"Big Oil's Message to Permian Strugglers: We Won't Bail You Out" Bloomberg News.

(edited)

.(Bloomberg) __  Big Oil probably won’t be buying up the Permian Basin’s struggling independent drillers any time soon.

Years of costly exploration and frantic buying sprees have gutted shareholder returns in the world’s largest shale basin. And management teams and their financial backers can’t count on shale-hungry, cash-rich supermajors to buy them out.

Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and ConocoPhillips are all on record saying they are wary of scooping up smaller rivals at a time when would-be sellers are demanding premium payouts and global crude prices are under pressure from ample supplies.

There is “not always alignment among buyers and sellers,” Exxon Chief Executive Officer Darren Woods said Wednesday. He suggested Permian drillers may have to be squeezed by weak prices for a bit longer before they dial down their expectations.

“That’s often the case in a market, particularly in one that’s in transition,” Woods said.

Conoco CEO Ryan Lance has a similar view. There are “a lot of bid-ask issues sitting in the market today,” he said on May 23. “Expectations change” is what’s needed to stoke acquisition activity.

Shell has been on the hunt to bulk up in the Permian for some months but has yet to seal a deal. The Anglo-Dutch major was said to be in talks with privately-owned producer Endeavor Energy Resources LP in January.

Chevron walked away from buying Anadarko Petroleum Corp. earlier this month after being outbid by Occidental Petroleum Corp. “We’re serious about being disciplined,” Chevron CEO Mike Wirth said.

Occidental may have ended up with a winner’s curse. Carl Icahn, the billionaire investor, sued Occidental on Thursday for its “fundamentally misguided and hugely overpriced” bid for Anadarko.  

https://finance.yahoo.com/news/big-oil-apos-message-permian-190921841.html

lp

 

 

Edited by Falcon

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45 minutes ago, Falcon said:

.(Bloomberg) __  Big Oil probably won’t be buying up the Permian Basin’s struggling independent drillers any time soon.

Years of costly exploration and frantic buying sprees have gutted shareholder returns in the world’s largest shale basin. And management teams and their financial backers can’t count on shale-hungry, cash-rich supermajors to buy them out.

Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and ConocoPhillips are all on record saying they are wary of scooping up smaller rivals at a time when would-be sellers are demanding premium payouts and global crude prices are under pressure from ample supplies.

There is “not always alignment among buyers and sellers,” Exxon Chief Executive Officer Darren Woods said Wednesday. He suggested Permian drillers may have to be squeezed by weak prices for a bit longer before they dial down their expectations.

“That’s often the case in a market, particularly in one that’s in transition,” Woods said.Conoco CEO Ryan Lance has a similar view. There are “a lot of bid-ask issues sitting in the market today,” he said on May 23. “Expectations change” is what’s needed to stoke acquisition activity.

Shell has been on the hunt to bulk up in the Permian for some months but has yet to seal a deal. The Anglo-Dutch major was said to be in talks with privately-owned producer Endeavor Energy Resources LP in January.

Chevron walked away from buying Anadarko Petroleum Corp. earlier this month after being outbid by Occidental Petroleum Corp. “We’re serious about being disciplined,” Chevron CEO Mike Wirth said.

Occidental may have ended up with a winner’s curse. Carl Icahn, the billionaire investor, sued Occidental on Thursday for its “fundamentally misguided and hugely overpriced” bid for Anadarko.  

https://finance.yahoo.com/news/big-oil-apos-message-permian-190921841.html

Much, much cheaper to buy these guys at the bankruptcy sale…

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It would be wise if they all got together and formed a new large oil company.  As they say, united we rise and divided we fall.  It looks like the big oil companies may be waiting to pick them off one by one slowly over time.  If they all unite and form a big company then they would be more potential for them to be bought out all at once.  

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6 minutes ago, canadas canadas said:

It would be wise if they all got together and formed a new large oil company.  As they say, united we rise and divided we fall.  It looks like the big oil companies may be waiting to pick them off one by one slowly over time.  If they all unite and form a big company then they would be more potential for them to be bought out all at once.  

There is a reason dictators/Socialism/Oligarchy always fail.  One person making one decision is always worse than 2 people making 2 different decisions. A hundred people making different decisions is vastly superior.  Why?  You have non idea if you are right or not when you make a decision until AFTER the fact by many many many years.  Therefore your descendants can see the hundreds of decisions made by their forefathers and pick the best one and discard Most of the stupid ones. 

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59 minutes ago, canadas canadas said:

It would be wise if they all got together and formed a new large oil company.  As they say, united we rise and divided we fall.  It looks like the big oil companies may be waiting to pick them off one by one slowly over time.  If they all unite and form a big company then they would be more potential for them to be bought out all at once.  

Your analysis is quite correct, my one comment being that if all those smaller properties combine then there likely is no pressing need to go sell out to Big Oil.  Economies of scale seems to be driving the producers to sell, albeit at reduced prices  (Andarko excepted, of course). 

From what I can make of it, the profits are being limited by (a) an inability to obtain decent revenue, or even any revenue, from the gas that is being co-produced, and (2) lack of take-away capacity in various pipelines.  Get past those obstacles and the combined operation may very well be just as profitable, possibly even more so, than Big Oil.   Smaller ventures then to be very nimble, albeit hampered by lack of access to capital, the strong suit of Big Oil.  

I remain intrigued as to how it will play out in Canada, as apparently the new Enbridge line across Wisconsin is history.  At least, for now. 

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