Peyto Exploration & Development (PEYUF) inherited a drilled but uncompleted well (DUC) in the Bluesky formation when it acquired the acreage from Repsol (REPYY)(REPYF). This was yet another interval in which advancing technology now made possible low-cost production. This well performed much better than average. But it only recently paid back due to costs. This whole episode pointed out that the wells that make the highest production list in Alberta, Canada may not be the most cost-effective wells. The comp ...

Report Title - Central Point Continues to Decline, Focus on Arbitrage under Oil Transport Disturbance - 2026 Annual Outlook for Crude Oil Futures [1] Investment Rating - Not provided in the report Core Views - BRENT, WTI may test $50/barrel, SC may test CNY 380/barrel, and a trend rebound may not occur until the second half of 2026 [2] - Global inventory accumulation is the major trend under the increased production of OPEC+, the US, and non-OPEC+ countries, especially in the first half of the year; geopolitics and the oil transport market are the key variables [2] - The strategy is to short on rallies and focus on various types of arbitrage [3] Summary by Directory 1. 2025 Crude Oil Price Trend Review - In 2025, the international crude oil market was affected by seasonality and macro factors. The price center shifted downward year-on-year [6] - In Q1, prices first rose and then fell. In Q2, prices bottomed out and rebounded at the end of the month. In Q3, prices did not rise during the peak season and instead declined. In Q4, prices fell due to geopolitical and trade issues [6] 2. Supplementary Notes on Oil Price Influencing Factors and Pricing Mechanisms - The negative correlation between oil prices and the US dollar is difficult to recover in 2026 due to high core PCE in the US and a moderate pace of interest rate cuts [10] 3. Supply 3.1 US Shale Oil - The transmission logic of oil prices to shale oil involves multiple steps, with a time lag [15] - In 2025, production efficiency increased through cost reduction and efficiency improvement, offsetting the decline in the number of rigs [20] - Shale oil still faces cost pressure, including high break-even prices and increased equipment costs due to tariffs [28] - In 2026, US crude oil production is expected to remain stable, with increases in the Gulf of Mexico and Alaska offsetting the decline in the lower 48 states [33] 3.2 OPEC+ - In 2025, OPEC+ gradually exited production cuts and increased production, with an 80% completion rate by the end of the year [42] - In 2026, OPEC+ will adopt a "wait-and-see, then intervene" policy, with production policy adjustments depending on market conditions [77] - There are significant differences in OPEC production data among different institutions, which may lead to a reevaluation of the market's understanding of OPEC's remaining production capacity and global oil demand [55] 3.3 Non-OPEC+ - In 2025, non-OPEC+ supply increased by 1.7 million barrels per day, driven by offshore projects [88] - In 2026, the supply growth rate will slow down to 1.2 million barrels per day, with the Americas and the North Sea remaining the main sources of growth [89] 3.4 Supply Side Summary - In 2026, the global crude oil supply pattern remains uncertain. US production is expected to be stable, non-OPEC+ growth will slow down, and Russia's production may decline [94] 4. Geopolitical Disturbance and Trade Flow Changes 4.1 Observation Dimensions of Geopolitical Influence - Geopolitical events affect the crude oil market through price signals, market structure, and capital flow [95] 4.2 Major Geopolitical Events and Their Impact Paths - The Russia-Ukraine conflict continues, with the prospect of a ceasefire remaining uncertain. The outcome will affect the global oil market through supply and price premiums [105] - Venezuela's geopolitical risk is increasing, which will affect the heavy oil supply and price differentials [116] - The Middle East remains a high-risk area, with potential events such as the resurgence of the Iran-Israel conflict and the closure of the Strait of Hormuz [128] - Tensions in East Asia due to Japan's actions may disrupt key oil trade routes [132] 4.3 Importance of the Oil Transport Market - The oil transport market has become increasingly important, with运费 fluctuations affecting crude oil cross-regional spreads [141] - In 2025, oil transport freight rates increased significantly in Q4, and the market is expected to remain volatile in 2026 [145] 4.4 Key Points of Various Cross-Regional Arbitrages - SC-Dubai and SC-Brent spreads are affected by oil transport freight rates and regional inventories [169] - The EFS spread is expected to remain low in 2026 due to limited European demand and supply changes [178] - The Brent-WTI spread will continue to be influenced by freight rates in 2026 [179] 4.5 Key Points of Calendar Spread Arbitrage - SC calendar spreads are affected by supply and demand expectations, inventory levels, and arbitrage opportunities [183] - In 2026, SC calendar spreads are expected to remain flat in the first half of the year, with positive calendar spread arbitrage being the preferred strategy [190] 5. Global Refining Capacity and Supply-Demand Balance 5.1 2025 Review and 2026 Outlook - In 2025, global refining capacity increased by 232,250 barrels per day [191] - In 2026, global refining capacity is planned to increase by 1.45265 million barrels per day, mainly in Asia [195] 5.2 Refining Capacity Changes from 2021 to 2030 - From 2021 to 2025, global refining capacity decreased significantly, while from 2026 to 2030, it will show a trend of short-term rebound, continuous decline, and low-level fluctuation [203][204] - Asia will remain the core of global refining capacity growth, but the growth rate will slow down [206] 5.3 Refining Capacity Summary - In 2026, refining capacity changes will affect price differentials, but other factors such as freight rates and OPEC+ production adjustments also need to be considered [209] 6. Strategy Summary - In 2026, the crude oil market will be characterized by intensified supply-demand games, frequent geopolitical disturbances, and a reshaped oil transport pattern [210] - The price center is likely to continue to decline, and inventory accumulation will be the main trend, especially in the first half of the year [210] - The strategy is to short on rallies and focus on various types of arbitrage opportunities [3]

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].

Market Overview - Major U.S. index futures indicate a mixed opening, with Nasdaq 100 futures down by 0.5% and Dow futures up by 0.2% [1] - The Dow continues to benefit from a shift toward cyclical stocks, reaching a new record closing high [3] - Overall trading activity may be subdued due to a lack of major U.S. economic data [3] Company Performance - Broadcom (AVGO) shares are under pressure, down by 5.4% in pre-market trading despite better-than-expected fiscal fourth quarter results and positive guidance [2] - Other chipmakers like Advanced Micro Devices (AMD) and Micron Technology (MU) are also experiencing pre-market weakness, indicating a potential rotation out of tech stocks [2] - Oracle (ORCL) shares plunged by 10.8% after reporting fiscal second quarter earnings that exceeded analyst estimates but had weaker-than-expected revenues [5][6] Stock Index Movements - The Dow jumped 646.26 points or 1.3% to a new record closing high of 48,704.01, partly driven by a 6.1% increase in Visa (V) shares after an upgrade from Bank of America [4][5] - The S&P 500 rose 14.32 points or 0.2% to 6,901.00, while the Nasdaq closed down 60.30 points or 0.3% at 23,593.86 [4] Economic Indicators - Initial jobless claims in the U.S. rose to 236,000, an increase of 44,000 from the previous week's revised level of 192,000, exceeding economists' expectations [7] - Gold stocks surged by 4.3%, reaching a new record closing high, alongside a significant increase in gold prices [7][9] International Market Reactions - Asian stocks rallied following a less hawkish outlook from the U.S. Federal Reserve, with the Nikkei 225 Index jumping 1.4% [10][12] - Chinese shares rose, with the Shanghai Composite Index up 0.4% after pledges for a proactive fiscal policy [11] - European stocks moved higher, driven by optimism regarding potential interest rate cuts from the U.S. Federal Reserve [16]

Core Insights - ComEd has completed the expansion of the 765 kV Wilton Center substation, which is essential for connecting a significant number of utility-scale renewable energy projects to the grid starting in 2026 [1][2] Company Developments - The expansion allows ComEd to deliver over 2,000 megawatts of new renewable generation to meet increasing electricity demands from residential and business customers [2] - The Wilton Center substation's yard has been increased by 50% to 1.5 million square feet, minimizing environmental impact by reusing approximately 80,000 tons of topsoil and 90,000 tons of on-site clay [2] - New equipment installed includes 765 kV circuit breakers, transformers, disconnect switches, and extensive protection and control upgrades [2] Industry Context - The Wilton Center substation, built in 1968, supports the highest voltage transmission lines in the U.S., which are crucial for efficient long-distance power transmission [3] - After a minor upgrade planned for Q2 2026, the transmission system will support five wind farms and two solar farms, generating up to 2,450 megawatts of renewable energy for the PJM energy market [4] Project Details - The expansion supports several renewable projects, including the Heritage Prairie wind farm with up to 850 MW capacity, two 400 MW wind farms by Panther Grove Wind Energy, and other projects totaling significant renewable energy output [7]

Core Viewpoint - TotalEnergies is merging its UK upstream business with NEO NEXT Energy to form NEO NEXT+, an independent oil and gas producer in the UK, demonstrating its commitment to the UK oil and gas sector and energy security [1][3]. Group 1: Transaction Details - The merger will combine TotalEnergies' UK upstream assets, including Alwyn North, Dunbar, and Culzean, with NEO Energy's and Repsol UK's interests in various fields such as Elgin/Franklin, Penguins, Mariner, and Shearwater [2]. - The transaction is expected to be completed in the first half of 2026, pending regulatory approvals [2]. - TotalEnergies will hold a 47.5% stake in NEO NEXT+, with HitecVision and Repsol UK holding 28.9% and 23.6%, respectively [3]. Group 2: Financial Implications - TotalEnergies will retain up to $2.3 billion in decommissioning liabilities related to its legacy assets, which will support the cash flows of the combined entity [3]. - NEO NEXT+ is projected to produce over 250,000 barrels of oil equivalent per day (boepd) by 2026 [5]. Group 3: Strategic Importance - TotalEnergies' operational expertise in low-cost and low-emissions operations is expected to enhance cash flow generation for NEO NEXT+ [4]. - NEO NEXT+ aims to play a significant role in ownership consolidation within the UK Continental Shelf (UKCS) for the foreseeable future [6][7].

Core Insights - TotalEnergies UK has acquired a 47.5% stake in Neo Next Energy, indicating a strategic investment in the renewable energy sector [1] Company Summary - TotalEnergies UK is expanding its portfolio by investing in Neo Next Energy, which reflects the company's commitment to increasing its presence in the renewable energy market [1] Industry Summary - The acquisition highlights the growing trend of traditional energy companies diversifying into renewable energy sources, aligning with global sustainability goals [1]

Group 1 - TotalEnergies has agreed to merge its oil assets in the British North Sea with NEO NEXT Energy, a partnership between Repsol and HitecVision [1] - This merger indicates a strategic move by TotalEnergies to consolidate its operations in the North Sea region [1] - The partnership with NEO NEXT Energy reflects a trend of collaboration among major oil companies to optimize asset management and enhance operational efficiency [1] Group 2 - The merger is expected to create a more competitive entity in the North Sea oil market, potentially leading to increased production and cost efficiencies [1] - This development may influence the overall dynamics of the oil industry in the region, as companies seek to adapt to changing market conditions [1] - The collaboration could also signal a shift towards more sustainable practices in oil extraction and management, aligning with broader industry trends [1]

Core Viewpoint - Libya is positioning itself as a key player in Africa's gas future, highlighted by the opening of the Libya Africa International Gas Forum (LAIGF 2025) in Tripoli, which gathered over 500 delegates from various sectors and countries [1][2]. Group 1: Libya's Commitment and Strategy - The LAIGF 2025 is organized with endorsements from key national entities, signaling Libya's renewed commitment to gas exploration and partnerships [2]. - Libya's Minister of Oil and Gas, H.E. Dr. Khalifa Abdulsadek, emphasized the country's ambition to enhance the gas value chain and restore its status as a strategic energy partner in Africa and the Mediterranean [3]. - The National Oil Corporation (NOC) outlined an investment roadmap focusing on offshore and onshore developments, processing capacity expansion, and modernization of transmission infrastructure [4]. Group 2: Regional and International Perspectives - H.E. Mohammed Hamel, Secretary General of the GECF, highlighted Africa's growing influence in global gas markets and Libya's role in fostering inter-African collaboration and energy stability [5]. - Major international operators, including Repsol and TotalEnergies, expressed confidence in Libya's gas sector, citing significant untapped potential and ongoing investments [6]. - S&P Global Energy provided an assessment of Libya's competitive advantages, noting its world-class geology and improving conditions, which have attracted renewed interest from global investors [7]. Group 3: Libya's Role in Regional Integration - The event reinforced Libya's intention to act as both a gas producer and a gateway for African gas, promoting regional integration and diversification amid rising global demand [8].

Financial Performance (3Q 2025) - Revenues reached $96.9 million[10], with an operating income of $30.6 million[10] and a net income of $15.1 million[10] - Adjusted EBITDA stood at $61.6 million[10] - A cash distribution of $0.026 per common unit was paid in November 2025[10, 18] Key Transactions & Refinancing - Daqing Knutsen was purchased for a net cash cost of $24.8 million[12], with KNOT guaranteeing the hire rate until July 2032[12, 22] - A common unit buyback program was concluded in October, with 384,739 common units purchased for $3.03 million, averaging $7.87 per unit[13, 28] - The Synnøve Knutsen loan was refinanced with a new $71.1 million senior secured term loan facility[24] - Refinancing of the Tove Knutsen was completed, generating $32 million of net proceeds[16] Contractual Agreements & Fleet Utilization - Fleet operated with 99.9% utilization, or 96.5% overall including the drydocking of the Tove Knutsen[10, 74] - The term of the current time charter for the Bodil Knutsen was extended to a fixed term ending in March 2029, followed by two charterer's options each of one year[17] - The term of the current time charter for the Hilda Knutsen was extended by 3 months firm (to June 2026) plus a further 9 months at the company's option (to March 2027)[15] - A time charter for the Fortaleza Knutsen was executed with KNOT, to commence Q2 2026 for a fixed period of one year plus two charterer's options each for one additional year[27] Strategic Developments - KNOT made an unsolicited non-binding offer to purchase all publicly held common units of the Partnership for $10 in cash per common unit[9, 25] - Contractual backlog expanded to $939.5 million of fixed contracts averaging 2.6 years, with charterers' options averaging a further 4.2 years[32, 54]