According to the International Energy Agency (IEA), global investment in fossil fuels fell by 20% in 2020, to $536 billion. This was the lowest level of investment since 2014.
The decline in investment was driven by a number of factors, including the COVID-19 pandemic, which led to a sharp drop in energy demand, and the increasing cost of extraction.
The IEA expects investment in fossil fuels to remain weak in the coming years.
In its World Energy Outlook 2022, the IEA projects that global investment in fossil fuels will average $500 billion per year between 2022 and 2026. This is below the level of investment needed to meet the world’s energy needs in a sustainable way.
The decline in investment in fossil fuels is a positive development for the environment. It is helping to reduce greenhouse gas emissions and air pollution.
However, it is also a challenge for the global economy. Fossil fuels are still a major source of energy for many countries, and the decline in investment could lead to higher energy prices and job losses in the fossil fuel sector.
One likely upshot of this reality is a very strong context for small but growing fossil fuel producers. They will be stepping into a field of shrinking competition and higher margins for at least the coming decade.
With that in mind, we take a look below at some of the most interesting names in the space.
Matador Resources Co. (NYSE:MTDR) engages in the exploration, development, production, and acquisition of oil and natural gas resources. It operates through the following segments: Exploration and Production, Midstream, and Corporate.
The Exploration and Production segment focuses on the exploration, development, production, and acquisition of oil and liquids-rich portion of the Wolfcamp and Bone Spring. The Midstream segment conducts natural gas processing, oil transportation services, oil, natural gas and produced water gathering services, and produced water disposal services to third parties.
Matador Resources Co. (NYSE:MTDR) recently announced financial and operating results for the first quarter of 2023. A short slide presentation summarizing the highlights of Matador’s first quarter 2023 earnings release is also included on the Company’s website at www.matadorresources.com on the Events and Presentations page under the Investor Relations tab.
Joseph Wm. Foran, Matador’s Founder, Chairman and CEO, observed, “Our results for the first quarter of 2023 were above our expectations both operationally and financially and constituted a strong start to the year. We set new operational records in the first quarter. Then, shortly following the end of the first quarter, we closed the acquisition of Advance Energy Partners Holdings, LLC (“Advance”) for approximately $1.6 billion that added over 100 million barrels of oil and natural gas equivalent reserves to the 357 million barrels of oil and natural gas equivalent reserves that we already had. This acquisition sets up another record year of production in 2023 and an even better 2024. For additional information regarding our operational and financial results in the first quarter of 2023 and the closing of the Advance acquisition, please see the set of seven slides identified as ‘Chairman’s Remarks’ (Slides A through G) on our website.
“In addition to the better-than-expected production during the first quarter of 2023, we also had lower-than-expected capital expenditures for both our drilling, completing and equipping costs and our midstream capital expenditures. These lower capital expenditures are primarily due to the timing of operations and our planned midstream projects. Innovation and operating efficiencies, which include faster drill times, dual-fuel fracturing fleets, simultaneous and remote fracturing operations and the use of existing facilities, continue to improve and help to mitigate the inflationary pressure of service costs. The Company expects to utilize dual-fuel fracturing equipment for over 95% of wells completed in 2023 and to increase its use of simultaneous fracturing operations from 45% in 2022 to over half of our 2023 completions.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 11% in that timeframe. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -4%.
Matador Resources Co. (NYSE:MTDR) managed to rope in revenues totaling $563.7M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -15%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($503.4M against $601.4M, respectively).
Camber Energy Inc (NYSE American:CEI) bills itself as a growth-oriented diversified energy company. Through its majority-owned subsidiary, Camber provides custom energy & power solutions to commercial and industrial clients in North America and owns interests in oil and natural gas assets in the United States.
The company’s majority-owned subsidiary also holds an exclusive license in Canada to a patented carbon-capture system, and has a majority interest in: (i) an entity with intellectual property rights to a fully developed, patented, ready-for-market proprietary Medical & Bio-Hazard Waste Treatment system using Ozone Technology; and (ii) entities with the intellectual property rights to fully developed, patent pending, proprietary Electric Transmission and Distribution Open Conductor Detection Systems.
Camber Energy Inc (NYSE American:CEI) most recently announced that on April 25, 2023 the Company entered into agreements (collectively, the “Termination Agreements”) canceling and terminating, effective as of the agreement date, one hundred percent of the warrants held by Discover Growth Fund, LLC (“Discover”) and Antilles Family Office, LLC (“Antilles”). The Termination Agreements also include a provision granting the Company the right to redeem the remaining shares of Series C Preferred Stock held by Antilles, subject to the conditions set out therein. Prior to entering into the Termination Agreements Camber had already extinguished, through redemptions and conversions, approximately ninety-four percent of previously issued shares of Series C Preferred Stock.
James Doris, President & CEO of Camber stated “We continue to improve the company’s capitalization, and are firmly committed to strengthening our platform and expanding our portfolio of products, services and innovative technologies that are in high demand regardless of market conditions.”
Additional details regarding the Termination Agreements were included in, and the description above is qualified in its entirety by, Camber’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2023, which is available under “investors” – “SEC filings” at www.camber.energy.
Camber Energy Inc (NYSE American:CEI) is currently working through a proposed transaction which contemplates a wholly owned subsidiary of Camber merging with and into Viking Energy Group Inc. (OTC US:VKIN), with Viking surviving the Merger as a wholly-owned subsidiary of Camber and Camber remaining the sole publicly-traded entity. Viking has proven oil and gas assets valued at over $96 million located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi.
Diamondback Energy Inc. (Nasdaq:FANG) is an independent oil and natural gas company, which engages in the acquisition, development, exploration, and exploitation of unconventional, onshore oil, and natural gas reserves. It operates through the Upstream and Midstream Services segments.
The Upstream segment focuses on the Permian Basin operations in West Texas. The Midstream Services segment is involved in the Midland and Delaware Basins.
Diamondback Energy Inc. (Nasdaq:FANG) recently put out a letter to shareholders that was very insightful.
“This letter is meant to be a supplement to our earnings release and is being furnished to the Securities and Exchange Commission (SEC) and released to our stockholders simultaneously with our earnings release. The intent of this new form of communication is to increase transparency with our stockholders and add additional color as to how management is thinking about the business outside of the numbers presented in the earnings release. Instead of beginning tomorrow morning’s earnings call with prepared remarks, we will instead move straight to Q&A. I hope you enjoy this new form of stockholder communication. Please see the information regarding forward-looking statements and non-GAAP financial information included at the end of this letter.
“Diamondback continued to execute in the first quarter, with oil production near the high end of our first quarter guidance and total production above the high end of our guidance. Production is expected to continue to increase in the second quarter as we will have a full quarter of contribution from our Lario acquisition in our numbers, as well as some expected organic growth. This trend is expected to continue through 2023 as we bring on large pads with high net revenue interest in our core development areas in the Northern Midland Basin. Therefore, we are guiding to second quarter production of 258 – 261 MBO/d (430 – 436 MBOE/d), and remain confident in our full year production projection of 256 – 262 MBO/d (430 – 440 MBOE/d).”
And the stock has been acting well over recent days, up something like 6% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -5%.
Diamondback Energy Inc. (Nasdaq:FANG) managed to rope in revenues totaling $1.9B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -20.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($53M against $1.9B, respectively).
Other key small-cap energy players include SilverBow Resources Inc. (NYSE:SBOW), Helmerich & Payne Inc. (NYSE:HP), SM Energy Co. (NYSE:SM), and VanEck Oil Services ETF (NYSEArca:OIH)
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