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An oil pump jack operates at the Inglewood Oil Field in Culver City, California, U.S., on Sunday, July 11, 2021.
Kyle Grillot | Bloomberg | Getty Images

LONDON — Oil and gas majors are likely to report bumper second-quarter earnings in the coming days, energy analysts have told CNBC, following a brutal 12 months by virtually every measure.

The expected upswing would build on a surprisingly strong showing in the first quarter and lend further support to the oil and gas industry’s efforts to pay down debt and reward investors.

“Big Oil” companies, referring to the world’s largest oil and gas majors, still face significant challenges and uncertainties, however.

These include the remarkable success of shareholder activism in recent months, a “tremendous degree” of ongoing investor skepticism and intensifying pressure to massively reduce fossil fuel use in order to meet the demands of the climate emergency.

“Europe’s integrated oil sector already enjoyed surprisingly strong earnings in 1Q, but 2Q is set to show further improvement as commodity prices took another step up,” analysts at Morgan Stanley said in a research note.

International benchmark Brent crude futures rose to an average of $69 a barrel in the second quarter, the Wall Street bank said, up from an average of $61 in the first three months of the year. The oil contract was last seen trading at around $73.57.

Oil companies that ignore climate in their earnings calls will be seen as laggards. Long-term investors will conclude they are financially risky.
Kathy Hipple
Finance professor at Bard College

Analysts at Morgan Stanley noted that energy major share prices continue to be anchored by their dividend distributions. Notwithstanding substantial increases to free cash flow forecasts, the bank said Big Oil dividend expectations remain “rather static.”

“The energy transition confronts investors with much uncertainty, and the sector’s capital allocation track record has been mixed at best over the last decade. Hence, investors are only valuing the cash flow paid to them, with little credit given for cash flow retained within companies,” they said.

“As the dividend outlook has not improved much, and dividend yields in aggregate are already low by historical standards, share prices have trailed the earnings outlook considerably.”

In Europe, Royal Dutch Shell and TotalEnergies will report second-quarter earnings on July 29, with BP scheduled to follow on Aug. 3. Stateside, ExxonMobil and Chevron are expected to publish their latest figures on July 30, while ConocoPhillips will report second-quarter earnings on Aug. 3.

Fuel prices on a sign at a BP gas station in Louisville, Kentucky, on Friday, Jan. 29, 2021.
Luke Sharrett | Bloomberg | Getty Images

Rene Santos, manager for North America supply at S&P Global Platts Analytics, told CNBC via email that he expects second-quarter earnings from U.S.-based energy companies to be “significantly higher” when compared to the same period in 2020.

This is “mainly due to much higher oil prices,” he added. “In addition, the majors, large and mid-cap companies have kept capital discipline and have continued to focus on paying down debt and increasing free cash flow instead of increasing activity [drilling and completion] despite higher oil prices.”

Santos said S&P Global Platts Analytics also foresee an increase in the reporting of ESG activity, noting that it “looks like pressure from environmental groups and fear of more regulations from the current administration is persuading many companies to do more to decrease emissions.”

Growing climate risk

The oil and gas industry was sent into a tailspin last year as the coronavirus pandemic coincided with a historic fuel demand shock, plunging commodity prices, unprecedented write-downs and tens of thousands of job cuts. The torrent of bad news prompted the head of the International Energy Agency to suggest it may come to represent the worst year in the history of oil markets.

Oil prices have since rebounded to multi-year highs and all three of the world’s main forecasting agencies — OPEC, the IEA and the U.S. Energy Information Administration — now expect a demand-led recovery to pick up speed in the second half of 2021.

Clark Williams-Derry, energy finance analyst at IEEFA, a non-profit organization, said he expects oil and gas companies to try to claim a clean bill of health after a bumper second quarter. “That’s the mantra that we will hear,” he told CNBC via telephone.

However, while energy majors will likely have had the opportunity to pay down some debt after generating a significant chunk of cash from their operations, Williams-Derry said that this hides the fact that these companies have not invested much in future production.

Members of the environmental group MilieuDefensie celebrate the verdict of the Dutch environmental organisation’s case against Royal Dutch Shell Plc, outside the Palace of Justice courthouse in The Hague, Netherlands, on Wednesday, May 26, 2021. Shell was ordered by a Dutch court to slash its emissions harder and faster than planned, dealing a blow to the oil giant that could have far reaching consequences for the rest of the global fossil fuel industry.
Peter Boer | Bloomberg | Getty Images

“What I think the market is starting to signal is that it kind of likes when the oil companies shrink and aren’t going all out into new production but they are using the cash that their operations are generating to pay down debt and reward investors.”

Longer term, Williams-Derry warned there’s a “tremendous degree” of investor skepticism about the business models of oil and gas firms, citing the deepening climate crisis and the urgent need to pivot away from fossil fuels.

“We saw earlier in the year signs of a sea change in investor thinking about, frankly, the legal status of some of the supermajors,” he said, referring to a series of landmark courtroom and boardroom defeats for the likes of Royal Dutch Shell, ExxonMobil and Chevron.

“So, even if you are riding high for a quarter or two when prices are high, the reality is still that stock prices are way below the market as a whole and there’s just not the investor enthusiasm for the old business model that I think these companies probably expected to see,” he said.

Energy transition

Kathy Hipple, finance professor at Bard College in New York, told CNBC via email that she believes two key themes are likely to emerge this earnings season: Addressing investor concerns around climate risk and the outlining of new business models to survive a pivot toward renewables.

“Investors are future-oriented and will look past a short-term pop in earnings compared to last year’s dismal second-quarter results,” Hipple said. “They want to see concrete business strategies that acknowledge the energy transition that is gathering speed.”

She argued it was important to note that these earnings will be announced “against a backdrop of climate disasters around the globe,” from extreme heat in the Pacific Northwest to flooding in Europe and China.

“Oil companies that ignore climate in their earnings calls will be seen as laggards. Long-term investors will conclude they are financially risky,” Hipple said.

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US Gov’t set to spend $46 million to electrify container ports

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US Gov't set to spend  million to electrify container ports

Multi-million-dollar grants adding up to more than $46 million from the US Federal Highway Administration (FHWA) will help support electrification efforts at several American ports.

The Long Beach Container Terminal (LBCT) in Long Beach, California has received a $34.9 million grant from the FHWA to replace 155 on-site commercial trucks and buses with zero-emission vehicles (ZEV). The grant will fund both the purchase of new electric trucks and the necessary charging infrastructure to support them.

LBCT said the grant dollars will allow it to continue its multi-billion dollar investments in more sustainable logistical operations. “Our vehicle electrification project, coupled with previous investments, enables LBCT to achieve a unique status that is reframing the way the world views sustainable goods movement, enhancing community quality of life and climate change,” said Anthony Otto, CEO of LBCT.

Real progress at Port of Long Beach

Long Beach Container Terminal, photo by LBCT.

Back in 2018, Power Progress reported that the Port of Long Beach had plans to install zero-emissions cranes and cargo handling equipment at its terminals. True to its word, the port has invested more than $2.5 billion to convert its cranes and terminal tractors vehicles to electric equipment. It’s a project that LBCT says has led to an 86 percent (!) reduction in harmful carbon emissions.

“This investment is a huge win for clean air, electrification and the region,” said US House Rep. Robert Garcia. “These federal dollars will make our port cleaner, safer and help us meet our climate goals.”

In a separate announcement, charging infrastructure operator Voltera said that its sites in California and Georgia would receive $11.4 million of the FHWA funding.

Electrek’s Take

No matter what you call it… …yard dog, yard truck, terminal truck, hostler, spotter, shunt truck, yard horse, goat, mule … …Orange EV pure electric trucks deliver.
e-Triever terminal tractor; via Orange EV.

Container ports used to be some of the dirtiest, most heavily polluted areas in the world. That was bad for everyone – but it was especially bad for the people who lived and worked near them. That’s why any positive change is good. Beyond just “positive change,” however, ports today seem to be leading the way when it comes to electric vehicle and hydrogen adoption.

How things change!

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Kramer shows off electric wheel loader and telehandler at Intermat

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Kramer shows off electric wheel loader and telehandler at Intermat

German equipment manufacturer Kramer showed off a pair of zero-emission equipment options at the Paris Intermat show last week – the 5065e electric wheel loader and 1445e electric telehandler.

Kramer says the quiet operation of its new electric wheel loader and telehandler are ideal for noise-sensitive areas such as city centers, cemeteries and golf courses, hotels, and suburban parks and recreation areas, where it can operate without emitting harmful diesel particulate matter and other forms of air pollution.

Kramer-Werke GmbH is serious about promoting its new EVs in the French market. “That’s why Intermat is an important platform for us,” explains Christian Stryffeler, Kramer’s Managing Director. “We are also looking forward to showcasing our new generation of (electric) wheel loaders and telescopic wheel loaders here.”

Kramer 5065e wheel loader

The 5065e loader is powered a 37.5 kWh, 96V lithium-ion battery that’s good for up to four hours of continuous operation – which is a lot more than it sounds, considering idle time in an EV doesn’t drain batteries the way idling a diesel drains fuel. A 23 kW (30 hp) electric motor drives the electric wheel loader around the job site, while a 25 kW (approx. 35 hp) motor powers the machine’s 40 liters hydraulic system.

Kramer says the battery on its electric loader can be fully charged in just 5.1 hours using a “Type 2 Wallbox” (that’s an L2 charger to you and me). Max payload is 1750 kg, with a 2800 kg tipping load. Top speed is 20 km/h (approx. 12.5 mph).

Kramer 1445e telehandler

The 1445e telehandler uses a 96V battery architecture that’s similar to the one in the wheel loader, but in a smaller 18 kWh or 28 kWh pack. This enables a fleet manager to right-size their equipment’s batteries to provide four hours of run time in different types of work environments. And, also like the wheel loader, a 23 kW (30 hp) electric motor provides the drive while a 25 kW (approx. 35 hp) powers the hydraulics.

Level 2 charging comes standard on Kramer’s electric telehandler, enabling a full charge of the larger, 28 kWh battery in about five hours. Max payload is 1450 kg.

Electrek’s Take

Kramer 5056e electric wheel loader; image via Kramer.

It’s always good to see more manufacturers pushing out electric equipment options. It’s still the “wild west” out there, even more so than in automotive, and Kramer’s offerings seem to be a step behind in some ways (no DCFC capability) and ahead in others (96V where others are 48V), so it’s hard to know where they stand.

More than anything, the lesson seems to be that fleet managers need to choose wisely when they choose to electrify – and work closely with the dealers and OEMs to ensure that they’re buying the right tool for the right job.

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Watch this autonomous excavator build a 215 foot retaining wall [video]

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Watch this autonomous excavator build a 215 foot retaining wall [video]

The robotics experts at ETH Zurich have developed an autonomous excavator that uses advanced AI to help it complete high-skill tasks without a human operator.

Dry stone wall construction typically involves huge amounts of operator labor. Doing it right requires not just hours of labor, but hours of skilled, experienced labor. At least, it used to. If the crew at ETH is successful, building stone retaining walls will soon become a “set it and forget it” task for robots to complete. Robots like their HEAP excavator.

HEAP (Hydraulic Excavator for an Autonomous Purpose) is a customized Menzi Muck M545 developed for autonomous operation that uses electrically-driven hydraulics to operate an advanced boom arm equipped with draw wire encoders, LiDAR, Leica iCON site-mapping, and a Rototilt “wrist” on the end that makes it look more like a high-precision robotic arm than a traditional heavy equipment asset.

ETH HEAP tech stack

Image via ETH Zürich.

Which makes sense. After all: the ETH guys are roboticists, not skilled heavy equipment operators. So, how does their robot do against skilled operators?

“We are currently outperformed by human excavator operators in placement speed,” ETH researchers wrote in Science Robotics. “Such operators, however, typically require string and paint references with which to register their construction and often a second or third person outside the machine to provide guidance and to insert small supporting stones, gravel, and soil by hand and shovel. In contrast, our process can build complex nonplanar global surface geometries without physical reference markers, does not require a skilled driver or small supporting stones, and provides a full digital twin of the built structure for better accountability and future reuse.”

Translation: the robot is slower, but it gets the job done.

You can watch the ETH HEAP put all its onboard tech to work building a 215 foot long, 20 foot high retaining wall all on its own in the video, below.

Autonomous excavator constructs dry stone wall

The completed project can be seen at Circularity Park in Oberglatt, Switzerland, and illustrates the potential for autonomous equipment to build with irregularly-shaped materials. And with skilled operators in short supply everywhere, the potential to free up operators so they can go where they’re really needed.

Electrek’s Take

ETH Zürich’s robot excavator has been in development for years, with numerous white papers exploring its potential uses in construction and agriculture published on the company’s site. It’s quite a rabbit hole, as internet deep-dives go, and I highly recommend it.

That said, the electrically driven hydraulics and high-precision Rototilt wrist on the end of the boom arm’s “claw” alone make this futuristic excavator worth some attention. As more and more manufacturers switch to full electric or even “just” electric drive, research into better solutions for existing hydraulic equipment and expertise could lead to big market wins.

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