2025 Energy Outlook_ 10 Questions, 40 Charts

Industry and Company Overview * Industry: Energy sector, focusing on natural gas, oil, and related infrastructure and services. * Key Companies: Antero Resources (AR), ARC Resources Ltd (ARX CN), Baker Hughes (BKR), ConocoPhillips (COP), Cenovus Energy (CVE CN), Chevron (CVX), Expand Energy (EXE), TechnipFMC (FTI), Pembina Pipeline Corp (PPL CN), Shell (SHEL), Scorpio Tankers (STNG), Tenaris S.A. (TEN), ExxonMobil (XOM), YPF S.A. (YPF) Key Themes and Insights 1. US Natural Gas Demand Growth: * Demand Pull: Improved permitting and infrastructure development expected to drive additional gas-fired generation and pipeline construction. * LNG Exports: Expectation for lifting of the "LNG Pause" benefiting infrastructure and natural gas producers. * Storage Situation: Tightening storage situation into the winter of 2025-26 due to rising production and demand. * Appalachia: Significant growth potential in natural gas power demand, driven by pipeline expansions and data center demand. 2. Global Oil Macro: * Non-OPEC Supply Growth: Expected to match global oil demand growth in 2025. * Iran Sanctions: Potential impact on global oil supply and prices. * China Demand: Significant contribution to global oil demand growth. 3. US Oil Future Role: * Shale Maturity: Oil sentiment negative, but oversupply thesis unlikely to dissipate. * US Supply: Wide dispersion in US oil supply, driving uncertainty. 4. LNG Outlook: * Oversupply Thesis: Pushed to the right due to project delays and higher-than-expected demand. * North American LNG: Expected to grow significantly, driven by operating, under-construction, and proposed projects. 5. Global Refining S&D: * Capacity Closures: Indicate marginally tighter supply and demand in the second half of 2025. * Refining Margins: Expected to remain under pressure due to excess cash balances and concerns over demand growth. 6. Energy M&A: * E&P Consolidation: Significant room for further M&A in the E&P sector. * Midstream Services: Likely to follow L48 E&P consolidation. 7. Midstream: * Strong Demand Fundamentals: Underpin volume growth across key North American basins. * Valuations: Expected to re-rate higher due to central bank policy easing and solid growth outlook. 8. Shipping: * Iran Sanctions: Potential for stricter enforcement under the Trump administration. * Tanker Utilization: Expected to increase, driving up spot rates for VLCCs and tankers. 9. International Capex: * Onshore Capex: Expected to remain flat in 2025. * Offshore Capex: Expected to increase in 2025, but decelerating trend is clear. Stock Picks * Buy: AR, ARX CN, BKR, COP, CVE CN, CVX, EXE, FTI, PPL CN, SHEL, STNG, TEN, XOM, YPF * Hold: APA, BRY, CNQ CN, CHRD, CIVI, DVN, ENB CN, EOG, HES, KEY CN, MUR, NOG, PPL, RRC, SUBC NO, TRP CN, TEN, YPF Conclusion The energy sector is expected to see significant growth in natural gas demand, driven by US LNG exports and global demand. Oil demand is expected to remain strong, but supply concerns and geopolitical factors could impact prices. Midstream and services companies are expected to benefit from strong demand fundamentals and improving valuations.