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

• M&A Spree in Permian Could Usher in New Era

• Regulator Warns of Looming Grid Instability. Again.

• Upcoming Oil and Gas Events

• Tweet of the Day

M&A Spree in Permian Could Usher in New Era

The recent string of acquisitions in the Permian may well extend into 2024.

With few other growth options, big players could eventually drive out everyone else.

And the U.S. could end up with a handful of producers by 2030.

Next-level of consolidation

Exxon, Chevron, and Occidental announced massive acquisition deals in the span of two months.

Analysts are seeing this as the beginning of a consolidation drive.

Because, really, the shale patch is already crowded, and there’s no spare one.

Taking over smaller rivals is the only viable way to grow from now on.

And grow these companies will.

It’s in their DNA.

"We're probably going to end the 2020s with 10 oil companies in America."

That’s according to the CEO of an investment firm, Smead Capital Management.

Now, that might be a bit far-fetched… but not too far-fetched.

Industry evolution

Remember how many independent drillers there were in the early days of the shale boom?

Probably thousands.

You just needed some money and luck. Everyone wanted in on the fracking game.

But over the years, things changed.

The weakest fell off the cart; the healthy ones got taken over or merged with other healthy ones.

This is evolution in action.

And evolution is always in motion, in nature, and in oil.

Ten companies in total could be a bit excessive, but it seems the wildcatter era may be truly over soon.

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Regulator Warns of Looming Grid Instability. Again.

A few months ago, NERC warned that the U.S. grid is facing grave problems due to reliability issues.

Now, the regulator has repeated the warning.

The combination of generator retirements and rising energy demand, it says, could be dangerous.

It’s not getting better. It’s getting worse.

In May, NERC said two-thirds of America faced “reliability challenges” in case of a heatwave.

I guess the summer must have been pretty normal, and there were no widespread blackouts.

So much about “global boiling.”

But the danger of blackouts remains.

"New environmental regulations and incentives are likely to drive even higher levels of retirements than what we've accounted for."

That’s according to Mark Olson, NERC’s manager of reliability assessments.

Translation: all the subsidies going into wind and solar are driving coal and gas out.

Taxing coal and gas as “carbon polluters” is also helping.

The grid won’t be able to cope with this much longer.

How much worse does it have to get?

In May, Olson warned against the too-fast replacement of coal and gas generators with wind and solar.

He noted new additions were not coming on as fast as older capacity was being retired.

It doesn’t take an engineering degree to see how this creates a reliability gap.

Apparently, no one heard NERC last time.

Few are likely to hear it this time, as well.

There is a race to build as much wind and solar as possible as quickly as possible.

Grid reliability be damned.

Some are probably hailing the coal and gas generators going out of business.

That’s too bad because they may be in for a nasty surprise.

Along with the rest of us, unfortunately.

Upcoming Oil & Gas Events

• January 16: TIPRO/IPAA Leaders in Industry Luncheon, Petroleum Club of Houston, Houston, TX

• January 17: IPAA Private Capital Conference, The Post Oak at Uptown Houston, Houston, TX

• January 17-18: GO-WV Winter Meeting, Marriott Town Center Hotel, Charleston, WV

• January 18: Kansas Oil and Gas Day Legislative Reception, Kansas State Capital, Topeka, KS

• January 23-25: POWERGEN International, Ernest N. Morial Convention Center, New Orleans

Around the Global Patch

🇮🇳 Anticipated slowdown: India's oil demand growth in 2024.
🌍Africa: aligning for optimal oil exploration.
🇷🇺 Russia's oil revenue hits a 6-month low in July slump.

Tweet of the Day

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