The consolidation wave among oil and gas producers, from Exxon-Pioneer to Chevron-Hess to Diamondback-Endeavor, is extreme. What's behind it? Will it affect gas prices? And what is the likely outcome?
Brings back so many memories. I'm a transplanted Houstonian. I recall when the independent oil producers were called Wildcatters. Some of them could retire in splendor, at 23 to 25 years of age. That is, if they could analyze the mud, and call a gusher. Those days are gone.
They were followed by Enron, which basically got caught selling air upon air (options on exploratory drills, then clusters of those options, then options on those clusters, ad nauseum.).
Excellent info, on the encroaching in, from private equity firms. I hope Texas decides to share the local wealth, locally, and amp up the trust busting.
If big oil would rather grow their stock price by shifting things around in a spreadsheet than by drilling more planet warming substances out of the ground that seems a-okay with me. It also seems if they actually manage to mess with Texas to the extend people in Texas don’t get much out of their oil production it’ll lead to more support to phase out oil production in places like Norway or the UK.
Then there might also be a question of financing here, where big oil might still be able to hold out against ESG investors but anyone small would be silly walking into a bank to loan money for oil rather than solar cells or wind power. Texas already has a pretty large amount of renewables in its grid even if the politicians there aren’t fond of talking about that.
A very good unbiased article. Hard to say what is good for the industry that propels the US and the World. I would like for you to look into the new nuclear power technology-industry. We need this resource to power manufacturing since there is not enough solar and wind to take care of that need.
There is decent evidence that the Permian basin's oil production either has already peaked or is going to by 2026. Given this, consolidation starts to make more sense. A few large firms can extend the life of the fields and wring out more production through a brutal focus on efficiencies.
Not saying this is necessarily good or fair (or that I even agree with it). But I think it makes more sense in that context. And given the financial system relies on energy supply growth to function normally, I can't imagine these mergers will be undone. (and I say this very much as someone who thinks over-consolidation and rentier behavior is a big problem in general)
I’ve been waiting for this piece!
Great article Matt. Lots I disagree with, but well written nonetheless.
Brings back so many memories. I'm a transplanted Houstonian. I recall when the independent oil producers were called Wildcatters. Some of them could retire in splendor, at 23 to 25 years of age. That is, if they could analyze the mud, and call a gusher. Those days are gone.
They were followed by Enron, which basically got caught selling air upon air (options on exploratory drills, then clusters of those options, then options on those clusters, ad nauseum.).
Excellent info, on the encroaching in, from private equity firms. I hope Texas decides to share the local wealth, locally, and amp up the trust busting.
Wouldn't pride be hurt to have profits taken out of Texas?
If big oil would rather grow their stock price by shifting things around in a spreadsheet than by drilling more planet warming substances out of the ground that seems a-okay with me. It also seems if they actually manage to mess with Texas to the extend people in Texas don’t get much out of their oil production it’ll lead to more support to phase out oil production in places like Norway or the UK.
Then there might also be a question of financing here, where big oil might still be able to hold out against ESG investors but anyone small would be silly walking into a bank to loan money for oil rather than solar cells or wind power. Texas already has a pretty large amount of renewables in its grid even if the politicians there aren’t fond of talking about that.
A very good unbiased article. Hard to say what is good for the industry that propels the US and the World. I would like for you to look into the new nuclear power technology-industry. We need this resource to power manufacturing since there is not enough solar and wind to take care of that need.
Is this a sign production has peaked? That even innovation cannot save production from decline.
There is decent evidence that the Permian basin's oil production either has already peaked or is going to by 2026. Given this, consolidation starts to make more sense. A few large firms can extend the life of the fields and wring out more production through a brutal focus on efficiencies.
Not saying this is necessarily good or fair (or that I even agree with it). But I think it makes more sense in that context. And given the financial system relies on energy supply growth to function normally, I can't imagine these mergers will be undone. (and I say this very much as someone who thinks over-consolidation and rentier behavior is a big problem in general)