Today we had the pleasure of visiting with Thomas Fox, President and Director of Innovation at Highwood Emissions Management. Thomas has an impressive academic and commercial background in emissions and from our previous interactions with him, we knew he could tackle the issues in a measured way that would help us all. While obtaining his Ph.D., Thomas invented LDAR-Sim (Leak Detection and Repair Simulator) – it is now used widely by industry, regulators, and innovators to approve new technologies and understand how to deploy them. Headquartered in Calgary, Highwood works with producers, technology solution providers, and regulators to tackle the challenge of emission management solutions.

Our discussion centered around an in-depth presentation by Thomas. In the presentation, Thomas covers the multiple motivations for why oil and gas companies are paying more attention to emissions, the complexity of measuring emissions and the technology involved, how to reduce emissions and get the best value for your spend, how to prove that you’ve reduced emissions (and get the credit for it), and how to prepare for the future and the future of the emissions monitoring landscape.

After Thomas’s presentation, we discuss how emissions will be factored into M&A activity, where the intensity of emissions is highest, how companies analyze opportunities to decarbonize vs. the cost of mitigation, and the competitive technology landscape. As you will hear, Thomas anticipates methane from oil and gas in North America will be largely solved in the next five years. We want to thank Thomas for joining us today and for providing such a detailed analysis.

Mike Bradley kicked us off by highlighting that last week, traders were focused on two macro events, the OPEC+ meeting and the US Debt Ceiling Deal. He flagged OPEC+ agreed to cut crude production by 1mmbpd, with Saudi Arabia taking on all the cuts starting in July. Since October 2022, OPEC quota reductions total ~3mmbpd and the recent cuts primarily relate to 2H’23 demand concerns. Mike also flagged global S/D deficit estimated for 2H’23 is ~1.5mmbpd, and that these additional production cuts would ensure global inventories draw substantially in 2H’23 and should provide a crude oil floor. He then noted the US debt ceiling deal initially boosted bonds, commodities, and equities, but there hasn’t been follow through since. Mike wrapped by noting the CBOE Volatility Index (VIX) is trading at historically low levels, indicating equity markets are dialing in low risk levels, and that energy companies pursuing aggressive buybacks may want to consider retaining more cash on their balance sheets for future opportunities. Todd Scruggs joined for today’s discussion and added his thoughts around a recent Goldman Sachs report that lowers the odds of a recession, along with a Wall Street Journal article discussing ESG proposals to address scope 3 emissions and the vote outcomes. He also noted the equity market breadth remains narrow, with buying centered on a handful of AI/tech related equities.

We learned a lot in our conversation with Thomas and hope you will find it as useful and informative as we did. Our best to you all!

“The Low Hanging Fruit Of Methane Emission Sources” Featuring Thomas Fox, Highwood Emissions Management

C.O.B. Tuesday