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Oil companies bet on $100 a barrel as they rush to sell assets

Business

Oil companies are betting that if they sell land, buyers will come, as crude prices have soared more than 50% this year, fueling the most robust pipeline of deals in more than four years.

Large oil companies are unloading properties from Texas to California, with some using the market rally as a chance to rake in cash for future investment in the global transition to cleaner energy. Other sellers are taking the chance to profit when just a few months ago big properties were being sold at a loss, according to interviews with 10 advisers and analysts.

Even though renewable fuel usage is increasing, overall global oil demand is expected to return to pre-pandemic levels next year, leaving opportunities for producers looking for deals.

“In greed versus fear, last year fear was the factor. Greed is creeping in now,” said Dan Pickering, chief investment officer at Pickering Energy Partners. “There is more optimism in the market, there is a little more greed from the seller’s perspective, there is a little more urgency from the buyer’s perspectives.”

Still, some buyers may struggle to secure financing. Some private equity firms that once loomed large in oil transactions have headed to the sidelines under investor pressure about climate change, while European banks have also largely pulled out of lending to oil companies. Smaller deals or land with more shale, seen as less polluting than tar sands oil, may be easier to finance, Pickering said.

Among the largest sellers are the majors, including Royal Dutch Shell (RDSa.L), BP (BP.L) and Chevron (CVX.N). Early this year, big players – like Norway’s state-run Equinor (EQNR.OL) – were finding fewer buyers, as the company had to sell its position in North Dakota’s Bakken shale region for $900 million, roughly one-fifth of the value of its purchase there a decade ago.

Now, companies see a better outlook for possible sales. On Wednesday, Chevron confirmed news first reported by Reuters that it planned to divest a swath of conventional assets in the Permian Basin, which sources valued at over $1 billion. read more

While some sellers are motivated by an opportunity to unload underperforming assets at a profit, others, like Shell, are selling in an effort to cut back on carbon emissions under pressure from investors and government regulations.

The potential transactions are concentrated in the largest U.S. shale formation, the Permian Basin of Texas and New Mexico.

In addition to Chevron’s planned Permian sale, Shell is considering divesting all of its acreage in the Permian Basin and has notified joint venture partner Exxon Mobil (XOM.N) that it will be leaving production in California as well. read more

Smaller deals have also popped up as private equity firms seek to turn over long-held investments and distressed players look to shed unwanted assets. Three companies proposing Permian asset sales have pegged their desired deal prices to oil rising to $100 a barrel, according to one person familiar with the talks.

Bank of America has estimated global benchmark Brent futures will reach $100 per barrel in 2022, with U.S. crude trading at $95 a barrel. read more That’s higher than Reuters’ poll on Wednesday of 44 analysts, who expect an average price of $64.54 this year and $65.44 next year.

“While asset prices are coming up helping sellers, there is still plenty of room for buyers to capture upside at these commodity price levels,” said Andrew Dittmar, a senior M&A analyst at energy information provider Enverus. “Buyers are paying valuations on assets that leave room for commodity prices to come down a bit and they still make money.”

Smaller, privately held companies also see a potential to take advantage of the current high prices. Private driller Recoil Resources is hunting for a buyer, and Mesquite is looking to divest Eagle Ford acreage as it considers selling off even more assets as it emerges from bankruptcy.

Potential buyers for smaller packages may include Skye Callantine’s Validus, which people close to the firm say is among active bidders on assets in the Eagle Ford.

reuters



8 Comments on "Oil companies bet on $100 a barrel as they rush to sell assets"

  1. elite whitey (((supertard))) did 911 and said they said building 7 cause loss of life so they said pull it and i said pull it and now elite whitey supertards pulled it with CONvid-19 and 2 weeks to flatten the curve and ZOMG delta varians and we on Sat, 3rd Jul 2021 3:01 pm 

    gonna die

    when it has to do with fear, it brings out the supertards who argue the case for fear using science! and to wear face diapers

    if it gota to with fear it’s ur clue

    please feel at ease among friends, we’re all lovers of supremacists muzzies

  2. Outcast_Searcher on Sat, 3rd Jul 2021 3:25 pm 

    Did you go beyond the fifth grade in your schooling?

    If so, why not grow up and act like it, re your posting style?

    THEN post something substantive, and see if you’re worthy of an actual adult reply.

    Instead of, say, doing the equivalent of shouting at clouds like a 9 year old.

  3. Biden’s hairplug on Sat, 3rd Jul 2021 3:37 pm 

    Well, at least Paultard has 9/11 right. Not many Americans can say that of themselves.

    https://youtu.be/9aOhnK01wMY

    https://newspunch.com/former-italian-president-francesco-cossiga-said-cia-mossad-were-behind-911/

    “Former Italian President Francesco Cossiga Said CIA & Mossad Were Behind 9/11“

  4. makati1 on Sat, 3rd Jul 2021 4:06 pm 

    Outcast, some on here are losing it big time. There are few of us left who can post in correct English, spelling and punctuation. Even fewer who post intelligent remarks for discussion. Sigh!

    Those who post multiple trash, under different names, need to get a life. I’m retired and, living basically in the Philippine jungle, have a full day, every day. No time for hours on the internet wasting my life.

    Who cares what is happening in the oily industry? Price up. Price down. Guesses about tomorrow. Yawn!

  5. supertard kat speaking high english is nevar an excuse for being thick this is why i promoted low enlish low english does not tolerate stupidity on Sat, 3rd Jul 2021 8:12 pm 

    makati1 on Sat, 3rd Jul 2021 4:06 pm

    Outcast, some on here are losing it big time. There are few of us left who can post in correct English

  6. Biden's hairplug on Sun, 4th Jul 2021 10:29 am 

    “Huilend Duits meisje van viral fragment massaal uitgelachen, Britten halen enorm bedrag op”

    https://www.ed.nl/dossier-ek-voetbal/huilend-duits-meisje-van-viral-fragment-massaal-uitgelachen-britten-halen-enorm-bedrag-op~aede7fe7/

    After the loss of Germany against England during the “Euros”, a video went viral of a crying little German girl, who coulnd’t cope with the loss in the stadium. So far, so good.

    Disturbing was the massive online reaction of the Lymeys: pure vitriol, hatred and Schadenfreude, as expressed by these vengeful low characters, low quality mob, giving one excellent insight into the true motivations of these people.

    As a Hollander, I have intimate insight into the English motivations, as they relatively trust the Dutch:

    https://www.dailymail.co.uk/travel/travel_news/article-7136459/Brits-vote-Dutch-friendliest-Europe-followed-Portuguese.html

    “Brits vote the Dutch as being the friendliest people in Europe followed by the Portuguese (and the French come last)”

    (history thingy, keyword Glorious Revolution 1688)

    I have encountered many English throughout my (still ongoing) career and the pattern is always the same: it seldom won’t last more than 5 minutes until they bring up WW2, where they assume I’m on their side (I’m not). However, since Brexit, the traditional Dutch Anglophilia has cooled markedly:

    https://www.theneweuropean.co.uk/brexit-news/how-the-dutch-are-falling-out-of-love-with-britain-20116

    “How the Dutch are falling out of love with Britain”

    One of the more realistic reasons for their alleged Dutch-affinity is the hope they can destroy the EU by luring countries out, countries like Holland, France, Italy or Poland.

    Since Brexit, I have begun to frequent British newspapers, especially the pro-Brexit newspaper the DailyMail, out of geopolitical curiosity with how this drama could be playing out, as Brexit could potentially be a God-sent, as a first step to intentionally blow up the West. Through that daily experience and spending a lot of time in the DailyMail comment section, I got intimately familiar with the outright hatred of the average Brexiteer Englishman for anything continental European, which they try to hide with limited success, by pointing out that they “love Europeans”, but merely “hate the EU”, an outright lie.

    No greater joy for them to fantasize about the demise of the EU and European civilization in general.

    There is no fundamental difference between a jew like our apneaman and the average Brexiteer, apart from the 15 IQ-points.

    If Europeans world-wide are to have a future, we have two problems to solve: the JQ and the EQ.

  7. Duncan Idaho on Sun, 4th Jul 2021 10:47 am 

    “Ralph Waldo Emerson told of a dinner guest who went on and on about the virtue of honesty, offering his own life as a model of perfect rectitude. “The louder he talked of his honor,” said Emerson, “the faster we counted our spoons.”

    Lesson:
    Beware of our repug friends

  8. why supertards insist on speaking high english did it expose 911 NOPE high english justifies it remember the 911 commission full of high english and now high english allows elite whitey supertards to say dead everywhere but low english says on Sun, 4th Jul 2021 4:18 pm 

    nobody died. it’s the CONvid-19, the CON means it’s a con job, a hoax.

    high english nowadays is indicative of mental deficiency

    elite whitey (((supertard))) did 911 and said they said building 7 cause loss of life so they said pull it and i said pull it and now elite whitey supertards pulled it with CONvid-19 and 2 weeks to flatten the curve and ZOMG delta varians and we on Sat, 3rd Jul 2021 3:01 pm

    gonna die

    when it has to do with fear, it brings out the supertards who argue the case for fear using science! and to wear face diapers

    if it gota to with fear it’s ur clue

    please feel at ease among friends, we’re all lovers of supremacists muzzies

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