d go down, you were also correct. I dare say that even with insight as to what was to come, many analysts would have had the timing completely reversed from what actually happened. Why? What caused the volatility? And most importantly, what can we learn from this to help us in 2023 and beyond? After all, in 2022, oil company Exxon increased in market value more than any other company in the S&P 500. It became the eighth largest with a 74.3% increase in share price, up from the 27^th largest a year ago. In contrast, WTI Crude closed near its low for the year, the dynamics involved are certainly worth investor exploration.

Background

Twelve months ago, according to the Energy Information Administration (EIA) the price of West Texas Intermediate (WTI) crude oil was considered high at $75.99/bbl. WTI closed the year less than 6% higher at $80.47/bbl. But this is not indicative of the wild surprises in between. There are two events that had a major impact during those twelve months.

Russia’s late February invasion of its neighbor helped crude prices to shoot up above $120/bbl. Oil has only visited that level once before (2008). Very few could have expected this event, so the expectations leading up to the early months of 2022 were, at worst moderate price declines to moderate increases. Those expecting some price increases pointed to the ongoing supply shortfall related to the pandemic response. This is the period that surprised traders with oil on the way up. Then as it became evident the war would be prolonged and Europe and other regions would take steps to move away from Russia’s output, expectations were for further price increases. What was not anticipated was a massive release of oil from the U.S. Strategic Petroleum Reserves. Along with releases from reserves in other parts of the world, oil prices sank. But, fear of the European winter, lack of support from OPEC+, and anticipation of price caps on Russian oil creating a loss of supply had many talking about upward pressure by year-end. It has not materialized.

The Crude World Order (OPIC?)

What’s changed the expected results related to oil prices and even producer prices? First off, there was a level of unity never-before-experienced and organization among petroleum-importing countries among consuming nations. The pushback and, to some degree taking charge, by nations that are net consumers began in late Spring 2022 when 31 members of the International Energy Agency (IEA) decided to all release oil from reserves to quench demand and impact prices.

The Paris-based IEA promotes what it believes are beneficial energy situations for consumers. It had taken the lead on emergency measures before, but never with this much unity or on this scale. The amount of reserves sold into the oil market amounts to less than 1%, but it is estimated to have shaved $20 or more off per barrel oil prices in the spring and summer. Brent crude, the international oil benchmark, hit its peak settlement value of $127.98 per barrel in March but had fallen below $100 by July. Recently it has been trading near $80.

Certainly, the drawdown on reserves which borrowed from the future will need to be replenished. Pulling from reserves is unsustainable and therefore limits bargaining power. Nations have pledged to return their reserves to a level deemed in line with national security (the U.S. has a 50-day reserve supply), but the timing is uncertain.

What is positive for consumers is the IEA has learned to stand firm and work together.

Why are Oil Company Stocks Outperformers?

Crude is roughly the same price now as it was at the beginning of last year. Yet, factors including conservation efforts and China Covid policies have caused limited demand growth. And despite favorable economics currently, energy companies have been slow to drill new wells. U.S. rig count, as reported by Baker Hughes, crept up to 779 rigs by the end of the year. This compares to a peak level of 1,600 in 2014.

So why, as mentioned earlier, are oil companies performing as tech companies did in 2021?

On the surface, one might think energy company stock prices would be weakening, but this isn’t the case there are other factors at play. Michael Heim, Senior Energy Analyst, at Noble Capital Markets, explains in his newly released Q4 2022 Energy Industry Report, “Operating cash flow has soared over the last two years, but capital expenditures have barely increased. The result has been a large increase in dividend payments, share repurchases, and debt reduction.” Heim’s report further explains that while capital expenditures lagged well behind, it is inaccurate to conclude that oil production has not increased. The Noble Capital Markets analyst explains, “…current production levels are above that during peak drilling periods in 2014. The implication is that drilling has become more productive. While drilling advances such as the use of horizontal drill and fracking in shale deposits may be old hat, it is worth noting that drillers have been refining drilling techniques for individual drilling locations.” Drillers are improving techniques, improving efficiencies and maximizing production per dollar spent. Heim also attributes some of the efficiencies to well recompletions, which he explains are less expensive to put in service.

Read the Noble Capital Markets Energy industry report here.

Take Away

The S&P index that tracks the Energy sector gained 53.8% last year. If you had had a crystal ball that told you about the events that would transpire, such as the European war, and oil returning to its starting place, it’s a rare investor that would expect the drillers/producers to increase over 50%. While all situations have their own circumstances, understanding why price action happened can provide greater preparedness to face the markets each year.

Sign-up for no-cost Channelchek and receive research reports, articles, and even video interviews with company executives in your inbox each morning. Sign-up here.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.iea.org/

https://oilprice.com/Energy/Energy-General/The-Fall-Of-Tesla-And-The-Rise-of-Exxon-Amid-The-Energy-Crisis.html

https://www.forbes.com/sites/rrapier/2022/12/31/the-year-in-energy-prices/?sh=59b071fa5314

https://www.eia.gov/petroleum/weekly/

https://www.channelchek.com/news-channel/energy-industry-report-energy-stocks-resume-their-upward-trend-is-80-oil-the-new-norm

Crude Prices vs. Energy Company Prices – Will the Gap Narrow?

Posted on December 6, 2022December 6, 2022 by phoffman@channelchek.com

The Argument for Higher Oil Market Prices is Fairly Straightforward

The price of oil is near its 2022 low. This lower per barrel cost is normal when the commodities market perceives the economy as slowing or that it will slow. What is surprising is that the price is near the low for the year when the Chinese are easing Covid restrictions and will soon be requiring more fuel; at the same time, a Russian oil cap, which is sure to bring less supply to the market, was just instituted this week. In the meantime, energy producers, up 60.8% on the year, are not sinking at the pace of oil prices.

Energy shares have been the big winners for 2022. And it is rare that they are flying solo, without the help of price increases of their underlying product. According to Bespoke Investment Group, last month marked the first time since 2006 that the S&P 500 energy sector has traded within 3% of a 12-month high while the price of West Texas Intermediate retreated more than 25% from its one-year peak..

The divergence has caught the attention of investors. Since drillers and miners tend to rise and fall with the prices of the commodities they produce, many expect the gap to narrow to its more historical norm. Most are looking for oil to rise rather than drillers to fall.

Pressures that could cause oil to rise include the EU winter season, the U.S. Strategic Reserves bumping up against depletion, OPEC+ keeping production quotas unchanged, and Western governments’ $60-a-barrel price cap on Russian crude. These, taken together, are expected to put upward pressure on per-barrel prices. The commodities market is not moving in accordance with these factors. Futures contracts for U.S. crude closed Monday 3.8% lower at $76.93 a barrel, its fourth-lowest settle of the year.

Working against the argument for higher crude prices is the expected slowing of world economies. The possibility of a recession in many global economies while central banks raise interest rates, is unknown. Any impact remains to be seen.

Paul Hoffman

Managing Editor, Channelchek

The Week Ahead – Volatile Oil Prices, A Less Hawkish Fed, and U.S. Productivity

Posted on December 4, 2022December 4, 2022 by phoffman@channelchek.com

Will Russia Make the EU an Acceptable Counter Offer?

On Sunday, OPEC+ voted to maintain the previous level of output. This is known in OPEC vernacular as a “rollover,” it will allow the group time to experience and assess the market impact of the price cap of $60 a barrel on Russian oil. The $60 EU price cap is scheduled to begin Monday, December 5^th.

Otherwise, it will be a quiet week in terms of data and Fed governor speeches. After a flurry of talks out of Fed executives last week, mostly pointing to a tapering of increases, the Fed is now in a blackout period until after the December 13-14 meeting and announcement.

Monday 12/5

9:45 AM ET, PMI Composite Final Consensus Outlook A little less contraction is the call for the PMI Service’s November final, at a consensus of 46.3 versus 46.1 at mid-month.
10:00 AM ET, Factory Orders are seen rising to a 0.7 percent gain in October. This would follow a 0.4 percent gain in September. The upward adjustment is in part due to Durable Goods orders for October, which have already been released and are one of two major components of this report. Durable Goods rose 1.0 percent in the month, which was stronger than expected. Factory Orders are a true leading indicator of future economic activity.
10:00 AM ET, ISM Services Industries has been slow, having reported 54.4 in October and expectations of 53.5 for November.

Tuesday 12/6

8:30 AM ET, International Trade in Goods and Services, a deficit of $80.0 billion is expected in October for total goods and services, which would compare with a $73.3 billion deficit in September. Advance data on the goods side of October’s report showed a more than $7 billion deepening in the deficit.

Wednesday 12/7

7:00 AM ET, MBA Mortgage Applications are expected to show that the composite index down 0.8%, the purchase index has gained 3.8%, and the refinance index is down 12.9%. The MBA compiles various mortgage loan indexes. The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction, along with related industries that are impacted by a changing housing market.
8:30 AM ET, Productivity and Costs for third-quarter are expected to show non-farm productivity rising 0.4 percent versus a scant 0.3 percent annualized gain in the first estimate. Unit labor costs, which slowed from 8.9 percent in the second quarter to 3.5 percent in the first estimate for the third quarter, are expected to rise at a 3.3 percent rate in the second estimate.
10:30 AM ET, EIA Petroleum Status report. The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad. The level of inventories helps determine prices for petroleum products.
3:00 PM ET Consumer credit is expected to increase $27.3 billion in October versus a $25.0 billion increase in September. Changes in consumer credit indicate the state of consumer finances and signal future spending patterns. The report includes credit cards, vehicle loans, and student loans; mortgages are not included.
Productivity measures the growth of labor efficiency in producing the economy’s goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends

Thursday 12/8

8:30 AM ET, Jobless Claims for the December 3 week are expected to come in at a 228,000 four-week moving average, versus 225,000 in the prior week. Employment is one of the Fed’s mandates; as such, any number that significantly varies from consensus could alter the market’s thinking.
10:00 AM ET, ISM Manufacturing Index was 50.2 in October; the ISM Manufacturing Index has been gradually slowing to nearly breakeven. November’s consensus is 49.9.
10:00 AM ET, Construction spending is expected to fall 0.2 percent in October. This would be dramatic relative to September’s modest 0.2 percent gain.
10:30 AM ET, The Energy Information Administration (EIA) provides weekly information on natural gas stocks in underground storage for the U.S. and five regions of the country. The level of inventories helps determine prices for natural gas products.
4:30 PM ET, The Fed’s balance sheet is a weekly report presenting a consolidated balance sheet for all 12 Reserve Banks that lists factors supplying reserves into the banking system and factors absorbing reserves from the system. The report is officially named Factors Affecting Reserve Balances, otherwise known as the “H.4.1” report; investors have taken a recent interest in this weekly report as it shows if the Fed is on track with quantitative tightening plans.

Friday 12/9

8:30 AM ET, Producer Price Index or PPI, after moderating in October, PPI is expected to rise 0.2 percent on the month in November and 7.2 percent on the year. These would compare with 0.2 and 8.0 percent in October, which were both lower than expected. When excluding food and energy, prices are expected to also rise 0.2 percent on the month and 5.9 percent on the year.
10:00 AM ET, Consumer Sentiment is expected to remain unchanged at 56.8 after a rebound in November’s final report.
10:00 AM ET, Wholesale Inventories (second estimate for October) is expected to be unchanged from the first estimate at 0.8%.

What Else

The focus until mid-month is likely to be how interest rate markets trade with a new sense that the Fed is slowing its tightening pace. Also in high focus this week, markets are expected to pay attention to how oil prices play out with the EU plan and perhaps a forthcoming Russian proposal.

Sources

https://www.wsj.com/articles/opec-gathers-to-decide-output-with-russian-oil-price-cap-looming-11670116254

https://www.econoday.com/

Release – InPlay Oil Corp. Confirms Monthly Dividend for December 2022

Posted on December 2, 2022December 2, 2022 by aweinsoff@channelchek.com

Research, News, and Market Data on IPOOF

Dec 01, 2022, 17:02 ET

CALGARY, AB, Dec. 1, 2022 /CNW/ – InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to confirm that its Board of Directors has declared a monthly cash dividend of $0.015 per common share payable on December 30, 2022, to shareholders of record at the close of business on December 15, 2022. The monthly cash dividend is expected to be designated as an “eligible dividend” for Canadian federal and provincial income tax purposes.

About InPlay Oil Corp.

SOURCE InPlay Oil Corp.