📰 Black is the new green

ENERGY TRANSITION

Shell to keep production steady, make distributions and reduce emissions

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• Shell aims to deliver more value with less emissions and increase shareholder returns through a balanced energy transition.

• The company will focus on performance, discipline, and simplification.

• Shareholder distributions will increase to 30-40% of cash flow from operations (CFFO) through the cycle.

• There will be a 15% increase in dividend per share effective from Q2 2023 and share buybacks of over $5 billion are planned for 2H 2023.

• Capex will be reduced to $22-25 billion per year for 2024 and 2025.

• Annual opex will be reduced by $2-3 billion by the end of 2025.

• Shell reiterates its commitment to climate targets, including achieving net-zero emissions by 2050.

• The company will focus on growing its Integrated Gas business, maintaining leadership in the LNG market, and stabilizing liquids production until 2030.

• The company aims to achieve near-zero methane emissions by 2030 and eliminate routine flaring from Upstream operations by 2025.

• Shell will invest $10-15 billion from 2023 to 2025 in low-carbon energy solutions such as biofuels, hydrogen, electric vehicle charging, and CCS.

CARBON CAPTURE

Oklahoma starts process to gain primacy from EPA for carbon sequestration

• Governor Kevin Stitt signs SB 200 in Oklahoma, initiating the process to gain program delegation from the EPA for carbon sequestration projects.

• The delegation would allow Class VI applicants in Oklahoma to secure permits within the state, rather than from the Regional EPA office in Dallas.

• Carbon sequestration delegation is important for Oklahoma’s efforts to increase “blue” hydrogen production.

• The legislation triggers a review of the Oklahoma Carbon Capture and Geologic Sequestration Act of 2009, with a focus on recommended changes or statutory adjustments.

• SB 200 establishes regulations for carbon sequestration into subsurface domains and involves collaboration between the Secretary of Energy, the Department of Environmental Quality, and the Oklahoma Corporation Commission.

NATURAL GAS AND LNG

Total buys stake in LNG developer NextDecade for $219 million

• TotalEnergies buys a 17.5% stake in NextDecade for $219 million.

• The investment is part of a deal to support NextDecade’s Rio Grande LNG export project.

• Framework agreements with Global Infrastructure Partners (GIP) and TotalEnergies will facilitate the final investment decision for the project.

• The investment will add 5.4 million tons per year of LNG to TotalEnergies’ global portfolio.

• TotalEnergies aims to grow its LNG business by 3% annually and expects natural gas to account for half of its energy sales by 2030.

• The Rio Grande LNG export plant plans to produce up to 27 million tons of LNG annually and incorporates a carbon sequestration component to reduce greenhouse gas emissions.

• NextDecade has agreements to supply LNG to Itochu, Shell, Exxon Mobil, ENGIE, and ENN.

RENEWABLES

Brookfield buys 3.4 GW of Duke’s commercial renewables for $2.8 billion

• Duke Energy is selling its unregulated utility-scale Commercial Renewables business to Brookfield Renewable for approximately $2.8 billion.

• The transaction is expected to be completed by the end of 2023.

• Duke Energy’s net proceeds from the sale will be around $1.1 billion, which will be used to strengthen its balance sheet and focus on regulated clean energy growth opportunities.

• Brookfield Renewable, as one of the largest renewable energy operators, has the resources to support the continued growth of the Commercial Renewables portfolio.

• The sale includes over 3,400 MW of utility-scale solar, wind, and battery storage projects across the U.S., as well as ongoing operations and new project development.

• The primary operations of the Commercial Renewables business will remain in Charlotte, N.C., and Duke Energy employees supporting the business will transition to Brookfield.

• Duke Energy is also progressing with a separate sale of its distributed energy business, which is expected to close by the end of 2023.

TWEET OF THE WEEK

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.