Summary of Global Oil Services Conference Call Industry Overview - The focus is on the **Global Oil Services** industry, with a specific outlook for **2026** highlighted in the report [1][2]. Core Insights and Arguments - The report suggests that the oil services sector may be at an **inflection point**, primarily driven by changing investor perceptions rather than fundamental economic shifts [2][3]. - Investor interest has been historically low, but there are signs of a shift as the sector's valuation improved from **1.3x EV/Revenue** in October 2025 to **1.44x** in December 2025, following positive earnings calls from major companies [3][19]. - **Thirteen relevant themes** have been identified for the oil services sector, with five expected to gain momentum in 2026: 1. Investor interest 2. The Middle East 3. OCTG (Oil Country Tubular Goods) 4. Exploration 5. Digital advancements [4][23]. Key Themes and Trends - The **Middle East** is expected to see a significant increase in capital expenditures, particularly with **Adnoc** launching a **$150 billion** capex plan for 2026-2030 [4][24]. - **OCTG** volumes are anticipated to rise in the second half of 2026, with potential price increases due to steel tariffs and improved pricing power [4][24]. - **Exploration** spending is set to increase, with companies like **Chevron** planning to boost exploration capex by approximately **50%** [4][24]. - The **Digital** sector is highlighted as a growth area, with companies like **SLB** and **Adnoc** investing in AI tools to enhance operational efficiency [4][25]. Financial Strength and Valuation - The oil services industry is reported to be in a stronger financial position compared to previous cycles, with a **CFO-to-revenue ratio** of **15%**, a **net-debt-to-assets ratio** of **14%**, and a **ROIC** of **9%** [26][27]. - Despite a supportive macro environment, investor engagement in the sector has not met expectations, indicating potential for future growth [7][26]. Investment Recommendations - The report lists preferred stocks for 2026: - **Tenaris** (Target Price: €21) - **SLB** (Target Price: $52.3) - **Vallourec** (Target Price: €22.6) - **Saipem** (Target Price: €3.54) - **Subsea 7** (Target Price: NOK240) [5][41]. - Short-term trading opportunities are identified in **Technip Energies**, **GTT**, **Viridien**, **SBM Offshore**, and **Rubis** [5][41]. - Long-term value is seen in **Adnoc Drilling** and **Adnoc L&S** [5][41]. Additional Insights - The oil services sector has largely **decorrelated from oil prices** since 2022, indicating a shift in how the sector's performance is influenced by oil market fluctuations [32][36]. - The **free cash flow** for the industry reached **$26 billion** in 3Q25, surpassing the previous peak of **$15.5 billion** in 2015, reflecting strong cash generation capabilities [37][39]. Conclusion - The Global Oil Services industry is poised for potential growth in 2026, driven by improved investor sentiment, strategic capital investments in the Middle East, and advancements in digital technology. The financial health of the sector supports a positive outlook, with several companies identified as key investment opportunities.

Summary of Key Points from the Conference Call Industry Overview - The document discusses the oil industry, specifically focusing on the International Energy Agency (IEA) and Goldman Sachs (GS) forecasts for global oil supply and demand from 2024 to 2027 [3][5][6]. Core Insights and Arguments - **Global Oil Demand Forecasts**: - The IEA upgraded its forecast for global oil demand in 2026 by 194 thousand barrels per day (kb/d), marking the third consecutive upgrade [3][18]. - Demand upgrades were primarily in non-OECD Americas (+105 kb/d) and China (+66 kb/d), with OECD Europe contributing +51 kb/d [3][5]. - Specific product demand changes include an increase for gasoline (+169 kb/d) and gas/diesel oil (+104 kb/d), while naphtha demand was revised down (-102 kb/d) [20]. - **Global Oil Supply Forecasts**: - The IEA slightly increased its forecast for global oil supply growth in 2026 by 0.1 mb/d to 2.5 mb/d, while maintaining 2025 growth at 3.1 mb/d [3][5]. - A notable decline in global oil supply was observed in December, attributed to weaker production in Kazakhstan and the Middle East, despite a rebound in Russian production [3][5]. - Supply forecasts for Canada (+76 kb/d) and Brazil (+62 kb/d) were revised up, while Kazakhstan's supply forecast was downgraded (-106 kb/d) [3][5]. - **Price Forecasts**: - Goldman Sachs expects Brent prices to trend down to an average of $56 per barrel in 2026, primarily due to a sizable surplus [3][5]. - The report highlights two-sided risks to the price forecast: upside risks from low OECD commercial stock levels and potential geopolitical supply disruptions, and downside risks from ongoing supply increases outside OPEC [3][5]. Additional Important Information - **Global Stock Trends**: - Global oil stocks are building rapidly, with a 2.5 mb/d increase in November, although OECD commercial stocks only increased by 0.2 mb/d [6][24]. - The January OECD commercial stocks nowcast was revised up by 11 million barrels to 2,830 million barrels [6][24]. - **Refinery Runs**: - A 0.7 mb/d increase in December refinery runs was noted, driven by Russian and Mexican production, leading to an upgrade in the 2026 crude runs forecast by 0.2 mb/d [4][6]. - **Imbalance in Supply and Demand**: - The document indicates an imbalance in supply and demand, with a projected surplus of 2.3 mb/d in 2026, which is a significant factor influencing price forecasts [5][7]. This summary encapsulates the key points from the conference call, providing insights into the oil industry's current state and future projections based on the IEA and Goldman Sachs analyses.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Oil Services - **Focus**: Implications of the political situation in Venezuela on global oil services companies Core Insights and Arguments - **Venezuela's Oil Production Recovery**: - Production may increase slightly in the short term, potentially reaching several hundred thousand barrels per day over the next 2-3 years if a US-supported government is established and sanctions are lifted [2][10] - Historical peak production was approximately 3 million barrels per day in the mid-2000s, with Venezuela holding about 20% of global proven oil reserves [2][11] - **Investment Requirements**: - Any recovery in production will be gradual and necessitate substantial investment [2] - Companies like Chevron, ENI, and Repsol currently have operations in Venezuela, with Chevron being the only US oil major still active [17] - **OCTG Market Potential**: - Demand for Oil Country Tubular Goods (OCTG) in Venezuela could reach 140,000 to 240,000 tons by 2030, translating to a market size of $0.6 to $1 billion [4][30] - The current addressable OCTG market for Tenaris and Vallourec is estimated at 5.7 million tons and approximately $18 billion, indicating that the Venezuelan market could add 3-4% in volume and 3-5% in dollar terms [36] - **Tenaris and Vallourec's Position**: - Tenaris has a long-standing presence in Venezuela and supplies Chevron's OCTG needs, benefiting from logistical advantages due to local operations [3][27] - Vallourec, while currently absent from Venezuela, could supply the market from its Brazilian plant, leveraging a competitive cost base [28] - **US Oil Services Companies**: - Companies like SLB, Halliburton, and Weatherford International are positioned to benefit from increased activity in Venezuela [8][44] - SLB has indicated its ability to scale operations in Venezuela if activity increases, while Halliburton and Weatherford have historical ties and expertise that could be advantageous [8][45][46] Additional Important Insights - **Long-term Oil Price Implications**: - A recovery in Venezuelan production to 2 million barrels per day by 2030 could pose significant downside risks to long-term oil prices, potentially reducing Brent oil price forecasts by $4 per barrel [11] - Current estimates suggest that Brent prices could average $58 per barrel if production declines, and $54 per barrel if production increases [10] - **Technical Requirements for OCTG**: - The extraction of heavy crude from the Orinoco Oil Belt requires complex, high-performance OCTG solutions due to the challenging conditions [29] - The majority of Venezuela's proven reserves are high-sulfur and heavy crude, necessitating robust materials and testing protocols for well integrity [29] - **Rig Count and Well Drilling**: - The estimated rig count needed to support a production level of 2 million barrels per day by 2030 is between 40 to 50 active rigs, with an annual drilling of 480 to 600 new wells [31][32] This summary encapsulates the critical insights and potential implications for the oil services industry stemming from the evolving situation in Venezuela, highlighting both opportunities and risks for companies involved in this sector.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the global crude oil market, specifically the impacts of potential disruptions in oil production from Iran and Venezuela [5][9]. Core Insights and Arguments - A permanent decline of 1 million barrels per day (mb/d) in oil production is expected to increase prices by approximately $8 per barrel within 12 months, assuming OPEC does not compensate for the shortfall [2]. - Venezuela's crude production is projected to rise from 0.83 mb/d in December 2025 to 1.07 mb/d in December 2026, attributed to easing sanctions and increased investments in existing assets [2]. - The Polymarket prediction market indicates a 13% probability of the Iranian regime falling by January 31, and a 70% probability of the US striking Iran by the end of the month [5][9]. - Brent crude prices have increased year-to-date to above $66 per barrel, reflecting a nearly $6 per barrel rise, consistent with a forecasted 0.7 mb/d disruption in Iranian oil production over the next 12 months [5]. - Options markets show a significant increase in the probability of Brent futures expiring in the $70s, rising from below 7% to 15% in two weeks, while the probability of prices exceeding $80 remains modest at 5% [10]. Production and Tariff Implications - The forecast for Iranian crude production in 2026 remains stable at 3.5 mb/d despite the announcement of a 25% tariff on Iranian oil [5][17]. - A similar 25% tariff on Venezuelan oil buyers was threatened but did not materialize in March 2025 [5]. - China, as the main importer of Iranian crude, holds significant bargaining power due to its dominance in rare earth supply chains [5]. - Russian oil flows to India have continued despite a similar tariff imposed on India for importing Russian crude [5][17]. Market Reactions - Energy equity markets and regional crude markets are adjusting to the anticipated increase in Venezuelan crude supply, with equities of US oil majors, US Gulf Coast refineries, and international services operators experiencing a rally [20][21]. - The quality differential between heavy and light crude has widened by approximately $2 per barrel, aligning with expectations of a 0.3 mb/d increase in Venezuelan heavy crude production by year-end [25]. Additional Considerations - Refining coking margins, which are profits from processing heavy crude into high-value products like diesel, are favorable for US Gulf Coast refineries designed to process heavier Latin American crudes [7]. - The report emphasizes that investors should consider this analysis as one of many factors in their investment decisions [4]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and expectations for the crude oil market, particularly concerning Iran and Venezuela.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the global crude oil market, specifically the impacts of potential disruptions in oil production from Iran and Venezuela [5][8]. Core Insights and Arguments - A permanent decline of 1 million barrels per day (mb/d) in oil production is projected to increase prices by $8 per barrel within 12 months, assuming OPEC does not compensate for the shortfall [2]. - Venezuela's crude production is expected to rise from 0.83 mb/d in December 2025 to 1.07 mb/d in December 2026 due to easing sanctions and increased investments [2]. - The Polymarket prediction indicates a 70% probability of the U.S. striking Iran by the end of the month, which is contributing to market volatility [5][8]. - Brent crude prices have increased by nearly $6 per barrel year-to-date, surpassing $66 per barrel, reflecting concerns over a potential 0.7 mb/d disruption in Iranian oil production over the next year [5]. - The probability of Brent futures expiring in the $70s has risen from below 7% to 15% in two weeks, indicating increased market speculation [9]. Production and Tariff Implications - Iran's crude production is forecasted to remain stable at approximately 3.5 mb/d in 2026, despite the announcement of a 25% tariff on Iranian oil [5][16]. - The U.S. previously threatened a similar tariff on Venezuelan oil buyers, which did not materialize, indicating potential for market fluctuations based on geopolitical developments [5][16]. - China, as the main importer of Iranian crude, holds significant bargaining power due to its dominance in rare earth supply chains [5]. Market Reactions - Energy equity markets are responding positively to the anticipated increase in Venezuelan crude supply, with equities of U.S. oil majors and Gulf Coast refineries rallying [19][20]. - The quality differential between heavy and light crude has widened by approximately $2 per barrel, aligning with expectations of a 0.3 mb/d increase in Venezuelan heavy crude production by year-end [24]. Refining Margins - U.S. Gulf Coast refineries, designed to process heavier Latin American crudes, are expected to benefit from higher coking margins, which are profits from processing heavy crude into high-value products like diesel [6]. Additional Considerations - The report emphasizes that investors should consider this analysis as one of many factors in their investment decisions [4]. - The potential for geopolitical events, such as U.S. military actions or sanctions, remains a significant risk factor for oil prices and production levels [5][8].

Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call is on the oil industry, specifically regarding Brent crude oil prices and geopolitical risks affecting supply and pricing dynamics. Core Insights and Arguments 1. **Brent Price Forecast**: The 0-3 month price target for Brent crude oil has been upgraded to $70 per barrel from the previous range of $55-65 per barrel, driven by rising geopolitical risks, particularly related to Iran and Russia/Ukraine [1][2][6] 2. **Geopolitical Risks**: Increased tensions in Iran and ongoing conflicts involving Russia and Ukraine are contributing to a higher geopolitical risk premium, which is expected to support oil prices in the near term [1][7] 3. **Iranian Oil Production**: Iran's crude oil production is approximately 3.9 million barrels per day (b/d), with exports around 1.3 million b/d. Protests in Iran could lead to supply disruptions, particularly if oil-rich regions like Khuzestan are affected [2][3] 4. **Oil Inventories**: Current oil inventories are at comfortable levels, with OECD stocks at approximately 1,144 million barrels, which is up 42 million barrels year-over-year. However, a 1-2 million b/d outage could quickly deplete spare capacity and push prices higher [2] 5. **Political Unrest**: While protests have intensified in urban centers, they have not significantly impacted Iran's core oil production areas, thus limiting immediate supply disruptions [3] 6. **US Policy Impact**: The US administration's policies, including tariffs on nations trading with Iran, are amplifying short-term price volatility without significantly altering core oil flows. A stock build of 1.6 million b/d is expected through the first half of 2026 [6] 7. **Market Dynamics**: Despite the geopolitical tensions, global oil supply is projected to increase by 1.8 million b/d this year, suggesting that any price rally may be temporary. Recommendations include selling Brent crude if prices exceed $70 per barrel [7] Additional Important Information - The report emphasizes the potential for producer hedging in response to price spikes, as OPEC+ has the capacity to increase supply if significant disruptions occur [1] - The analysis indicates that while geopolitical risks are currently high, the fundamentals of the oil market remain looser compared to previous crises, suggesting a more stable long-term outlook [1][7]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **US Oil Industry**, specifically discussing crude oil production, supply, demand, and refinery operations. Core Insights and Arguments 1. **Record Crude Production**: US crude production reached a record of **13.87 million barrels per day (mb/d)** in October, primarily driven by gains in the US Gulf region, despite a stall in shale production growth [2][3][4]. 2. **Shale Production Trends**: Shale production saw a slight decline of **10 kb/d month-over-month (MoM)** in October, with New Mexico's output increasing by approximately **30 kb/d**, while Texas experienced a decline of **45 kb/d** [5][6]. 3. **Rig Count Decline**: The US oil rig count decreased by **6 rigs** in October, with significant losses in the Eagle Ford basin [8][12]. 4. **Fracking Activity Increase**: Frac activity rose sharply in October, with **1,261 frac jobs** initiated, marking a **21% increase** from September [13]. 5. **Gulf of Mexico Production Growth**: Offshore production in the Gulf of Mexico increased by **45 kb/d** MoM, reaching **2.0 mb/d**, supported by new projects like the Leon-Castille field [14][17]. 6. **Crude Imports and Exports**: Crude imports fell sharply by **500 kb/d** MoM to **5.9 mb/d**, while exports decreased by **140 kb/d** but were still up **9% year-over-year (YoY)** [24][26][29]. 7. **Refinery Runs Decline**: US refinery runs dropped by **940 kb/d** MoM to **15.53 mb/d**, attributed to seasonal maintenance and unplanned outages [35][40]. 8. **Oil Demand Contraction**: Total US oil demand contracted by **2% YoY** in October, ending four months of growth, with notable declines in gasoline and jet fuel consumption [48][49]. 9. **Finished Products Output**: Refinery output of finished products fell by **3% MoM**, with gasoline being the only product to see an increase in output [91][94]. 10. **Crude Inventory Build**: US crude inventories rose by **15.8 million barrels** in October due to reduced refinery demand, with significant builds in PADD 3, PADD 2, and PADD 5 [136][141]. Additional Important Insights - **Transfers to Crude Oil Supply**: In October, **860 kb/d** of transfers to crude oil supply were recorded, indicating an increase in blending materials used for refinery feedstock [22][23]. - **Impact of Seasonal Factors**: The decline in refinery runs and oil demand was influenced by seasonal factors, including maintenance schedules and the end of the harvest season affecting diesel demand [71][74]. - **Future Outlook**: Weekly EIA data suggests a recovery in refinery runs in November as maintenance concludes, with crude imports also expected to rise [138]. This summary encapsulates the critical developments and trends in the US oil industry as discussed in the conference call, highlighting production, demand, and operational challenges faced by the sector.

Summary of Key Points from the Expert Call on Oil Market Outlook Industry Overview - The discussion focused on the global oil market, particularly the outlook for 2026, with insights from Dr. Anas Alhajji, Managing Partner at Energy Outlook Advisors [1] Core Insights - **Oil Price Projections**: Brent crude oil prices are expected to remain stable in the $60s per barrel, with fluctuations driven by geopolitical events or perceived oversupply being temporary [1] - **Demand vs. Surplus**: The perceived surplus in the oil market is considered exaggerated. Stronger-than-expected demand, especially from the US, is anticipated, with a growth estimate of approximately 1.2 million barrels per day (Mb/d) for 2026 [2] - **China's Role**: China has absorbed about 70% of the increase in oil inventories over the past year, but its inventory levels may limit price increases, with Brent prices above $70/bbl likely triggering selling [3] - **US Shale Production**: US shale production growth is slowing, with the US Strategic Petroleum Reserve (SPR) absorbing the supply growth since January [4] - **Venezuela's Production Outlook**: Venezuelan oil production is not expected to rebound quickly, with potential upside capped at around 0.2 Mb/d. The country has significant storage capacity available, allowing it to maintain production levels despite sanctions [5] - **OPEC+ Dynamics**: There is skepticism regarding OPEC+'s ability to significantly change production capacity disclosures, as many members are historically protective of their production data [6] Additional Considerations - **Investment Risks**: The oil market is characterized by high volatility due to unpredictable political, geological, and economic factors, which can significantly affect supply and demand [8] - **Strategic Reserves**: The build-up of strategic reserves in both China and the US is seen as a factor that supports oil demand and mitigates perceived oversupply [2] - **Market Sentiment**: The expert acknowledged a previous underestimation of demand for non-sanctioned OPEC+ crude, which contributed to unexpected price movements [6] This summary encapsulates the key points discussed during the expert call, providing insights into the current state and future outlook of the oil market.

Summary of the Oil Market Outlook Conference Call Industry Overview - The report focuses on the oil industry, specifically the outlook for oil prices and supply dynamics for 2026 and beyond, as analyzed by Goldman Sachs Global Investment Research. Key Points and Arguments Price Trends and Forecasts - Oil prices declined by 14% year-over-year in 2025, averaging $68 per barrel due to strong supply despite geopolitical tensions [7][9] - Forecasts for 2026 average prices are $56 for Brent and $52 for WTI, with a projected surplus of 2.3 million barrels per day (mb/d) [7][23] - Prices are expected to bottom at $54 for Brent and $50 for WTI in Q4 2026 as inventory builds increase [39] - A price recovery is anticipated starting in 2027, with revised forecasts of $58 for Brent and $54 for WTI due to slowing non-OPEC supply growth and solid demand [43][50] Supply Dynamics - The report predicts a combined production decline from Russia, Venezuela, and Iran of 0.7 mb/d by December 2027, with oil on water decreasing by 33 million barrels [4][72] - US liquids supply reached a record high, increasing by 0.8 mb/d year-over-year in October [34] - The report highlights that OPEC's production increases in 2025 were strategic to support market stability later in the decade [28] Geopolitical Risks - Geopolitical risks remain significant, with potential supply disruptions from sanctioned countries like Iran and Russia likely to cause price spikes [52][65] - However, US policymakers' focus on maintaining strong energy supply is expected to limit sustained price increases [65] Recommendations - Investors are advised to short the 2026Q3-Dec2028 Brent timespread to capitalize on the anticipated surplus [78] - Oil producers are recommended to hedge against potential price declines in 2026, as the market may be underpricing inventory builds [79] Long-Term Outlook - The long-term outlook remains constructive, with expectations of a price recovery later in the decade driven by ongoing demand growth and necessary investments in long-cycle production [50][75] - The report notes that technological advancements may lead to continued production beats, potentially keeping prices lower than previously forecasted [71][75] Additional Important Insights - The report emphasizes the importance of OECD commercial stocks in influencing price dynamics, as they tend to be more significant than inventory trends elsewhere [39] - The analysis includes various price risk scenarios based on changes in sanctioned supply and global economic conditions, indicating a complex interplay of factors affecting future oil prices [68][69] This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the oil market outlook as presented by Goldman Sachs.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the oil industry, particularly regarding Venezuelan oil and its implications for the US market amid geopolitical risks and domestic political challenges ahead of the US midterm elections in November 2026 [1][2][3]. Core Insights and Arguments - The US is attempting to redirect Venezuelan oil to alleviate rising oil prices, with an initial plan to move 30-50 million barrels (m bbls) of Venezuelan oil to the US [1][3]. - This redirection may lead to a diversion of Canadian heavy crude oil to Asia, as US Gulf Coast refiners will likely process the Venezuelan oil [1][3]. - Geopolitical risks, including tensions in Iran and the Russia-Ukraine situation, could keep oil prices supported in the range of $55-65 per barrel [1][2]. - US oil inventories are experiencing a rise in gasoline and diesel stocks, while crude stocks are declining due to strong refinery runs [1][4]. Supply and Demand Dynamics - Short-term measures could result in a growth of Venezuelan oil supply by 0.3-0.5 million barrels per day (m b/d) starting from the fourth quarter of 2026 [2]. - Long-term supply recovery in Venezuela may take over eight years to return to levels above 3 m b/d, contingent on political and economic stability [2]. - US commercial crude inventories fell by 3.8 m bbls to 419.1 m bbls, exceeding expectations for a 1.3 m bbl draw, driven by strong refinery runs [7]. - Refinery runs increased slightly to 16.9 m b/d, while gross crude imports and exports also saw significant increases [7]. Inventory and Utilization Trends - As of the end of 2025, US commercial crude inventories were up by 5 m bbls year-over-year, with crude output rising to 13.8 m b/d [4]. - Diesel stocks rose by 5.6 m bbls to 129.3 m bbls, surpassing expectations for a 1.6 m bbl build, while gasoline inventories increased by 7.7 m bbls to 242.0 m bbls [8][9]. - The US Strategic Petroleum Reserve (SPR) increased by 245,000 bbls to 413.5 m bbls [7]. Additional Important Insights - The US is facing political, security, legal, and fiscal uncertainties regarding Venezuelan oil, which could impact future supply and investment [2]. - The US administration's actions may have broader implications for oil flows to other countries, particularly China, which may need to source oil from alternative suppliers [3]. - The overall demand for oil products has shown a decline, with total product supplied decreasing by 0.15 million b/d week-over-week [13]. This summary encapsulates the critical points discussed in the conference call, highlighting the current state of the oil industry, particularly in relation to Venezuelan oil and its impact on the US market.