The Biggest Winners In 2022’s Energy Rollercoaster

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hen U.S. President Joe Biden traveled to Riyadh in July to give him a fist bump and beg for more oil, it was clear that one of the biggest winners from this historic roller coaster year for the energy sector was Saudi Crown Prince Mohammed bin Salman. Soon MbS had a White House declaration that the prince, as de facto head of state, has sovereign immunity and so couldn’t be sued in U.S. courts for ordering the 2018 murder and dismemberment of dissident journalist Jamal Kashoggi at the Saudi consulate in Istanbul. A federal judge then tossed out a civil suit against MbS over the death.

The 37-year-old ruler is rolling in petrodollars thanks to the operations of Saudi Arabian Oil Company, which saw their average sales price jump from $67 a barrel last year to $104 in the last quarter. Through nine months, Aramco’s net income exploded 66% to $130 billion — half a billion dollars a day!

MbS pulled off a remarkable power play this year, just by making sure Aramco fulfilled its role as reliable supplier amid the tightest oil market since 2008 and a global energy crisis triggered by Russia’s invasion of Ukraine. Despite prices rocketing higher, the Saudis increased output only gradually.

Aramco’s CEO Amin Nasser, speaking at a Schlumberger
SLB
event this fall, sent a strong message to the entire carbon-energy industrial complex that the world’s biggest fossil fuel providers ought not be taken for granted: “When you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversity energy supplies (especially gas), oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right.”

But the transition plan so far appears lacking, thus Europe will spend this winter cold, dark and suffering some of the highest priced natural gas and power in history, which topped out above $1,000 per megawatthour. Although oil prices have relaxed back to $75 per bbl, inventories remain tight, especially for diesel and heating oil.

The total collapse of European energy markets, and emergent instabilities in the U.S. power grid have triggered a mass realization by capital markets of deep structural underinvestment in energy infrastructure. The winners of this year, like Crown Prince MbS, are set to keep on winning for years to come.

Here’s a few.

Europe’s impossible quest to replace shut-in supplies of Russian natural gas drove a stellar year for America’s champion LNG exporter Cheniere Energy, which have seen shares jump four-fold since its pandemic low. Cheniere’s Ebitda surged 140% to $8.5 billion in just the last nine months. Carl Icahn in June realized some of his $1.3 billion+ in profits in Cheniere, selling a $350 million chunk back to the company.

Primed for a big 2023 is billionaire Wes Edens’s New Fortress Energy, which is erecting offshore gas liquefaction terminals on platforms in the shallow waters of the Gulf of Mexico. Shares are up 66% in a year, boosting Edens’ stake to $1.9 billion.

The family of the late Forbes 400 lister Earl Holding (d. 2013) enjoyed a mighty liquidity event, selling their regional oil refining company to HollyFrontier. Widow Carol Holding received shares in the renamed HF Sinclair and pipeline subsidiary worth $3.4 billion. Not bad for having started out managing one motel in Wyoming in the 1950s.

Of course wind and solar and batteries and all manner of renewable, sustainable energy had an incredible year thanks to passage of the Inflation Reduction Act and its hundreds of billions of dollars in green subsidies and tax credits. Chicago billionaire Michael Polsky landed a $3 billion equity investment from Blackstone
BX
to his company Invenergy, which develops wind and solar projects. Some of that funding is earmarked to take advantage of the first wave of offshore wind turbines.

Even coal miners had a good year. The world burned a record amount of coal, led by China at 5 billion tons. Prices doubled to some $400 per ton, and just like that, the coal industry is solvent again. It was a good year for the heirs of coal billionaire Chris Cline, who died in a 2019 nighttime helicopter crash in the Bahamas. Their Kameron Coal Management secured approvals to reopen the Donkin Mine, in Nova Scotia, which I visited for this story in 2017. Donkin produces high-grade metallurgical coal, used in steel making.

Nothing, however, can match Big Oil’s grand profits. ExxonMobil
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looks to make $50 billion in net income this year, despite taking a $4 billion loss on abandoning its Russian operations. Shares in Exxon are up 77% in a year, while Occidental Petroleum
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has more than doubled. But there’s pressure being in the spotlight. Would you rather be in the shoes of 1. Exxon CEO Darren Woods, or those of 2. Crown Prince Mohammed bin Salman, or how about 3. a lowkey oil billionaire like Autry Stephens, whose Midland, Texas-based Endeavor Energy is believed to be the nation’s second largest privately owned oil driller (after Hilcorp Energy), pumping more than 130,000 barrels per day — for an enterprise value worth $10 billion or more. Operators in Texas and New Mexico are enjoying an especially lucrative year, far removed from the public eye or investor concerns about ESG. Last summer we wrote about Tim Dunn, another below-radar oil guy whose CrownQuest Energy will likely make more than a billion this year.

Harold Hamm sure went out on top. The quintessential American oilman of our age has been single mindedly chasing the black gold since founding his company in 1967. Rather than gradually selling down his controlling stake in continental, this year Hamm put up $4.5 billion this year to buy up the 20% of shares his family didn’t already own, and took the company private. As part of the process, Hamm divided up his shareholdings and distributed chunks to each of his five children.

On the natural gas side, domestic prices spiked from $3.60 per thousand cubic feet a year ago to peak above $9, the highest since 2008, before the shale gas boom got underway. Dallas billionaire Trevor Rees-Jones picked this year to sell his Marcellus-shale-focused Chief Oil & Gas to Chesapeake Energy
CHK
for $2.65 billion in cash and stock. His longtime partner Michael Radler also sold his company Tug Hill Operating to Pittsburgh-based EQT
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, for $5.2 billion. This deal very likely made Radler a billionaire, and also generated a hefty payday for Quantum Energy Partners and its founder Wil van Loh, who invested $450 million into Tug Hill in 2014.

EQT is the biggest gas producer in the nation. Although it missed out on a lot of upside due to some unfortunate hedges, shares are still up 70% in the past year. EQT is run by CEO Toby Z. Rice. He and his brothers, including Derek and Toby (all still under the age of 50) made their name by building up their family’s natural gas company Rice Energy into a shale gas fracking giant that in 2017 they sold to EQT for $8.2 billion. After a boardroom battle and proxy fight Toby took over in 2019 and has solidified the company has the biggest producer of natural gas in the United States.

In 2018, early in the SPAC craze (i.e. IPOs of blank check shell companies), Daniel Rice launched Rice Acquisition Corp, which ultimately spent $1 billion to acquire landfill gas developers including Archaea Energy, and inked a massive deal with garbage giant Republic Services to build out dozens of landfill gas operations. This is a supergreen business, because it catches methane gas produced by rotting trash, which otherwise would simply waft into the atmosphere. And federal subsidies make this green business golden. Normal natural gas fetches about $7 per mmBtu. But landfill gas sells for $33 per mmBtu thanks to tax credits extended by the recent Inflation Reduction Act. BP in October agreed to buy Archaea for $4 billion — about $700 million of that will go to the Rice bros.

Their second Rice Acquisition SPAC finished up the year with a $1.5 billion deal to buy NET Power, a remarkable company working to commercialize a novel gas-fired power plant that captures its own carbon dioxide emissions and pressurizes them to be taken via pipeline to be injected permanently into porous geologic formations — often the very same rock that oil companies have sucked oil out of. The Rice brothers will put in $100 million, and join other investors including Occidental Petroleum, which plants to build the first NET Power plant near its massive oilfields in the Permian basin.

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xy’s CEO Vicki Hollub has a lot riding on this. She was pilloried for the 2019 acquisition of Anadarko Petroleum
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for $50 billion, with emergency financing from Warren Buffett’s Berkshire Hathaway
BRK.B
. Hollub took a very unconventional tack among big oil companies as the earliest to embrace the concept of capturing carbon dioxide by sucking it directly out of the air. NET Power looks more realistic; the new company will have the ticker symbol NPWR, with Daniel Rice as CEO. If the technology works it could help decarbonize the production of oil and gas nationwide.

Indeed, carbon capture is no longer seen just as an uneconomic science project. Even arch-fracker Harold Hamm this year pledged $250 million toward a grand scheme that will collect carbon dioxide from corn ethanol plants across the midwest and pipeline it up to North Dakota to inject into the ground, where he says, “We know the geology better than anybody.”

Crown Prince MbS and his royal cousins in neighboring UAE
UAE
, Qatar and Kuwait aren’t the only ones enjoying royalties on oil and gas production. In Texas, the Permanent University Fund, owns mineral rights to 2.1 million acres of land, generating more than $1 billion a year to support the University of Texas and Texas A&M. After this year, the Texas university endowments are set to surpass $53 billion, barely topping Harvard University’s endowment, which suffered a rare down year due in part to its decision to jettison oil investments. Winning!

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