A Puzzling Chart - Kuwait Capital Spending
(Below the Paywall Post)
The following charts are adopted from my September post titled Following in Rockefeller's footsteps - 115.5 years of O&G capex data (HERE)
Every Monday, I will feature a few charts from a recent post that was behind the paywall to provide you with (1) a look at my historical research process & product in order to (2) hopefully entice you to try out the paid subscription service by hitting the button below.
Annualizing first half capital spending trends for those publicly traded companies & NOCs that have reported it appears that “trackable” O&G capex translated to U.S. dollars is down 2.8% y/y.
As I was putting together this chart, there are a few important points to note:
Data for the Integrateds, E&Ps, U.S. Refiners, Chinese SOEs, Canadians, ARAMCO, PEMEX, and Petrobras are based on annualized figures as of the 2Q year-to-date.
PDVSA has not disclosed data since 2016, but we can assume its capex growth is minimal.
Since the sanctions, Russian oil and gas companies have been reporting data with a delay. I will update the chart when their latest data becomes available.
Then there's Kuwait Petroleum Company.
Many may not know this, but Kuwait Petroleum Company is one of the few national oil companies (NOCs) in the Middle East that publishes an annual report (HERE). The auditor is KPMG, but unfortunately, there is a significant delay, with the latest report covering the fiscal year from March 2022 to March 2023.
In that annual report, they outline a sustainable production capacity target of 4.0 million barrels per day, compared to the current production level of 3.0 million barrels per day.
Late in the summer, many oil bears highlighted this as a reason to be bearish on prices.
However, this was not "new news" — the same objective was outlined in the 2021-2022 Annual Report.
It's safe to say that the target is almost 4 years old! But that's not my point.
The great thing about these annual reports is that they provide capital spending data spanning over 20 years.
To add a million barrels per day, a significant amount of capital is required, and as the chart above shows, KPC has been doing anything but increasing its capex over the last few years.
In fact, KPC will likely need to raise additional capital if it hopes to meet its targets (HERE).
My point is, while there were legitimate reasons to be bearish on oil over the near term, this wasn’t one of them.
See ya next time.
-Rob Connors, CFA, CPA, Capital Spending Data Collector
Disclosure & Terms of Use
Nothing in this content should be considered personalized financial advice or a solicitation to buy or sell any securities.
The content provided here is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by The Crude Chronicles LLC are solely their own. Nothing in this content constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. An investment in any financial instrument involves risks. Some or all the securities discussed may not be suitable for you. Please consult your own investment or financial advisor for advice related to all investment decisions.
Terms of Use: Paying subscribers are permitted to use these charts for their own use (i.e. sharing internally or within published research to external clients) provided proper sourcing is used. Please source as "thecrudechronicles.substack.com"