Tom Biracree

E&P investors have historically been a skittish lot, and for good reason. In the second half of the 2010s, the S&P E&P Index had as many sudden ups and downs as Coney Island’s famous Cyclone roller coaster, culminating in a near crash in early 2020 as equity prices bottomed out at one-tenth their peak. A fairly smooth annual return of nearly 7% over the 2021-to-Q2 2024 period has wooed money back to a sector that now prioritizes shareholder returns. But wariness remains, especially as natural gas prices cratered to three-decade summer lows. In today’s RBN blog, we analyze the balance sheets and budgets of the U.S. gas-focused producers we track to determine if there are causes for concern.

While many larger E&Ps have been growing bigger through massive, headline-grabbing acquisitions, EOG Resources — by market cap, the second-largest non-integrated U.S. producer — has been expanding for a quarter century now by focusing on the stealthy exploration and development of new resource plays. The results of EOG’s long-standing strategy have been impressive, and include finding and development (F&D) costs that are significantly lower than its Oil-Weighted peer group and a higher-than-average reserve replacement rate. In today’s RBN blog, we analyze the scope and impact of EOG’s singular focus on organic growth instead of M&A. 

When legendary University of Texas football coach Darrell Royal was asked how he approached important games, he frequently said, “You dance with the one who brung ya,” which meant sticking with the strategy that produced previous success. After struggling through a period of extreme price volatility in 2014-20, U.S. E&Ps finally locked onto a game plan that works: They wooed back investors and regained financial stability by focusing on generating free cash flow and returning a lot of that bounty to shareholders. In today’s RBN blog, we analyze E&Ps’ 2024 capex and production guidance, which shows that producers have embraced Royal’s concept of sticking with what works. 

A Super Bowl game (and halftime show) for the ages followed up only hours later by a made-in-heaven combination of two of the largest, most admired E&Ps in the super-hot Permian? It doesn’t get any better than this, unless you’re a Taylor Swift fan too — in which case, it may be impossible for you to “shake it off.” In today’s RBN blog, we examine the newly announced plan by Diamondback Energy and Endeavor Energy Resources to combine into a Travis Kelce-sized Permian pure play with more than 800 Mboe/d of crude oil-focused production and more than 6,000 well locations with breakevens of $40/bbl or less. 

In a deal the energy industry had been whispering about for months, Chesapeake Energy and Southwestern Energy will combine to form what will be the largest natural gas producer in the U.S., with 7.3 Bcf/d of production in the Marcellus/Utica and the Haynesville and ready access to the Northeast and the LNG export market — assuming the merger passes muster with federal regulators. In today’s RBN blog, we discuss the merger and why it makes sense for both E&Ps. 

Sometimes, courtship is better the second time around. After some previous rumors and flirting with a deal in the spring of 2023, ExxonMobil, the largest international integrated oil company, reached an agreement to acquire Pioneer Natural Resources, the largest pure-play Permian producer, for $64.5 billion, the largest-ever U.S. upstream transaction. In today’s blog, we analyze the deal that would make ExxonMobil the top Permian producer, including shifts in the focus and depth of its upstream portfolio, the integration with its existing midstream and downstream infrastructure, and its energy transition goals.