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

• Exxon, Chevron Hunt for More Deals

• Energy Transition Faces Cable Shortage

• Around the Global Patch

• Upcoming Oil and Gas Events

• Tweet of the Day

Oil Majors Hunt for More Deals

Despite a dip in profits as oil prices trend lower this year, Exxon and Chevron are still on the lookout for acquisition opportunities.

Both made billion-dollar acquisitions earlier this year, and they’re not done.

Another strong quarter for Big Oil

Exxon reported a Q2 profit of almost $8 billion, and Chevron pocketed $6 billion for the quarter.

Now, these are substantially down from last year’s second-quarter earnings but still a pretty penny.

And the supermajors are going to use at least part of it to further consolidate the industry.

The rest they will use to keep shareholders happy, per the chief executives of the two companies.

Actually, the shopping spree should also keep shareholders happy.

It’s not like Exxon and Chevron are saying, “We’ll drill more.”

This seems to be the new taboo in the industry.

So, no straight-out “Drill, baby, drill”, but a more subtle “Buy, baby, buy”.

So, Big Oil’s getting bigger. And bigger.

Exxon and Chevron are shopping around. But this may be the beginning.

Because prices are going to go higher up and soon.

Goldman just revised its forecast for oil demand for the year.

And Reuters just reported that global oil inventories are on the decline.

There aren’t exactly a hundred ways this could play out.

Exxon and Chevron may yet see their quarterly profits rise in the second half of the year.

More money for so-called inorganic growth through acquisitions.

And probably even happier shareholders are free to pretend acquisitions don’t mean more drilling.

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Transition Faces Cable Shortage

There is not enough cable for the energy transition.

That’s the latest in a growing series of shortages threatening ambitions to electrify the world.

Deficits everywhere

First, it was lithium: production wasn’t growing in line with demand.

Then it was copper: there are nowhere near enough mines for the forecast demand.

Then it was transformers: without enough transformers, the grid can’t be expanded to accommodate wind and solar.

Now, it’s the turn of cable: not enough cable is being produced globally.

And this means a lot of wind and solar projects are facing even longer delays.

Oh, and get this: there’s a shortage of inverters, too.

Inverters are a must for wind and solar because they convert the electricity panels and turbine produced into grid-appropriate form.

Without inverters, wind and solar don’t work.

Or without cables.

Transition trials and tribulations

All these shortages are happening as transition planners get more and more ambitious.

Biden’s IRA is showering the right companies with billions in subsidies to build more wind and solar.

The EU’s Green Deal is trying to mandate electrification, wind, and solar.

But none of this is happening without cables and transformers.

And cables are not happening without a lot of copper.

Regardless of how many billions you offer the right companies...

Regardless of what ambitious targets you set for your member states…

It sure looks like a lot of people forgot you can’t just wish things into existence.

You have to mine them. And manufacture them.

You ignore that at your own peril.

Around the Global Patch

🌍 Powering Africa, the green energy leapfrog.
🇮🇷 Iran asserts rights to disputed gas.
🇮🇳 Modi's oil strategy, rethinking Russian imports.

Upcoming Oil & Gas Events

• July 31-Aug 2: 2023 Railroad Commission of Texas

• August 3-4: OOGA Summer Meeting, Belmont Hills Country Club, St Clairsville, OH

• August 9: Petroleum Alliance of Oklahoma Wildcatters, Petroleum Club of Oklahoma City

Tweet of the Day

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