“Drones overall will be more impactful than I think people recognize, in positive ways to help society” - Bill Gates

ARAMCO.

On Saturday, oil processing facilities at Abqaiq & Khurais in eastern Saudi Arabia were apparently attacked by drones.

The Abqaiq facility is the the largest crude oil stabilization plant in the world, processing upwards 7% of global daily oil production.

The attack has created the largest bottleneck / disruption in Oil Supply on record, surpassing the supply disruptions of the Iranian Revolution.

Details of the events that transpired are conflicting:

• The Houthis claimed responsibility for the attack, stating that they attacked from Yemen

• US Secretary of State Mike Pompeo has asserted that Iran was behind the attacks

• Royal Saudi Air Force claims that the drones were unlikely to have been launched from Yemen

• Kuwait said it was probing the sighting of a drone over its territory

Don’t hold your breathe waiting for the details…

OIL.

On the heels of the attack, markets went schizophrenic.

While US Equities & Nat Gas closed Monday flat, Oil Prices spiked as much as 20%, with Brent having its 2nd largest jump on record.

The dramatic Oil Price increase reverberated through the US E&P Sector as a whole:

Bakken players Continental & Whiting saw stunning single day gains.

The attacks materially moved the 12 month WTI strip upwards. Among other obvious benefits, the movement gives E&Ps the opportunity to hedge production at a much higher price than last week.

However, the market seems to think the bottleneck / supply issues will be resolved - 24 months on, the WTI curve currently sits under $54.

The mineral names took the Crude Price move as a signal that drilling will continue. Viper & Brigham saw the large gains, which is to be expected, given their shale exposure.

GUYANA.

Exxon & Hess announced their 14th offshore discovery in the small South American nation within just a few years.

To make analogies to sports, the Exxon+Hess Guyana partnership is either to Oil what Steph+Klay (GSW) are to the NBA, or Brady+Belichick (Pats) are to the NFL.

They keep on winning the biggest prize…