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

• Another Billion-Dollar Deal in the Permian

• Exxon Quits Huge Brazil Drilling Project

• Tweet of the Day

Another Billion-Dollar Deal in the Permian

Days after Ovintiv said it would buy Permian assets for $4.3 billion, a private equity firm has said it wants to sell its own assets there.

NGP Capital Management is eyeing $7 billion in proceeds.

The sweetest of the sweet shale spots

The two companies that NGP wants to sell are Tap Rock Resources and Hibernia Resources.

And they pump more than 120,000 bpd together.

Tap Rock operates in the Delaware Basin, and Hibernia is active in the Midland Basin: the two most prolific parts of the Permian.

With oil prices back above $80, there could hardly be a better time to cash in on such assets.

After all, you never know when the next downturn will start. It’s hard to tell these days.

Dealmaking could accelerate further

With last year’s record profits, public shale operators cut debt, boosted dividends, and, it seems, found themselves with some spare cash to spend.

Using this cash to buy more assets in the best parts of the Permian makes perfect sense.

“You’re going to have a raft of M&A in 2023,” Jefferies’ global head of energy banking told the FT in February.

“They’re out there shopping for more inventory. And we’re back in the business of selling Permian businesses with prime locations to sophisticated parties at real valuations.”

There’s nothing wrong with some more consolidation, is there?

It seems there isn’t, even if production growth is slowing down across the shale patch.

Maybe a consolidation push could reverse that; who knows.

Today's Edition is Brought to You By Energy Builders Podcast

On the latest episode of Energy Builders Podcast, our guest is Donna King. Donna founded Energy Point to fulfill a particular need in the asset management sector. With her industry know-how and a results-driven approach, she guides her team in providing clients with superior services, cutting-edge data management, and innovative solutions.

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• Why she started Energy Point

Listen on Apple Podcasts, Spotify, and more.

Exxon Quits Huge Brazil Drilling Project

Exxon has pulled the plug on a drilling project in Brazil after spending billions on it. Consider this the latest reminder that oil and gas is a risky business.

Remember that next time someone complains about obscene oil industry profits.

A major growth opportunity gone bust

One of Exxon’s “major growth opportunities” – that’s how CEO Darren Woods described Brazil at the end of last year.

It wasn’t news. Everyone’s been talking about Brazil’s legendary pre-salt zone chock full of untapped billions of barrels of oil and gas. And many have flocked to that zone in search for those barrels.

If only it were as simple as that.

Exxon’s decision to quit drilling in Brazil is a great reminder that regardless of how far exploration tech has come, there are still plenty of risks to drilling a dry hole.

Or three, which is what happened to Exxon.

Now the supermajor is moving its engineers from Brazil to Guyana, Canada, and Angola. With these, at least you know where the oil is.

A shrinking pool of untapped resources

The most interesting part of the exclusive WSJ report on Exxon’s pullout from Brazil is that the company plans to return and try again.

The reason is simple: there aren’t many places left in the world with untapped oil and gas resources.

And legacy fields won’t produce forever.

Even so, it seems that Exxon—and other Big Oil majors—prefer to focus on legacy regions right now. They are focusing on low-risk projects.

That’s good for the short term, sure, but is it good for the long term?

Not really.

Unless you’re a climate activist and believe we won’t need oil in 20 years time, in which case you’ll be in for a nasty surprise in roughly…oh, 20 years.

Around the Global Patch

🇳🇴 Norway is the new energy darling of Europe.
🇫🇷 If oil hits $100/bbl, these countries will hurt.
🇮🇩 Politics and producers’ interests collide in Indonesia.

Tweet of the Day

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