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Shale Consolidation Could Put A Permanent Lid On Oil Output

Back in April, the Wall Street Journal reported Exxon was interested in acquiring Pioneer Natural Resources.

The company is the biggest independent producer in the Permian and an acquisition was the most logical path to growth there after the record year that Exxon, like the rest of the industry, had in 2022.

The information re-emerged this month when the WSJ wrote the two were negotiating the deal, which could end up being worth $60 billion. And it would change the face of shale.

The oil price surge last year left supermajors and independents alike flush with cash. At the same time, both groups of shale operators showed restraint in spending and de-prioritized production growth. Some noted faster depletion of wells and exhaustion of high-quality drilling spots, while others reported a surprising boost in well productivity.

Interestingly, Pioneer’s former CEO, Scott Sheffield, was both among those who said shale was not going to ramp up production because it was running out of good-quality drilling acreage and among those who reported higher than-expected well productivity thanks to drilling longer laterals. All in all, shale had become cautious and frugal.

It was only a matter of time before a consolidation drive began to gather pace in these circumstances. Exxon has a production target of 1 million barrels daily from the Permian by 2025, and just buying more land and drilling more wells won’t do it in the most economical way. So Exxon is negotiating the acquisition of the largest operator in the Permian, which would add around 700,000 bpd to its total from the play.

“With this Pioneer deal, there is a possibility that Exxon might say they’ve achieved that growth target for Permian production, and so they don’t have to grow as rapidly as they originally intended,” East Daley Analytics director of analytics and research Ajay Bakshani told Reuters this week.

Others may be thinking along the same lines if only to stay in the race. The Wall Street Journal reported that Exxon’s rivals Chevron and ConocoPhillips, both with considerable presence in the Permian, were looking for acquisition targets. And there are targets, the report said, quoting unnamed sources from the industry. There were independents that were signaling to the supermajors that they would sell if the price was right.

The Wall Street Journal called this an “era of megadeals”, which would reshape the industry, leaving a handful of large players in charge rather than the hundreds of small independents that pumped at will at the height of the shale revolution.

Such a development would tighten control on production growth further, Reuters wrote this week, citing industry insiders, and it would also put additional pressure on oilfield service providers and midstream operators. With fewer players in the field, there will be less competition for their services and more negotiating power for the producers.

All this would be good news for oil investors. No wonder they rushed to energy stocks after the news about Exxon and Pioneer broke, boosting the market cap of the 10 largest shale independents by a total of $16 billion, per the Wall Street Journal.

It might be less good news for transition-focused investors planning to continue pressuring companies into moving away from their core business. If Exxon spends billions to acquire an oil driller, it will not shut all the newly acquired wells and build carbon capture systems on top. It will pump oil from those wells.

So will Chevron, which is looking for smaller acquisition targets, again per the WSJ sources. Earlier this year, the supermajor was reportedly interested in taking over Occidental, but since then, it had reconsidered and was focusing on smaller sector players.

Chevron, too, will likely not change the nature of its potential target’s business. It will continue to extract oil and gas from the shale patch. And like Exxon, it will have the power to turn the rate of extraction up or down depending on its interests. Control over production growth in U.S. shale will tighten if the era of the megadeals materializes.

It may well do just that in the absence of motives for the federal government to set its anti-trust sights on such deals. According to an earlier Reuters report, the White House did want to keep a close eye on Exxon-Pioneer developments, but legal professionals seem to believe there were no grounds for anti-trust action on the deal.


The era of megadeals will put the final strokes in shale’s move to a mature industry, according to analyses of the trend. It would go from hundreds of small players drilling themselves out of business in the 2000s and 2010 to a small group of large producers and some mid-sized ones for variety’s sake, all of which think really well before they start spending their money.

This would mean slower production growth for shale output but it would also likely mean more stable and consistent growth, which, all in all, is better over the long term.

By Irina Slav for

8 Comments on "Shale Consolidation Could Put A Permanent Lid On Oil Output"

  1. the rose toy on Sun, 22nd Oct 2023 1:05 am 

    The potential for shale consolidation and its impact on oil output is indeed a significant consideration in the energy industry. As companies merge or become more efficient, it can lead to a more stable and controlled oil market. While this may put a cap on output, it could also offer benefits such as increased financial stability and reduced price volatility. The energy landscape is continually evolving, and it will be interesting to see how these developments shape the future of the oil sector. The womens rose toy offers a delightful experience within just 10 seconds. This adult pleasure toy sets itself apart from other adult toys and games, such as tongue vibrators or tapping vibrators, which are typically limited to either vibrating or licking actions.

  2. Dredd on Tue, 24th Oct 2023 1:02 pm 

    Shale is just another form of shade-shady, like other genetic myths which led to the shadiest “Oil is the lifeblood of America’s economy” shade (The Shapeshifters of Bullshitistan – 5).

    “Lifeblood” is just another shady genetic number (On The Origin Of A Genetic Constant – 3).

  3. Theedrich on Tue, 24th Oct 2023 11:23 pm 

    Mohammedanism says the world is divided into two spheres, the dar al-Islam, the “house of Islam” and the dar al-harb, the “house of war.”  As long as Mohammedanism exists, its savagery and anti-civilizational animalism will continue.  Until the West dies and Allah subjugates the planet.  In complementary contrast, the White West seeks White genosuicide.  For most post-Christian citizens, that is just fine, since money is the only purpose of life.  He who dies with the most toys, wins.

    Any serious resistance against this ideology, which does not distinquish between politics and religion, is regarded as racism, the most terrible of all sins.  Better dead than racist.  Since the American constitution forbids any attack on religion, and Mohammedanism is defined as only a religion, not the demonic political ideology it is, the American nation is paralyzed and will remain so.

    Thus, the prediction of Muammar Gaddafi is coming true:  within half a century, all of Europe will be Mohammedan.  Ditto for America.  Because we can under no circumstances allow humanitarian suffering, if the sufferers would be Mohammedans, that is.  The deaths and suffering of non-Mohammedan infidels do not matter, no matter how many or how hideous their deaths and suffering.  Suicide is so comforting.

    𝖁𝖊𝖗𝖎𝖙𝖆𝖘 𝖑𝖎𝖇𝖊𝖗𝖆𝖇𝖎𝖙 𝖛𝖔𝖘.

  4. ANAL PROLAPSE CAPTURE LUBE EXTREME i appoint supertards Theedrich and supertard sis supertards their title is 'the lover' of supremacist muzzies on Wed, 25th Oct 2023 2:39 pm 

    supremacist muzzies

    Ramadan Bombathon 2023

    Final score

    Attacks 145
    Killed 741

  5. ANAL PROLAPSE CAPTURE LUBE EXTREME SHOCK i appoint supertard Michael Lynch supertard his title is 'the lover' of supremacist muzzies on Thu, 26th Oct 2023 7:07 pm 

    supremacist muzzies

    Ramadan Bombathon 2023

    Final score

    Attacks 145
    Killed 741

    I’m reading this supertard’s 2018 post

    What Ever Happened To Peak Oil?

  6. Duncan Idaho on Thu, 26th Oct 2023 8:46 pm 

    Peak Oil?
    Happened in Nov of 2018.
    In the rear view mirror.

  7. peakyeast on Sun, 29th Oct 2023 3:51 pm 

    The “redefined” peak oil happened in 2018.

    The real peak oil was in 2005.

    Since then we have been using accounting fraud and trash resources and redefinition to make it seem like there was no peak oil.

  8. wordle unlimited on Wed, 15th Nov 2023 10:58 pm 

    I agree with you!

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