Summary of Key Points from the Expert Call on IEA's World Energy Outlook 2025 Industry Overview - The discussion focused on the **Global Oil and Gas** industry, particularly insights from the **IEA's World Energy Outlook 2025** [1] Core Insights 1. **Rising Electrification and Energy Demand** - Incremental energy demand growth over the next decade is expected to primarily come from emerging markets outside of China - Key demand drivers include the expanding car fleet, plastic production, air-conditioning uptake, and rapid data center build-out - Electricity demand is accelerating globally, with low-emissions generation expanding faster than electricity demand, especially in Asia - Renewables, particularly solar PV, are growing rapidly, while nuclear energy is regaining momentum, and natural gas usage is increasing - Coal demand is projected to peak by 2030 before declining, highlighting the need for dispatchable capacity and enhanced power system flexibility [2] 2. **Diverging Pathways for Oil Demand in Road Transport** - The WEO 2025 presents differing oil demand projections under the Current Policies Scenario (CPS) and Stated Policies Scenarios (STEPS) - Under CPS, oil demand is expected to grow until 2050, while STEPS indicates demand will flatten by 2030, later than previous forecasts - The divergence is attributed to the transport sector outside China, with CPS assuming lower global electric vehicle (EV) uptake (43% by 2040) compared to STEPS (55% by 2040) - The IEA assumes an EU internal combustion engine (ICE) ban in 2035, which could impact both scenarios if pushed back to 2040 - The agency updates key cost components annually to reflect declining trends in EV prices and other inputs [3] 3. **Natural Gas and Coal Dynamics** - Significant changes in natural gas and coal dynamics were noted, reflecting shifts in power sector policies, including reduced renewable incentives and improved LNG competitiveness - Global long-term energy demand is expected to plateau, with regional and fuel-specific variations - In the STEPS scenario, global natural gas demand is projected to peak after 2030, while some Southeast Asian markets may not reach a peak - Gas demand uncertainty is linked to the power sector, particularly the extent of coal-to-gas switching versus direct renewable adoption - An oversupplied LNG market is anticipated to lower prices, stimulating demand in Asia [4] Additional Important Points - The report emphasizes the importance of understanding the risks associated with oil and natural gas price volatility, refining margins, and exploration risks [6] - The document includes disclaimers regarding the potential conflicts of interest and the independence of UBS's research products [7][36] - The report is intended for professional clients and does not constitute investment advice [27][50]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the oil industry, specifically the Brent crude oil market and its dynamics in relation to global supply and demand factors [1][3][4]. Core Insights and Arguments - **Brent Crude Price Decline**: Brent crude prices have fallen below $60 per barrel, marking the lowest level in four years due to increased oil stockpiles and rising supply risks from Russia and Venezuela [3][4]. - **Global Stock Builds**: The pace of global visible stock builds has accelerated to 2.1 million barrels per day (mb/d) over the last 90 days, resulting in global oil storage reaching a four-year high [3][4]. - **Shifts in Oil Purchases**: Increased purchases of discounted Russian oil by China and India are freeing up more crude for OECD buyers, impacting pricing dynamics [3][4]. - **Market Dynamics**: Higher exports from the Middle East and Brazil, along with a moderation in China's demand, have contributed to softer crude prices in Asia compared to the Atlantic region [3][4]. - **Contango Formation**: The combination of a large global surplus and seasonal builds in OECD is likely to flip Brent and WTI prompt timespreads into contango [3][4]. - **Long-Term Supply Risks**: Escalating tensions between the US and Venezuela, along with potential negotiations for peace in Ukraine, present upside risks to long-term oil supply from these regions [3][4]. - **Net Supply Changes**: Trackable net supply has increased by 1.0 mb/d over the last week, driven by lower demand from OECD Europe and China, alongside higher production from Russia [3][4]. Additional Important Insights - **Refined Products Margins**: Margins for refined products have declined due to increased refinery output in the US, China, and Kuwait, and ongoing peace talks affecting market sentiment [4][5]. - **OECD Commercial Stocks**: OECD commercial stocks now stand at 2,812 million barrels, which is 56 million barrels below the end-of-December forecast [9][13]. - **China and OECD Demand**: The demand nowcast for China oil decreased by 0.3 mb/d to 17.4 mb/d, while OECD Europe oil demand decreased by 0.6 mb/d to 13.3 mb/d [39][45]. - **Oil Rig Counts**: The US oil rig count increased by 1 to 414, while Canada’s count decreased by 3 to 123 [10][9]. Conclusion - The oil market is currently experiencing significant fluctuations due to various geopolitical and economic factors. The decline in Brent prices, coupled with rising stock levels and changing demand dynamics, suggests a complex environment for investors and stakeholders in the oil industry. The potential for increased supply from Russia and Venezuela, along with shifts in purchasing patterns, will be critical to monitor in the coming months [3][4][10].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **North America Energy Services & Equipment (ESE)** sector, with a particular emphasis on the outlook for 2026 and the dynamics of oil and gas markets [1][4][10]. Core Insights and Arguments - **Market Outlook**: North America is nearing a bottom in terms of oil prices, with international onshore growth driven by OPEC activity. However, offshore growth is expected to be muted due to moderating efficiency gains [1][5]. - **Earnings and Valuations**: The ESE sector has seen a rally of approximately **30%** since the lows post-Liberation Day, resulting in year-to-date gains of about **5%**. Despite this, earnings estimates have fallen, leading to higher EV/EBITDA multiples and tighter free cash flow yields, now aligning with historical median levels [4][15]. - **Spending Trends**: North American onshore spending is expected to remain constrained, while international activity is projected to be flat in 2026 before increasing in 2027, driven by OPEC+ activity and unconventional gas opportunities [5][10][26]. - **Offshore Activity**: The outlook for offshore spending is more cautious, particularly for deepwater projects, due to anticipated efficiency gains that will limit the need for additional rigs [9][10][26]. Key Themes for 2026 - **Power and Data Centers**: There is an emerging opportunity in power generation, with demand expected to grow at a **2.6% CAGR** through 2035, driven by data center growth and electrification. Companies like HAL and LBRT are positioned to provide power solutions directly to end-users [10][35][41]. - **Oil and Gas Price Forecasts**: Oil prices are expected to decline by approximately **20%** since the start of 2025, with a forecasted surplus of **~2 mb/d** in 2026, potentially reaching **~3 mb/d** in the first half of 2026. Brent prices are anticipated to drop to around **$60/bbl** before a recovery begins in mid-2027 [10][63][64]. - **Rig Counts and Efficiency**: The total US rig count has decreased by **~7%** since the beginning of 2025, with oil-directed rigs down by **~14%** and gas-focused activity up by **25%**. Efficiency improvements have led to a reduction in drilling days per well [77][80][86]. Company-Specific Insights - **Top Picks**: HAL is identified as a top pick due to its exposure to the Middle East and power generation opportunities. The strategic partnership with VoltaGrid is highlighted as a key differentiator [14][54]. - **NOV Downgrade**: NOV has been downgraded to equal-weight due to its significant offshore capex exposure and less resilience in oil and gas production opex compared to peers [14][54]. Additional Important Points - **Investment Strategy**: The report emphasizes a preference for stocks with defensive and unique revenue streams, favoring gas over oil-focused activities and spending tied to existing production [54][43]. - **Long-term Trends**: The report notes that oil capex represents only **~55%** of revenues for the covered companies, with significant contributions from gas capex and non-upstream markets, indicating a shift in revenue dynamics [45][50]. This summary encapsulates the critical insights and projections for the North America Energy Services & Equipment sector as discussed in the conference call, highlighting both opportunities and challenges in the current market landscape.

Key Takeaways from the Conference Call Industry Overview - The focus is on the oil and gas industry, specifically the dynamics between Oil Services, Big Oil, and Exploration & Production (E&Ps) sectors - The preferred sector strategy is Oil Services > Big Oil > E&Ps, indicating a bullish outlook on Oil Services due to expected revenue growth and margin expansion [1][9] Core Insights and Arguments - **Brent Oil Price Forecast**: A forecast of $60 per barrel for Brent oil in 2026 is expected to create significant pressure on free cash flow (FCF) across sectors, with E&Ps facing the most strain, followed by Big Oils and then Oil Services [1][2] - **Revenue Growth**: European Oilfield Services (OFS) are projected to see a 5% year-over-year revenue growth in 2026, while Big Oils are expected to experience nearly flat production growth [1][9] - **Earnings Estimates**: The average year-over-year EBITDA growth is estimated at +5% for OFS, -4% for Big Oil, and -10% for E&Ps under the $60/bbl Brent forecast [2][9] - **Capex Trends**: Industry capital expenditures (capex) are expected to flatline, further squeezing FCF and impacting cash returns to shareholders, with Big Oil buybacks projected to decrease by nearly 25% year-over-year [2][9] Company-Specific Insights - **TotalEnergies (TTE)**: Identified as a top pick due to its resilience and undervaluation, with a breakeven oil price expected to decline through organic growth in oil and gas volumes [3][4] - **Galp**: Noted for its significant production growth, projected at over 10% in 2026, which stands out among European Big Oils [4][36] - **Saipem**: Expected to benefit from margin expansion and a strong order book, with a projected 20% year-over-year EBITDA growth in 2026 [26][28] Additional Important Insights - **E&P Sector Vulnerability**: The E&P sector is facing significant challenges, with many companies carrying high debt levels and cash flow break-evens above the $60/bbl forecast, leading to limited defensive options [24][46] - **Dividend Yields**: Some E&Ps are offering double-digit dividend yields as a form of protection against market volatility, with Ithaca Energy highlighted for its strong balance sheet and low break-even price of $45/bbl [45][46] - **Balance Sheet Pressure**: The overall balance sheet strength of Big Oils is under scrutiny, with increasing net debt levels despite asset disposals, indicating a need for more inorganic growth cushions [23][24] Conclusion - The oil and gas industry is navigating a challenging environment with a $60/bbl Brent oil price forecast, impacting cash flows and shareholder returns across sectors. Oil Services are positioned to perform better than Big Oil and E&Ps, with specific companies like TotalEnergies and Galp standing out for their growth potential and resilience.

ab 9 December 2025 Global Research First Read Output from OPEC+8 carrying voluntary down -80kb/d In November, crude output from OPEC-9 and its partners fell by 174kb/d m/m to an average 37.5Mb/d. The total production change from the eight countries carrying the voluntary cuts was down 80kb/d m/m, vs. the planned adjustment (incl. new compensation plan) of -99kb/d. Russia led the decline, falling by 150kb/d m/m, followed by Saudi Arabia -100kb/d m/m, partly offset by increased Kazakh production (+120kb/ d). ...

J P M O R G A N Global Markets Strategy 04 December 2025 Oil Markets Weekly Two weeks in—assessing the early impact of Russia sanctions Global Commodities Research Natasha Kaneva (1-212) 834-3175 natasha.kaneva@jpmorgan.com Lyuba Savinova (1-212) 270-3781 lyuba.savinova@jpmchase.com JPMorgan Chase Bank NA {[{-M8qAsmq5A_F8c4rlNai3e56JB7o430cCPuNzl61-I8ZuK6-CUCqX9qPqqCUkSFAFU1eyT-xi34wvYG3}]} • Despite the expansion of sanctions and the expiration of the transition window on 21 November, Russian crude flows i ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **oil refining industry** and **crude shipping** dynamics, particularly focusing on the **Chinese market** and **geopolitical influences** affecting refining margins and shipping rates. Key Insights and Arguments 1. **Volatility in Refining Margins**: - Overseas refining margins have experienced significant fluctuations due to geopolitical tensions, with the UBS European Composite Refining Margin increasing from approximately **US$14/bbl** in late October to **US$20/bbl** in November, before dropping to **US$12.69/bbl** due to reduced risk premiums from Russia/Ukraine discussions [2][4][27]. 2. **Refinery Utilization Rates**: - Major refineries in China saw a **4.16 percentage point** month-over-month decrease in utilization, dropping to **79.22%** in November, attributed to maintenance and nearing completion of annual production plans. In contrast, utilization at teapot refineries increased by **3.79 percentage points** to **62.28%** [3][27]. 3. **Oil Product Prices and Exports**: - Brent crude futures remained stable at **US$64/bbl** in November. Domestic retail price ceilings for gasoline and diesel were raised by **Rmb55/t**. Year-over-year exports of gasoline, diesel, and kerosene increased by **12%**, **56%**, and **18%** respectively in October [3][27]. 4. **Crude Import Quotas**: - The first batch of China's crude import quota for 2026 expanded by **29% year-over-year**, while the total import quota for non-state-owned crude trade remained stable at **260 million tonnes** for 2026 [3][27]. 5. **VLCC Rates and Shipping Dynamics**: - Current Very Large Crude Carrier (VLCC) rates are between **US$130,000 and US$140,000 per day**, supported by seasonal demand and limited supply. The shadow fleet is estimated to consist of over **1,400 tankers**, with about **500** not on the sanctions list [4][27]. 6. **Geopolitical Risks and Future Uncertainties**: - Potential easing of geopolitical conflicts, OPEC+ output decisions, and the profitability of Chinese refineries are highlighted as uncertainties that could impact VLCC rates and overall demand [4][27]. Additional Important Information - **Regulatory Environment**: The refining and retail oil product marketing industries in China are currently in oversupply, which poses risks related to competitive pressures and government policy changes, including potential windfall profit taxes and price controls [27]. - **Market Dynamics**: The report emphasizes the seasonal nature of oil prices and refining margins, which can lead to volatile earnings in the sector from quarter to quarter [27]. This summary encapsulates the critical insights from the conference call, focusing on the oil refining industry and its dynamics influenced by geopolitical factors and market conditions.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Oil and Gas - **Key Organization**: OPEC and OPEC+ partners Core Insights and Arguments - **Production Targets Confirmation**: OPEC+ confirmed production targets for all members until the end of 2026, which aligns with market expectations and is expected to be neutral for oil prices [2][3] - **Voluntary Cuts**: Eight OPEC+ members decided to pause their production increase in the first quarter of 2026, maintaining flexibility for future adjustments [2][3] - **Maximum Sustainable Production Capacity (MSC)**: OPEC+ agreed on a mechanism to assess MSC, which will serve as a reference for 2027 production baselines. This audit is unprecedented and aims to enhance transparency and stability in the oil market [3][4] - **Audit Process**: The audit will be conducted by US-based consultant DeGolyer and MacNaughton, excluding countries under sanctions (Russia, Venezuela, and Iran). The process is expected to start early next year and conclude by September 2026 [3][4] - **Long-term Support for Oil Prices**: The audit mechanism could support oil prices in the second half of 2026 by highlighting reduced spare capacity, despite some members struggling to ramp up production recently [4] Short-term Focus - **Russia/Ukraine Situation**: Developments in the Russia/Ukraine conflict are critical in the near term, with potential agreements impacting refining and natural gas markets. A deal could lower the risk premium on oil prices, potentially bringing Brent crude below $60 per barrel temporarily [5] - **Current Oil Price Forecast**: The base case for oil prices is projected at $63 per barrel for Brent in Q4 2025 and $62 per barrel in Q1 2026, assuming no significant supply disruptions or peace agreements [5] Additional Important Information - **Production Capacity Data**: Current production levels and quotas for OPEC members indicate that some countries are not meeting their production targets, which could affect overall market dynamics [11] - **Volatility of Oil Prices**: Historical data shows that oil prices are highly volatile and influenced by unpredictable events, including geopolitical tensions and natural disasters [16] This summary encapsulates the essential points discussed in the conference call, focusing on the oil industry's current state, OPEC's strategies, and the implications for future pricing and market stability.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the oil industry, particularly the geopolitical risks affecting oil prices and exports, with a specific emphasis on Russia, Kazakhstan, and Venezuela [3][5][9]. Core Insights and Arguments 1. **Brent Crude Price Stability**: The Brent crude price has remained stable in the low $60s amid ongoing Russia-Ukraine peace talks, which have not yielded significant breakthroughs [3][5]. 2. **Russian Oil Export Revenue Decline**: - Seaborne oil exports from major Russian producers Lukoil and Rosneft have decreased by 1.1 million barrels per day (mb/d), or 42%, since the announcement of sanctions in October [3][5]. - Overall Russian oil export revenues in Rubles have fallen by approximately 50% year-to-date, dropping from 7.6% of GDP to 3.7% [3][5]. 3. **Geopolitical Risks Impacting Kazakhstan and Venezuela**: - Kazakhstan's oil exports may be affected by the Caspian Pipeline Consortium's efforts to restore full capacity following drone attacks, with current exports potentially 0.5 mb/d below capacity [3][5]. - Venezuela's oil production has decreased by 0.5 mb/d over the last two months due to escalating military risks, although there is potential for long-term recovery with the return of Western investments [3][5]. 4. **US Oil Production Growth**: - The US EIA report for September indicated a year-over-year increase in US liquids production by 1.3 mb/d, with a nearly equal split between crude and natural gas liquids (NGLs) [3][5]. - Public oil producers in the US reported nearly 2% higher Q3 oil production than previously expected [3][5]. 5. **Brazil's Record Oil Production**: Brazil's oil production rose by 0.76 mb/d, or 24% year-over-year, reaching a new record high in October [3][9]. 6. **Refined Products Margins**: European diesel margins have declined by $11 per barrel from mid-November highs, influenced by peace-talk headlines and expectations of increased Chinese product export quotas [3][9]. Additional Important Insights - **Global Oil Stocks**: Global visible oil stocks have increased by nearly 2 mb/d over the past 30 days, indicating a potential oversupply in the market [3][9]. - **US Oil Rig Count**: The US oil rig count decreased by 12 to 407 last week, which may signal a slowdown in future production growth [12]. - **Future Supply Growth Expectations**: Strong supply growth is anticipated outside of OPEC+ and the US Lower 48 crude regions into the next year, with several new projects expected to come online [25][30]. This summary encapsulates the critical points discussed in the conference call, highlighting the current state of the oil industry, geopolitical influences, and production trends.

Summary of the Conference Call on the Oil Services Industry Industry Overview - The report focuses on the oil services industry, specifically the period from 2000 to 2050, highlighting the evolution and future outlook of the sector [6][11]. Key Periods in the Oil Services Journey - The journey is divided into five periods: 1. The Golden Age (2000-2014) 2. The Great Disruption (2015-2024) 3. Drill, Baby Drill (2025-2029) 4. The Age of Sustainability (2030-2035) 5. The Age of Circularity (2036-2050) [11]. Core Insights and Arguments - The oil market is currently perceived as oversupplied, with a short-term supply increase peaking in early 2025, but a rapid rebalancing is anticipated in 2026 [7][9]. - A significant IEA report indicates that 90% of current oil and gas capital expenditures (capex) are for maintaining production rather than increasing it, suggesting a structural under-supply in the long term [10]. - The need for new drilling is underscored by projected decline rates of oil production, estimated at approximately 8% CAGR post-2025, necessitating new investments [15]. Investment and Capex Plans - Aramco's CFO highlighted the importance of massive investments in subsurface data acquisition and computing power, indicating a shift towards more data-driven operations [18]. - ADNOC announced a $150 billion capex plan for 2026-2030, aimed at maintaining operations and meeting growing global energy demand [25]. - Argentina's Vaca Muerta shale play is experiencing rising oil production, with production surpassing 447,000 barrels per day in March 2025, although rig counts remain historically low [20][23]. Market Dynamics and Future Projections - The report suggests that the current "Drill, Baby Drill" cycle may peak around 2028, driven by various factors including new offshore basins with low break-even prices and increasing global oil demand [29][38]. - SLB, Saipem, and Tenaris have forecasted a rebound in upstream spending in Saudi Arabia, indicating improved prospects for the oil services industry [39]. Company-Specific Insights - SLB is positioned as a key beneficiary of the improved market outlook, particularly in the Middle East, with a market share of nearly 10% in the region [39]. - Subsea 7 and Saipem are expected to create a new entity, "Saipem7," which will enhance their competitive positioning in the subsea market [44]. - Technip Energies is projected to have a record year for order intake in 2026, with several significant projects likely to be sanctioned [45]. Pricing Power and Market Conditions - The pricing power thesis for Tenaris and Vallourec remains intact, supported by tight capacity for premium tubes and rising costs [33]. - The report anticipates a gradual recovery in pricing conditions starting from the second half of 2026 as inventories clear [33]. Conclusion - The oil services industry is undergoing significant changes, with a focus on innovation, investment in technology, and a shift towards sustainability. The upcoming years are expected to bring both challenges and opportunities as companies adapt to evolving market dynamics and increasing global energy demands [11][39].