Good morning; here's what the Oilman has for you today:

• U.S. Oil Exports Are Bright Spot

• Another Massive Acquisition Deal in the Permian

• Tweet of the Day

U.S. Oil Exports Are Bright Spot in a Depressing Market

Rising U.S. oil exports are bucking expectations of a global oil slowdown with an outlook for continued growth despite the decline in rig count.

Why else would Canada’s Gibson buy the South Texas Gateway?

Demand projections versus reality

We’ve been hearing for months how demand for oil is weakening, how the global economy is slowing down, and how sad everything is.

Well, it’s not sad at all for U.S. oil drillers.

Based on export trends, U.S. oil is thriving.

And that’s despite multiple challenges, including higher costs and a labor shortage.

Since the start of 2023, exports have averaged 3.8 million bpd.

That’s compared with 3.37 million bpd last year.

Yeah, keep worrying about Chinese demand. *Note the sarcasm…

Why did Gibson buy the South Texas Gateway?

Because the outlook for U.S. oil exports is strongly positive, that’s why.

You don’t just splash $1.1 billion on an export terminal because you feel like risking your money.

You do it if you expect growth. Profits.

With total U.S. oil output this year seen at 12.7 million bpd, it’s only logical to expect growth in exports, too.

Especially with a Russian embargo in place in Europe.

And unyielding strong demand in Asia.

But rig count is declining!

Yes, but producers are once again doing more with less, it seems.

Which means we can’t take rig count numbers at face value.

And even if the decline in rigs does lead to lower output, exports will remain strong.

Because of… demand.

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Another Massive Acquisition Deal in the Permian

The wave of M&A in U.S. shale that many predicted has not happened – yet – but dealmaking’s definitely not dead.

Per a Reuters report, Civitas Resources is shaping up as the next big buyer, with a deal lined up for two Permian-focused producers.

Of course, it’s in the Permian

Reports emerged in April that NGP Energy Capital—a private equity energy investor—was looking for buyers for Hibernia Resources and Tap Rock Resources.

At the time, NGP was reportedly looking at proceeds of some $7 billion from the sales.

But oil was trading above $80 per barrel then.

Now it’s $10 cheaper, so the price tag has dropped to $5 billion.

Still, that’s almost as much as Civitas is worth itself.

And that means Civitas, so far focused on Colorado, has big plans for the Permian.

Who doesn’t have plans for the Permian?

There could still be a wave – a PE exit wave

Over the first quarter of the year, mergers and acquisitions in the shale space fell to a meager $8.6 billion across 16 deals.

That’s per Enverus data that also showed private equity is particularly active – in exiting the industry.

Perhaps they’ve figured oil prices are optimal for a safe exit without too much-missed opportunity.

The reported Civitas deal is just such an example.

The price seems to be good for buyers and for sellers.

Maybe there will be a wave of M&As after all once more potential buyers and sellers realize this…?

Around the Global Patch

🇺🇸 India's oil demand on track for record high despite April dip.
🇨🇳 Qatar and China forge second landmark LNG Deal.
🇷🇺 China's record-breaking Russian crude oil imports.

Tweet of the Day

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