Insights from a Busy Week in Energy: Trump, Conferences, and Market Trends

Things I Learned This Week – March 7, 2025

This week was quite eventful. President Trump delivered a significant address to a joint session of Congress, and Daniel Energy Partners hosted their THRIVE energy conference in Houston. Additionally, the Park Cities Quail Coalition held its annual dinner, although I found myself unable to bid on any auction items. We also conducted a Merit Energy board meeting. While this may not seem like much, Trump’s speech sparked considerable reflection, and the DEP conference felt like a reunion, allowing me to reconnect with old friends while making new acquaintances. A major topic of discussion was the potential impacts of Trump’s policies on our industry. Many attendees remarked that the phrase has shifted from “Drill Baby Drill” to “Build Baby Build.” Despite Trump’s desire for lower oil prices, it’s highly unlikely the industry will abandon its discipline and overproduce in a low-price environment. We’ve experienced that before and are not keen to repeat it.

One notable point raised by Trump was about control of the Panama Canal, suggesting that the Chinese have significant influence. Critics quickly countered that the Canal Authority operates independently. This debate may have reached a resolution with the recent announcement that Blackrock, the massive investment fund, is acquiring 43 ports across 23 countries from Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings for nearly $20 billion. This deal includes the two largest ports at both ends of the Panama Canal. While the Chinese may not directly control the Canal, owning these critical ports gives them substantial leverage. Blackrock’s acquisition may lessen the likelihood of any unfair practices against U.S. companies.

In a fascinating development, Libya is set to hold its first oil exploration bid round in 17 years. This is particularly intriguing to me, as I was part of the Sun Oil team that acquired six exploration blocks in Libya during a time when there was minimal data available. The country’s oil industry has faced numerous challenges, including civil conflict and tribal disputes, but this bid round could reignite interest in exploration. Currently, Mellitah Oil and Gas has resumed production at the Bahr Essalam gas field, and Eni is undertaking an offshore drilling campaign in the Sirte Basin.

At the THRIVE conference, discussions revolved around international production versus domestic unconventional resources. One CEO described the U.S. as a “magical anomaly,” where services, infrastructure, geology, capital, and private ownership have converged to create a unique environment for oil production. This success is now beginning to evolve in countries like Argentina and Saudi Arabia, aided by strategic partnerships to address gaps in infrastructure and investment.

PPHB – U.S. Energy Market Update Highlights:

• Commodity Prices: WTI crude oil is currently priced at $66.36 per barrel (a decrease of approximately 5.7% week-over-week), while natural gas stands at $4.36 per MMBtu (an increase of about 10.8% week-over-week).
• Crude Oil Production: U.S. crude oil production has reached approximately 13.6 million barrels per day (an increase of about 2.3% year-over-year).
• Crude Oil Inventories: Crude oil inventories in the U.S. rose by roughly 3.6 million barrels week-over-week, contrasting with an estimated increase of 0.6 million barrels.
• Frac Spread Count: There are currently 214 frac spreads operating in the U.S., marking an increase of four spreads from the previous week.
• Onshore Drilling Rig Count: The U.S. has 578 drilling rigs in operation, an increase of two rigs week-over-week.

In the deepwater sector, there is currently some slack in the rig market, but no one is hesitating to proceed with ongoing projects. While Halliburton is focusing more on development, SLB is leaning toward exploration.

Jeff Miller from Halliburton made insightful observations about technology, noting that the company benefits from extensive R&D capabilities compared to smaller competitors. With major rivals exiting the frac business, Halliburton finds itself in a strong position. The company is focused on innovations that enhance customer returns and is wary of investing in conventional frac fleets again. Halliburton prefers acquiring equipment that is consistent with its existing operations to streamline maintenance and training processes.

The offshore panel, which included representatives from Oceaneering, Noble Drilling, and Expro, expressed optimism about the future, even amidst current tight utilization rates. Oceaneering is prioritizing technological advancements to replace manual labor, while Noble is experiencing a revival in optimism, having not felt this positive in the last decade.

The CEO of Weatherford also shared encouraging insights, indicating that their focus is on optimizing management and strengthening their balance sheet. The company is evolving in its approach, leveraging acquisitions and organic development to enhance production technologies.

Enterprise Products, Plains All-American, and Energy Transfer participated in a panel discussing midstream operations. Enterprise has over $7 billion in assets under construction, and while growth may slow, it positions itself for consolidation opportunities.

In the natural gas sector, volatility remains a concern, with demand fluctuating significantly due to seasonal changes. There are expectations of a price spike this summer due to limited new supply.

The topic of power generation was a highlight of the conference, as many companies are diversifying into this field. Power generation offers longer contracts and more stability, although it comes with a longer payback period compared to traditional oil services.

As the week concluded, there were discussions about the shrinking frac fleet and increasing efficiency, with companies achieving more with fewer resources. This trend reflects advancements in technology that allow for higher horsepower and better resource management, even as the total number of rigs decreases.

In summary, oil prices remain stagnant compared to two decades ago, while advancements in technology continue to drive record production levels despite historical lows in activity. The industry remains poised for innovation as it adapts to changing market dynamics.

For further insights, feel free to reach out to me at the contact details provided.