A noteworthy observation:

The financial strength and capital allocation strategies of the majors

Rystad Energy’s recent analysis on the 1Q23 results of global supermajors ExxonMobil, Chevron, Shell, Eni, TotalEnergies, Equinor, and BP highlighted the conundrum that the six face when it comes to spending their record-high cash reserves which totals close to $150 billion, nearly double historical averages. These, combined with record-low net debt-to-equity ratios, provide a solid financial footing from which to invest. But so far, there is no indication that any of the six plan to spend significant funds in growing organically in the upstream, downstream or renewable energy space this year. Which begs the question: where exactly do the majors expect to allocate their substantial capital reserves this year?

With signs that shareholder returns are unlikely to be prioritized this year, one possible strategy that the majors may deploy is to use their significant cash reserves to acquire new assets or companies. With approximately $35 billion worth of assets reportedly available for purchase worldwide, there are early signs that the M&A option is already being explored by some of the six. In April, there were rumors circulating that ExxonMobil was engaged in talks to acquire Pioneer Natural Resources. In May, Chevron announced its acquisition of PDC Energy, a deal that will significantly expand the major’s presence in the DJ Basin, firmly establishing Chevron as the leading tight oil producer in the US. In months ahead, we are likely to see more such strategic deals announced by the majors, leveraging their strong foundation and potentially re-shaping the industry’s landscape.

New regional solutions to improve our clients' workflows

To help our clients understand the changes underway in the oil and gas space, Rystad Energy has bolstered several of our product offerings in recent months. In May, we launched the Southeast Asia Oil and Gas Solution, empowering our clients to gain comprehensive insights into key trends and conduct in-depth research within this pivotal oil and gas province. The cutting-edge product also provides crucial data pertaining to upstream operations, emissions, and gas market dynamics, with carbon capture, utilization and storage (CCUS) data to be added shortly.

Rystad Energy’s Northwest Europe Solution also benefitted from significant enhancements in May, with the addition of a new dashboard. This innovative tool facilitates streamlined analysis of the upstream industry, incorporating a wealth of data on hubs, emissions, and electrification. Finally, we have made notable improvements to our M&A Solution by incorporating traded emissions and emissions intensity data for each individual deal, facilitating a comprehensive study of how M&A activities influence the emissions’ footprint of the majors.

Armed with the data in our suite of products and supported by analysis provided in our commentaries are reports, Rystad Energy helps clients make sense of the strategies being undertaken in the investment space and the way in which the six majors could steer the direction of the energy markets in the months to come.