What to Watch

Tellurian Has Held Talks with Chesapeake Energy on Louisiana Fields

Tellurian Inc. is in talks to purchase Chesapeake Energy Corp.’s Louisianadrilling fields as it seeks to become a producer as well as exporter of natural gas, write the WSJ’s Christopher M. Matthews and Stephanie Yang.

Chesapeake, a pioneer of the shale boom, has been selling off some of the vast holdings assembled by its late co-founder Aubrey McClendon as it struggles with low energy prices and a mountain of debt it took on to lock up drilling rights for swaths of land.

Tellurian is the latest venture by Charif Souki, who developed the first terminals to liquefy natural gas and export it from the U.S. Gulf Coast as founder of Cheniere Energy Inc. The company, which has few assets, has said it is looking to acquire drilling fields near a coastal site where it plans to build an export facility to sell fuel overseas.

Chesapeake’s Louisiana fields, located in the Haynesville shale formation, are valued at about $2 billion, according to Jefferies analysts.

Meanwhile, oil prices received a boost on Friday from the possibility of a meeting between  U.S. President Donald Trump and North Korea’s leader, as investors took a bit of geopolitical risk out of the equation for the crude market.

Brent crude, the global oil benchmark, rose 0.6% to $64 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $60.41 a barrel.

Energy News

Trump Signs Metals Tariffs Sparing Some Allies

President Donald Trump implemented global tariffs on steel and aluminum on Thursday, signaling even more pressure on trading partners on the horizon, especially on China, but exempting Canada and Mexico pending negotiations to rewrite the North American Free Trade Agreement. The move to implement tariffs has met with fierce criticism from business groups including the oil-and-gas industry and others, who say the measure could hurt the U.S. economy. White House officials have countered by saying the benefits far outweigh the costs to the economy.

Tesla’s Musk Tells Trump China Trade Rules ‘Make Things Very Difficult’

Tesla Inc. Chief Executive Elon Musk took to Twitter on Thursday to lobby the U.S. president on China’s trade stance on auto makers. Mr. Musk noted on Twitter how American-made cars imported into China face higher duties than Chinese vehicles coming to the U.S. and how foreign auto makers in China face restrictions on ownership of factories. Tesla’s push into China comes as trade tensions have increased between the two countries, and the Trump administration has asked Beijing for a plan to reduce the U.S.’s annual trade deficit with China by $100 billion.

“It’s absolutely no secret that we want to continue to deepen our shale portfolio.”

Greg Guidry, Executive Vice President of Unconventionals at Royal Dutch Shell PLC

South Africa Greenlights a $900 million Deal With Chevron and Sinopec

South Africa’s Competition Tribunal gave conditional approval Friday of Sinopec Corp.’s $900 million purchase of Chevron’s assets in the country and in Botswana. The regulator said the transaction is subject to Sinopec investing 6 billion rand over five years to develop a refinery in South Africa, beyond the company’s current investment plans.

Big Number

4.3%

Despite declining government subsidies, the presence of electric vehicles on roads is expected to increase twenty fold until such cars make up 4.3% of the global car fleet in 2025, up from less than 1% in 2016, said analysts for Barclays in a recent report.

FutureCurve

Today: IHS Markit hosts the last day of the CERAWeek energy conference in Houston. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco. Also, oil services firm Baker Hughes releases its weekly U.S. rig count report.

June 5-6: The London Crude Oil Summit. The speakers include Shell Vice President of Crude Trading Mike Muller and Franco Magnani CEO, of Eni Trading and Shipping.

Reporter’s Notebook

WSJ reporter Sarah Kent on steel tariffs’ effect on oil. Steel tariffs in the U.S. are going to hurt the oil-and-gas industry, but other regulatory changes like tax reform mean the business environment remains positive, Royal Dutch Shell PLC’s head of shale said on the sidelines of the CERAWeek conference in Houston. “It’s not a question of whether it’s a setback or not. It’s a question of how big will the setback be when we ultimately see what’s going to get enacted,” Mr. Guidry said of the potential tariffs. Still, the move should be seen in the context of other changes like tax reform. “The tax cuts are in all likelihood going to be more materially positive than the impact of the tariff at least for my business,” he said.

WSJ’s Tim Puko on the U.S. electricity grid. The power grid’s reliability is threatened by state level interventions, the Federal Energy Regulatory Commission’s Robert Powelson said at CERAWeek. The commissioner said state policies that favor power plants within their own borders or that use certain types of fuels have consequences they aren’t considering. The national power grid currently runs on a more diverse mix of fuels that it ever has, but some in the power sector and President Donald Trump’s administration warn it could become too reliant on natural gas, solar and wind as those fuels undercut nuclear and coal plants in the market. While Mr. Powelson supports state authority, he adds that the threat of their interventions is now central to FERC’s work. “System reliability is not part of the (states’) conversation,” he said. “It needs to be.”