Q1: U.S. consolidation continues to dominate upstream M&A

U.S. producers seeking greater scale in core operating areas drove global upstream M&A to $56 billion in Q1. Evaluate Energy data shows this is a 41% increase over the global quarterly average spend for the past five years.

It was the second consecutive quarter where U.S. assets accounted for 90% of deal value.

Six corporate mergers each valued at over $1 billion saw the acquirer add significant production in existing key operational areas, headlined by Diamondback Energy’s $26 billion deal in the Permian Basin to acquire Endeavor Energy.

All six deals see the acquirer’s production base grow by at least 25%, with Chesapeake set to more than double in size by merging with Southwestern Energy, pending approvals.

The acquisitions by APA and Talos Energy completed by quarter end. At the time of writing, the remaining four deals listed above remain in play, along with the following deals in the U.S. and around the world:

Corporate mergers usually see acquirers seek to trim and streamline as they integrate new assets. The completion of these deals could be a key driver of M&A activity in the second half of 2024.

Some existing or acquired assets will be deemed “non-core” and sold based on several factors, including debt reduction, a less-than-ideal location, oil weighting, operating costs, or emissions profile.

Diamondback is a good example. It spent the last year integrating assets acquired for $3.1 billion via corporate mergers in early 2023. Since those deals completed, the company has made:

  • Upstream sales in Texas for a combined $348 million
  • A drop-down royalty sale to subsidiary Viper Energy for further $75 million
  • Midstream sector sales totaling almost $900 million

With so many mergers taking place all at once across the upstream sector, it is likely we will see increased levels of “non-core” assets being sold as 2024 progresses. This provides growth opportunity for smaller public or private operators.

 

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

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Petrobras in growth mode having cut risk profile

Brazil’s Petrobras has taken huge steps to alter its risk profile over the past few years, bringing the company in line with oil and gas supermajors.

The company is now planning increased investment in exploration, reserves replacement and production growth.

Evaluate Energy data shows that Petrobras has radically altered its capital structure to a company now comparable (based on key risk ratios) to the world’s other largest oil and gas producers.

Debt to capital employed ratios were once significantly higher than BP, Chevron, ConocoPhillips, ExxonMobil, Shell and TotalEnergies.

Petrobras is now the third least debt-funded company within that group relative to overall capital employed.

Debt reduction

This has been achieved by a drastic reduction in debt.

Petrobras’ total debt excluding leases is $80 billion lower than 2017 and approximately $15 billion lower than the supermajor average.

Operating cash flow increases have supported the bulk of this capital restructuring. Petrobras has also been extremely active selling assets and generating extra cash.

Next steps

Petrobras maintained production and proved reserves life at consistent levels since 2017 (around 2.8 million boe/d and around 11-12 years, respectively). However, among the supermajors only ConocoPhillips invested less in terms of capital spending in pure dollar terms. Petrobras channelled the lowest proportion of cash to capex.

This is set to be addressed by Petrobras’ latest strategic plans.

Increased spending is earmarked for its core Pre-Salt developments in deep waters offshore. Petrobras is also revisiting ideas of international expansion, allocating significant capital to exploration, and investments in areas it previously sought to exit – including petrochemicals and renewable power and technologies.

Source: Petrobras Strategic Plan 2024 – 2028, available via Evaluate Energy Documents

 

This analysis was created using:

  • Evaluate Energy: Our data enables in-depth analysis of financial and operating performance of hundreds of upstream and downstream oil and gas companies around the world using a range of proprietary tools and dashboards. Learn more here.
  • Evaluate Energy Documents: For more information, watch a short video here or click here.

 

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Leading natgas and LNG supplier evaluates options after merger talks fail

Natural gas supplier Santos is evaluating structural options as it looks to unlock value for shareholders after its merger negotiations with fellow Australian LNG producer, Woodside Energy, failed.

The two firms brought three months of talks to an end last month. Analysts suggest three options are now likely being assessed — a separation of Santos’s LNG assets from the firm’s other divisions, further assets sales, or another merger with an LNG portfolio player.

Over the last three years, Santos’s total share of cash returned to shareholders have been among the lowest of other global gas exporters, based on Evaluate Energy data.

Shares fell to A$7.17 (US$4.74) this week* from a three-year high of A$8.53 (US$5.60) in June 2022. Santos said at its 2023 investor day that it had appointed advisers to assess a range of options, acknowledging its “disappointing” share price performance.

“We will continue to look at other opportunities to unlock or create shareholder value whilst keeping our organization focused on delivering on our strategic plan,” CEO Kevin Gallagher said on the recent full year results call.

A demerging of Santos’s LNG assets in Australia and Papua New Guinea from its Australian and Alaskan oil and gas assets was proposed by activist shareholder L1 Capital last year.

“We believe a structural separation of the company’s LNG assets would help to unlock the inherent value of Santos’s assets and ultimately present a significant value-creating outcome for shareholders,” said a quarterly report from L1 Capital.

Such a move could highlight the firm’s LNG equity assets to investors. These assets are well placed to serve markets in China, South Asia and South-east Asia that will see natural gas demand grow from under 700 BCM currently to over 1050 BCM by 2040, according to Shell’s latest LNG outlook.

L1 Capital’s analysis suggested the valuation of the two demerged divisions would be equivalent to over A$10.50 (US$6.50) per share, representing an uplift of 43% from the share price of A$7.35 (US$4.80) in September last year.

Asked about any potential demerger at the firm’s full year results call, CEO Gallagher would not comment on the merits of the proposal but reiterated that the firm would “evaluate all options.”

A second option could be for Santos to divest more of its assets.

  • The firm sold a 2.6% stake in the PNG LNG project to Papua New Guinea’s state-owned firm, Kumul, in September last year, with a call option for a further 2.4% that can be exercised before June.
  • In the same month, the firm divested half of its working interest in 148 Alaskan exploration leases to Apache Corp. and Armstrong Oil & Gas.

A third option is another merger with an oil and gas player.

 

*March 13, 2024 Closing Price. Source: Australian Stock Exchange

 

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Eni, Equinor, Repsol lean into low-carbon investment ahead of forecast oil and gas production plateau

Eni, Equinor and Repsol — three European majors with advanced climate strategies — are matching the low carbon investments of larger operators while spending less on oil and gas production growth and returning less cash to shareholders.

Based on 2023 results, Eni spent $2.4 billion on low carbon, Equinor $2.1 billion and Repsol $1.5 billion. This compares to an average of $2.1 billion for the supermajors.

Eni is committed to spending 70% of its capex on low carbon by 2030, Equinor 50%, and Repsol 40%.

Source: Evaluate Energy and Evaluate Energy Documents

Of the supermajors, only the Europeans have made equivalent targets public. Shell and BP both target 50%, while TotalEnergies targets 30%.

Chevron has not quoted a percentage but does plan to spend $10 billion between 2022 and 2028 on low carbon initiatives.

Unlike the supermajors, which all plan to grow production this decade, Equinor and Repsol plan to keep production flat between 2025 and 2030. Eni plans a short-term production increase with a plateau from 2026-2030. All three firms have seen relatively flat production profiles across the last three years.

The three firms are adopting a managed investment strategy, with new developments focused on short cycle projects, enabling them to have more flexibility to sell assets and hit their targets.

Eni and Repsol both have absolute scope three reduction targets for 2030. Amongst the supermajors only BP has such a target.

Eni and Repsol (although not Equinor) are also returning a smaller share of their profits to shareholders as they look to reinvest a comparatively larger share than the supermajors into low carbon divisions.

Source: Evaluate Energy and Evaluate Energy Documents

All three firms are channeling low carbon investments into power generation and renewable fuels, although they organize low carbon assets in different ways and see varying degrees of profitability in these divisions.

Eni strategy

Eni’s low carbon strategy is focused in two areas — low-carbon electricity and sustainable mobility.

Low-carbon electricity is managed by its power division, Plenitude, which saw profits rise 11% to €681 million ($737 million) in 2023.

“The 2023 result of Plenitude came in the context of another highly volatile and challenging year for energy suppliers and again emphasized the quality of the model,” said CEO Claudio Descalzi.

But only 16% of Eni’s power generation is renewable. The division currently has 3GW of renewable power capacity and is targeting 15GW by 2030 and 60GW by 2050.

Source: Evaluate Energy and Evaluate Energy Documents

Sustainable mobility — which includes EV charging, biofuels and biomethane — is managed by Enilive, established at the beginning of 2023. The division is also profitable, reporting a 10% improvement in EBITDA year-on-year to €1 billion ($1.1 billion), despite weaker product markets.

The division is growing rapidly. In 2023 Eni saw biorefinery throughput up almost 60% year-on-year, while biofuel capacity was 50% higher at 1.65 million tons per year after the acquisition of the St Bernard biorefinery in the US.

Enilive also oversees the development of new vectors such as Sustainable Aviation Fuel (SAF) and CCS.

Repsol strategy

Like Eni, Repsol has a utility business that it calls ‘low carbon generation,’ with 6GW of renewable capacity currently and a target of 10GW by 2027. The firm plans to nearly double its electricity customer base to four million by 2027.

Also, like Eni, this business is profitable, generating returns of €75 million ($81million) in 2023. Repsol only invests in projects that offer 10% equity returns.

Repsol’s renewable fuels business is grouped in its industrial segment, which also includes refineries.

The firm is spending over €5.5 billion ($6 billion) repurposing its seven refining complexes over the next four years to produce renewable fuels, renewable hydrogen and biomethane. It will also soon commission an advanced biofuels plant in Cartagena, Colombia.

Repsol’s goal is to reach a total production capacity of between 1.5 and 1.7 million tons of renewable fuels, renewable hydrogen and biomethane in 2027, and up to 2.7 million tons in 2030.

These industrial low carbon businesses are forecast to deliver almost 40% of revenue growth by 2027.

By that date, Repsol expects €1.2 billion ($1.3 billion) of annual cashflow from low carbon, split evenly between the utility business and industrial low carbon fuels.

“Low carbon generation in Iberia for Repsol is at the heart, at the core of the business of the company,” says Repsol CEO Josu Jon Imaz on the firm’s recent fourth quarter results.

Equinor strategy

Equinor also produces low carbon electricity — largely from offshore wind — in its renewables division. It is targeting 12GW of renewable capacity by 2030.

The renewable division posted a loss of €33 million ($36 million) in 2023 due to ongoing investments in new wind projects — although it was profitable in 2022.

The firm also has a CCS business as part of its oil and gas division and expects returns of 4-8% from both renewables and CCS projects going forward.

The two divisions are forecast to deliver just under a quarter ($6 billion) of annual average cashflow of $26 billion by 2035, with the remainder coming from oil, gas, and trading.

“With the profitability and the volumes, low carbon solutions will be a source for long-term cash flow,” says CEO Anders Opedal.

 

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Renewable fuel projects proving attractive to E&Ps

Renewable fuel projects are proving an attractive proposition for oil and gas operators seeking to diversify portfolios through equity stakes or outright purchases.

Deals in the sector represent a wide range of fuels and technologies, including biomethane, biodiesel, sustainable aviation fuel, and e-methanol, emphasizing the diversity of low-carbon solutions interesting large-scale E&Ps.

The past three years saw 44 renewable fuel deals involving E&Ps, based on Evaluate Energy data. This represents almost a quarter of the 191 worldwide renewable fuel deals spread fairly evenly between 2021 and 2023. Of these, 15 were located in Europe and 15 in North America.

Equity Deals

Around a third of the E&P deals involved an equity stake.

One of 2023’s largest saw TotalEnergies join forces with Belgian start-up Tree Energy Solutions (TES) on a US$2 billion US plant to produce e-natural gas, a synthetic gas produced from renewable hydrogen and CO2. Also last year, TotalEnergies acquired a 20% stake in Ductor, a Finnish biomethane producer. By 2030, TotalEnergies plans to produce 13 to 20 mmbtu of biomethane a year.

BP, meanwhile, acquired a stake in WasteFuel, a California biofuels company, and UK hydrogenated vegetable oil producer Green Biofuels. Bioenergy is one of five strategic transition growth engines that BP intends to grow through this decade, and the firm has a target to produce around 4.8 million tonnes per year of biofuels by 2030. Biofuels are the most common renewable fuels used in transport and can be blended with fossil-based raw materials in refineries.

ExxonMobil has a 49.9% stake in Biojet AS, a Norwegian biofuels company that plans to convert forestry and wood-based construction waste into biofuels. ExxonMobil plans to use the fuel as a replacement for diesel in road transport. ExxonMobil also invested US$125 million in biofuels producer Clean Energy Holdings. The firm has a target to produce 500,000 tonnes of biofuels by 2025.

Last year, Chevron formed a JV with Corteva and Bunge to produce vegetable oil feedstocks for the growing domestic renewable fuels market. Chevron has a goal to grow renewable fuels production capacity to 4.8 million tonnes per year by 2030.

Asset purchases

Six of the E&P deals involved outright asset purchases — two in Europe and three in North America.

TotalEnergies acquired Fonroche Biogaz in 2021, a company that designs, builds and operates anaerobic digestion units, and is the leading producer of renewable natural gas in France.

Also in Europe, Shell completed the acquisition of Nature Energy Biogas in 2023, the largest RNG producer in the region. The company established its first biogas plant in Denmark in 2015 and has 14 operating plants producing around 6.5 mmbtu of gas.

In the US, BP acquired renewable natural gas provider Archaea Energy in 2022, one of the largest renewable natural gas producers in the region, for US$3.3 billion in cash — one of the largest of the deals in the sector.

Also in 2022, Chevron acquired biodiesel producer Renewable Energy Group in a deal valued at US$3.15 billion. Renewable Energy Group was one of the early movers in the US biofuels sector, manufacturing renewable diesel at its biorefinery in Geismar, Louisiana.

US oil and gas firm Camber Energy also acquired a renewable diesel plant in the US. The facility in Reno, Nevada produces 180,000 tonnes per year of the fuel. Like ExxonMobil, Camber Energy plans to market renewable diesel to the road transport sector.

In the remaining asset deal, Canadian oil and gas firm Petrox announced its intention to buy Canadian biochar producer M&L. M&L plans to build a facility in Alberta to convert wood waste into biochar, with an adjacent 1.58 MW facility using heat produced by the biochar production process to generate power.

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

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Unpacking energy supermajors’ future growth and investment strategies

Looking beyond headlines related to profitability and shareholder returns, the latest round of quarterly results tells us that the supermajors will continue a strategy of growing near-term oil and gas production whilst maintaining flexibility in their levels of low carbon spending, as they look to assess the speed of energy transition.

Total oil and gas production from Chevron, ConocoPhillips, ExxonMobil, BP, Shell and TotalEnergies was broadly flat in 2023, based on Evaluate Energy data. The EU firms tended to lower production slightly on 2022 levels, while the US operators slightly increased output.

None plan to cut production levels before 2025 and all plan to grow upstream by at least 2% per annum until then. Most speak openly about a strategy based on continued high fossil fuel demand, while BP and Shell last year rolled back targets on production cuts.

All six firms have targets to reach net-zero for scope one and two emissions by 2050. Only BP, Shell and TotalEnergies have 2050 scope three emission reduction targets. And only BP has a 2030 scope three emissions reduction target — aiming for a 20-30% cut by 2030 against a 2019 baseline, a target which it downgraded from a 35-40% cut last February.

In 2022, BP’s scope three emissions fell by 15% from the 2019 baseline. Further cuts — almost certainly in the form of assets sales — would still be required after 2025 if the firm was to meet its 2030 target.

CEO Murray Auchincloss stood behind BP’s direction of travel from “integrated oil company” to “integrated energy company” on the firm’s full year results call, although he insisted that the firm had to remain “pragmatic’’ about the transition.

Some equity analysts believe BP could still choose to back out of its 2030 scope three reduction target in the years ahead.

“We note an emphasis in BP’s presentation on 2025 targets rather than 2030, possibly leaving the company some wiggle room to ‘pragmatically’ adapt to future trends,” said HSBC’s oil and gas team in a research note. “The much-feared decline in oil and gas volumes by 2030 may not materialize if BP decides not to sell assets, but it is too early for such a move to be advertised.”

Strategy spectrum

Non-profit Carbon Tracker outlined a spectrum of responses that firms are taking as they approach the energy transition.

For now, the European firms — BP, Shell and TotalEnergies — are pursuing a ‘managed investment’ strategy, with limited new developments focusing on short cycle, cost effective oil and gas projects.

“Having a more managed approach to investment and the flexibility of a short cycle increases firms’ ability to respond to the energy transition,” said Mike Coffin, head of the oil, gas and mining research team at Carbon Tracker.

Meanwhile Chevron and ExxonMobil are pursuing a plan of business-as-usual replacement, with new development and exploration still moving ahead, even at higher breakeven prices.

ConocoPhillips has a yet more aggressive strategy, aiming to be the lowest cost “last producer standing,” said Coffin.

Despite the plans of US firms, IEA data shows that there has been a noticeable trend of reduced oil and gas capex globally on new projects since 2015.

Reinvestment alternatives

Those firms that are not reinvesting in new exploration projects face the dilemma of what to do with cashflow that historically would have been reinvested.

The first option is to return value to shareholders through increased dividends or via share buybacks. The second is to diversify into new, low carbon, energy vectors.

In the latest round of results, all six supermajors announced continued share buyback programs. At the same time, all claim they are investing in low carbon technologies that will ensure their place in the energy system post-transition. But, as Evaluate Energy data demonstrates, figures for 2023 show that these investments are a fraction of dividend payments and share buybacks.

“Some firms are talking about investing into new technologies and business areas, whilst in reality increasing the value distributed to shareholders,” added Coffin.

Of the US$1.7 trillion spent globally on clean energy technologies in 2023, only 1% was invested by oil and gas companies, IEA data shows.

Low-carbon options

Those low carbon investments that are being made by supermajors fall into four clear categories — renewable energy, sustainable fuels such as hydrogen and biofuels, petrochemicals, and CCS-as-a-service.

European companies have tended to focus on the first of these, renewable energy. But these units have arguably so far delivered returns below shareholders’ typical expectations. BP anticipates a return of 6-8% from its move into European offshore wind, while Shell sold its home energy retail businesses in the UK, the Netherlands and Germany.

TotalEnergies will be hoping its efforts are successful. Last year it invested US$5bn in building its Integrated Power division, largely through M&A, and says it hopes the division will be positive for net cash flow by 2028, with returns of 12% or higher.

US firms are more focused on hydrogen and CCUS. But these units are still nascent and represent only a fraction of profits. Neither Chevron, ConocoPhillips nor ExxonMobil report separately on the results of their low carbon divisions.

The business model for hydrogen supply is still unclear, and it will be years before the sector is fully commercialized. Meanwhile, CCUS is unlikely to be profitable without subsidy, even if offered as a service.

Supermajors are still hoping that these low-carbon sectors will develop in a way that allows them to deliver the returns that shareholders expect, whilst still decarbonizing. But this is far from guaranteed, according to Carbon Tracker.

“There is no single pathway for the industry to follow. Adopting a strategy of depletion and cash-out may be in investors’ interests,” said its Navigating Peak Demand report.

 

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European and U.S. upstream firms diverge on low-carbon technology deals

Europe remains the focal point for E&Ps investing in M&A power deals that utilize low-carbon solutions such as solar and offshore wind.

E&P companies engaged in 231 power deals between 2021 and 2023. This represents around 10% of all power deals worldwide, according to Evaluate Energy data. Only 13 of these power deals involved fossil fuel-based technologies.

Ninety-nine deals were targeted in Europe, followed by North America with 45. The data illustrates that many EU firms have moved into renewable power while U.S. firms focus on renewable fuels, hydrogen and CCUS.

The five leading E&Ps executing power deals were all European: TotalEnergies (38), Shell (27), Eni (26), Equinor (21), and BP (15). Only seven deals of North America’s 45 were agreed by U.S.-based E&P companies – and three of these were by one firm, Genie Energy, a provider of green and conventional electricity and natural gas supply plus solar energy solutions.

Regional spread

Not all deals done by European firms were EU focused. Firms’ net zero targets require them to reduce carbon intensity across their entire portfolio. This means renewable schemes in any geography count towards the overall target. Regions outside Europe often have cheaper construction costs and more abundant solar and wind resources.

Of the 38 deals done by TotalEnergies, only 12 were situated in Europe, with the rest in Africa, Central Asia, or Asia-Pacific.

Of the 27 deals by Shell, only 10 were in Europe. The rest were in Central Asia, Asia-Pacific, North America, or Latin America.

Eni was more European-focused, with 19 of its 26 deals taking place in Europe, with the remainder in North America, Central Asia, or Asia-Pacific.

Technology mix

Solar is by far the largest investment segment, with just under a third of all E&P power deals (78). They are spread mainly across Europe (26), North America (15) and Asia-Pacific (15). There are notable deals outside those regions – including BP’s 40.5% equity stake in the Asia Renewable Energy Hub (AREH) in Australia.

Offshore wind is the next largest segment with 51 deals. Offshore wind is often a good fit for oil and gas firms using marine and project management experience to add value.

Onshore wind has seen less interest with 31 deals.

Electric vehicle charging infrastructure saw 16 deals by E&Ps. Notably six of these were done by BP. One of the biggest BP deals involves a joint venture with Spanish utility Iberdrola to invest €1bn ($1.08bn) in 5,000 EV charging stations in Iberia by 2025 and 11,700 by 2030.

Shell is also looking at EV charging with three deals in the space, two of which involve working with original equipment manufacturers — China’s Nio and GM in the U.S.

The geothermal sector saw 12 deals – two by Chevron. There is growing geothermal interest amongst U.S. E&Ps after development funding was released by the Biden administration. The U.S. House Energy and Commerce Committee last month passed a bipartisan bill to streamline geothermal project permitting.

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

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Diamondback will almost double production base in $26bn Endeavor deal

The $26 billion acquisition of Endeavor Energy by Diamondback Energy is the fifth multi-billion-dollar corporate merger already in the U.S. this year and takes U.S. upstream deal spending to over $45 billion, according to Evaluate Energy data.

Diamondback says the deal will almost double its Permian Basin production base to over 800,000 boe/d by 2025, as well as provide:

  • A combined asset base of 838,000 net acres in the Permian Basin
  • 6,100 pro forma locations with break evens at under $40 WTI
  • Annual synergies of $550 million representing over $3.0 billion in NPV10 over the next decade

Last August, Diamondback had finalized the integration of assets acquired for a combined $3.1 billion in late 2022 and early 2023. “Going forward, it’s not important to win every deal,” said Diamondback CEO Travis Stice at the time. “It’s important to win deals that make us not just bigger but better.”

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

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CCUS deal-making by upstream oil and gas firms is rising

Global interest among E&P firms in Carbon Capture, Utilization and Storage (CCUS) project deal-making is starting to ramp up.

95 CCUS-related deals have been announced over the past three years involving upstream companies based on Evaluate Energy data. This represents around 53% of all CCUS deals worldwide since the start of 2021, and 2023 saw the ratio increase to 63%.

Equity financing and interest in project finance for CCS projects has increased significantly over the past 12 months, as national funding strategies start to emerge, according to the Global CCS Institute’s ‘Status of CCUS report’. A U.S. CCS tax credit regime was established in 2023 and an EU strategy is due this year.

Majors lead the way

Malaysia’s Petronas is the most active with ten CCUS-related deals. All were co-operation deals, as the firm looks to evaluate its involvement at various points in the value chain. Two involve evaluating storage sites, four evaluating the potential of CO2 shipping, and one the development of a storage hub in the Java Sea. The remainder relate to an interest more broadly in investigating the technology.

Chevron is the second most active with nine deals. One involves a 50% equity stake in the Bayou Bend CCS project in Southeast Texas, where Talos Energy and Equinor also have stakes.

Chevron also has interest in the firms Carbon Clean and Svante, as well as Blue Planet Systems, a building material CO2 sequestration developer. Chevron’s other deals signal broad co-operation in investigating the technology, albeit with a wide geographical footprint — the firm has deals in Australia, Indonesia, Kazakhstan, and the U.S. Chevron already runs a significant CCS project at its Gorgon LNG plant in Australia.

ExxonMobil is the third most active in the sector with eight pure CCS deals, which rises to nine if the company’s $4.9 billion deal to acquire U.S. oil and gas producer Denbury Inc. is included, due to CCS potential forming a huge part of ExxonMobil’s motivation for the deal.

ExxonMobil has entered into two deals on capture testing projects, both in the U.S. The first is a partnership with technology firm FuelCell Energy assessing the latter’s capture technology, and the second is a partnership with steel firm Nucor assessing a full CCS value chain at Nucor’s manufacturing site in Convent, Louisiana. Unlike Chevron, ExxonMobil is yet to take an equity stake in CCS technology firms.

Shell is the next most active company with seven deals. One involves participation in the same UK licensing round as ExxonMobil to investigate North Sea storage locations. Shell will work with ExxonMobil on three locations and evaluate a further two, while ExxonMobil won the license for a further location of its own. Shell’s remaining CCUS deals involve co-operation across various parts of the value chain.

Around the world

The U.S. has seen 29 deals by E&P firms over the past three years, reflecting the dominance of U.S. firms in CCS deals and the U.S. CCS tax credit regime, put in place last year.

Asia-Pacific has seen 27 CCS M&A deals. The region has significant potential for growth and a number of projects are being developed. This includes the Arun project in Indonesia, which has potential to sequester one billion metric tonnes of CO2 and may include open access storage, paving the way for a network of capture projects.

Europe is the next most popular region with 22 deals, which includes 12 E&P companies awarded licenses for storage locations in the UK’s first license round. The EU doubled funding for CCS to €3bn in 2022, and issued its second call for projects last year, meaning there is likely to be a further uptick in activity as the value chain develops.

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

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Creating a sustainability-ready workforce within oil and gas – New whitepaper

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“Our work with the industry over the last few years has demonstrated that there is a genuine need to think differently about the human capital and talent development strategy for the industry,” said Bemal Mehta, Head of Evaluate Energy ESG Learning. “We are hoping that the whitepaper helps foster an essential conversation. We’re going to need an immense amount of talent to achieve major goals such as Net Zero.”

Download this whitepaper to gain insights into:

  • Why this training/skills issue matters so much today, and the impact of inaction
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