The Top Public Companies for an Energy Transition

This data-file compiles all of our insights into publicly listed companies and their edge in the energy transition: commercialising economic technologies that advance the world towards ‘net zero’ CO2 by 2050.

Each insight is a differentiated conclusion, derived from a specific piece of research, data-analysis or modelling on the TSE web portal; summarized alongside links to our work. Next, the data-file ranks each insight according to its economic implications, technical readiness, its ability to accelerate the energy transition and the edge it confers on the company in question.

Each company can then be assessed by adding up the number of differentiated insights that feature in our work, and the average ‘score’ of each insight. The file is intended as a summary of our differentiated views on each company.

The screen is updated monthly. At the latest update, in October-2020, it contains 180 differentiated views on 90 public companies.

Oil markets: waiting game?

Oil prices must entrench well above $50/bbl for 2023-25 oil markets to balance. But prices could materially overshoot. This short 4-page note presents our latest conclusions, and top charts on oil supply-demand, including our outlook to 2025.

US shale: the economics?

This data-model breaks down the economics of US shale, in order to calculate NPVs, IRRs and oil price break-evens of future drilling in major US basins (predominantly the Permian, but also Bakken and Eagle Ford).

Our base case conclusion is that a $40/bbl oil price is required for a 10% IRR on a $7.0M shale well with 1.0 kboed of IP30 production. Break-evens mostly vary within a range of $35-50/bbl. They are most sensitive to productivity, which can genuinely unlock triple-digit IRRs, even at $40/bbl.

Underlying the analysis is a granular model of capex costs, broken down across 18 components (chart below). Costs are calculated off of input variables such as rig rates, frac crew costs, diesel prices, sand prices, tubular steel prices, cement prices and other more niche services.

Stress-testing the model. You can flex input assumptions in the ‘NPV’ and ‘CostBuildUp’ tabs of the model, in order to assess economic consequences.

 

Low-carbon refining: insane in the membrane?

Almost 1% of global CO2 comes from distillation to separate crude oil fractions at refineries. An alternative is to separate these fractions using precisely engineered polymer membranes, eliminating 50-80% of the costs and 97% of the CO2. We reviewed 1,000 patents, including a major breakthrough in 2020, which takes the technology to TRL5. Refinery membranes also comprise the bottom of the hydrogen cost curve. This 14-page note presents the opportunity and leading companies.

Refinery membranes: where’s the IP?

This data-file reviews over 1,000 patents to identify the technology leaders aiming to use membranes instead of other separation processes (e.g.,  distillation) within refineries.

Covered companies in the screen include Air Liquide, Air Products,  Aramco, BASF, BP, Chevron,  Dow, ExxonMobil, GE, Honeywell, IFP, MTR, Praxair, Shell, WR Grace and Zeon. A brief overview is prented for each company, along with a summary of their recent patent filings, and all the underlying details.

Operational data are also presented for two interesting cases: Exxon’s recent refinery membrane breakthrough (chart below) and Air Products’s PRISM membranes for hydrogen separation.

A database of historical commodity prices and disruptions

This data-file aggregates long-term historical prices of commodities going back to 1800, and running up until 1970, predominantly in the US, using academic records and census data.

Covered commodities include bricks, coal, copper, cotton, nails, rock oil, steel rails, sugar, turpentine, whale oil, wheat and wood. A combined profile of all of these commodities is aggregated in the index above.

In particular, we focus in upon the disruption of whale oil as a lighting fuel and the disruption of wood as a heating fuel, using granular data into pricing and demand. Our conclusions are presented in a research note linked here.

Global Energy Markets: 1750 to 2100

This model breaks down 2050 and 2100’s global energy market, based on a dozen core input assumptions.

You can ‘flex’ these assumptions, to see how it will affect future oil, coal and gas demand, as well as global carbon emissions.

Annual data are provided back to 1750 to contextualize the energy transition relative to prior transitions in history (chart below).

We are positive on renewables, but fossil fuels retain a central role, particularly natural gas, which could ‘treble’ in our base case.

A fully decarbonised energy market is possible by 2050, achieved via game-changing technologies that feature in our research.

Turning the tide: is another offshore cycle brewing?

Oil markets look primed for a new up-cycle by 2022, which could culminate in Brent surpassing $80/bbl. This is sufficient to unlock 20% IRRs on the next generation of offshore projects, and thus excite another cycle of offshore exploration and development. Beneficiaries include the technology leaders among offshore producers, subsea services, plus more operationally levered offshore oil services. The idea is laid out in our 17-page note.

Ventures for an Energy Transition?

This database tabulates almost 300 venture investments made by 9 of the leading Oil Majors, as the energy industry advances and transitions.

The largest portion of activity is now aimed at incubating New Energy technologies (c50% of the investments), as might be expected. Conversely, when we first created the data-file, in early-2019, the lion’s share of historical investments were in upstream technologies (c40% of the total). The investments are also highly digital (c40% of the total).

Four Oil Majors are incubating capabilities in new energies, as the energy system evolves. We are impressed by the opportunities they have accessed. Venturing is likely the right model to create most value in this fast-evolving space.

The full database shows which topic areas are most actively targeted by the Majors’ venturing, broken down across 25 sub-categories, including by company. We also chart which companies have gained stakes in the most interesting start-ups.

Oil markets: the next up-cycle?

2022 oil markets now look 2Mbpd under-supplied, portending another industry up-cycle. 1.5bn bbls of excess inventories from the COVID crisis have likely been drained by early-2021, allowing OPEC to ramp back fully from production cuts by mid-2021. Yet this year’s disruption to shale and across the wider industry will drain a further 2.5bn bbls from inventories by mid-2023. It takes until 2024 for oil markets to re-balance. Inventories remain historically low until late in the decade.

This 4-page note makes the case for the next oil industry up-cycle, with a one-page summary of our thesis, plus three pages of charts covering market balances, demand, shale, other supply, inventories and our Monte Carlo analysis. The underlying models are available here for TSE clients.