Goldman Sachs upgrades IOC

[Putncalls]

Yep. They down graded. Their prediction of ever declining oil prices without acknowledging the impact of canceling all those non shale oil projects is indicative of their moral state, regretfully.

[wapitidropiti]

Yep. They down graded. Their prediction of ever declining oil prices without acknowledging the impact of canceling all those non shale oil projects is indicative of their moral state, regretfully.

They (GS) could only be selling.

[admin]

Don't get too excited, it looks like they have a $48.60 target price.

From Goldman:

["Our 12-month risked SOTP price target remains US$48.60, implying 14% upside to the current price, among the

highest in our sector coverage."]

[Palm]

It's interesting that the continued lowered targets reflect what should be post-Certification. Today's White House revised energy plan to reduce CO2 does something I'm not sure people may realize. A while ago I heard an energy industry consultant state that people shouldn't be fooled. The anti-CO2 campaign is not just aimed at coal. The person stated we would next see NG included in the "program".

And it appears that way. Aimed at power plants this revised plan has a goal of NG powered electric generation to stay the same as it is today and for renewables to take the place of retiring coal generation plants. Pretty aggressive initiative.

Are the analysts taking this into account when they are setting new pps targets and what might that mean globally? In December, Paris will host the next round of climate change/CO2 meetings and there may be pressure applied to "follow the leader". This all won't be without opposition, but we must watch and see the direction these things go.

"When the United States leads, other nations follow,” McCarthy said. “Since we proposed the rule last year, the U.S. has made joint announcements with China and Brazil where each country made major new commitments to cut carbon pollution. Since three of the world’s largest economies have stepped up, we’re confident other nations will follow, and the world will reach a climate agreement in Paris later this year.”

"The rule will incentivize early action to build renewable energy and implement user-side energy efficiency programs in low-income communities. The aim is to shift toward renewable energy, such as solar and wind power, rather than encourage an early surge toward natural gas as a means of replacing coal power, McCarthy said."

[admin]

["Are the analysts taking this into account when they are setting new pps targets and what might that mean globally? In December, Paris will host the next round of climate change/CO2 meetings and there may be pressure applied to "follow the leader". This all won't be without opposition, but we must watch and see the direction these things go."]

I doubt whether analists are taking this on board. It's a longer-term issue, although there were early signs (most notably the agreement between the US and China on climate). It cuts several ways. One could argue fossil fuels face a quadruple whammy:

• Relentless reduction in cost of alternatives
• Relentless increase in energy efficiency
• Escalating cost of exploiting new (non-shale) sources (no new non-shale project below $80 break-even)
• Possible efforts of limiting CO2 emissions

There are studies by reputable organizations (see details here) that argue that to limit CO2 to 450ppm would mean trillions of stranded assets in the oil and gas (and, most of all, coal) industry. Organizations like the Bank of England have commissioned studies to assess the financial impact of that.

However, the net effect on IOC is difficult to assess, the most expensive projects should be cut first and that should support prices at some time. Natural gas is 50% less CO2 intensive than oil and coal, and burns much cleaner (a not unimportant advantage if you care to google the health hazards of fine particle pollution).

These are tectonic plates shifting in energy land, but they move slow and alternatives are nowhere near to fill the void just yet (and still come with their own problems, like intermittency). This is stuff with a time scale of decades, not years.

[jft310]

Slide 35 of the AGM presentation shows LNG contracted supply dropping by 50 percent from 2021 to 2035 . Over 135 mtpa must be added to stay flat with today . And demand all over the world is supposed to rise much higher per Wood Mc Kenzie . The lowest cost new build per the slides additionally shows Papua LNG as that low cost to build . Think Arun which is now dry no more gas .
Japan and China are adding Regas terminals and many think even more need to built .
Today renewables can't compete with NG without HUGE government support .
How many Trillions is the U.S. in debt so whose gonna pay for the renewables ?.
Meanwhile we are selling gas in Asia not in the U.S..

[Putncalls]

There is a problem with solar and wind though. It's really expensive and it's not getting cheaper.

[Putncalls]

As and example of expensive:
In order to generate 100% of the electricity in the US with solar a state the size and location of Nevada would have to be 90% covered by thick film (most expensive) solar cells.

[admin]

There is a problem with solar and wind though. It's really expensive and it's not getting cheaper.

Agreed that there are problems with solar and wind, but it is getting cheaper

[Palm]

Not as sold on wind, but solar is making huge strides. And batteries are getting close.