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Shell’s CEO Ponders Joining the Fossil Fuel Fiesta in the U.S.

Posted by John Donovan: 6 Jan 24

Wael Sawan, the CEO of Shell, a corporation worth a whopping $214 billion, seems to be eagerly warming the bench as he watches Exxon Mobil and Chevron have all the fun in the Permian, a hotspot for oil that’s as profitable as it is controversial. In 2024, Sawan faces a thrilling dilemma: let his U.S. rivals hog all the glory or jump back into the oil bonanza himself, turning his back on that pesky renewable energy trend.

Rewinding to 2021, when green pressures were all the rage, Sawan’s predecessor, Ben van Beurden, was coaxed into selling assets in the Permian. But fast forward to the present, where the Ukraine war has conveniently dampened Shell’s enthusiasm for reducing oil output. Sawan, playing it cool, has also slyly dropped most of those green targets, and guess what? Investors are loving it. Since Sawan took the helm in 2023, Shell’s stock has soared by 15%, leaving U.S. and European rivals eating its dust. Meanwhile, BP, which took the high road away from oil, is barely keeping pace amid its CEO-hunting saga.

If Sawan’s crystal ball shows a rosy future for fossil fuels, he’s probably itching for more reserves. Shell’s plan is to add half a million barrels of oil equivalent per day by 2025 to keep its production from dropping. But after that, who knows? Citi analysts whisper that Shell’s oil reserves will dry up in nine years, lagging 20% behind its peers. And let’s not forget: the Permian’s short production cycle is like speed dating compared to conventional drilling, cutting down those investment risks.

And what’s this? A match made in oil heaven? Endeavor Energy Resources, a Permian big shot, is reportedly on the market for a cool $30 billion. Unlike its smaller peers, Endeavor boasts a prime spot in the Midland Basin and is already churning out 25% more oil than last year, according to Fitch Ratings. Plus, with a dazzling operating margin of 81% per barrel, it’s the belle of the oil ball.

So, as Shell’s CEO ponders his next move, the world watches with bated breath. Will Sawan join the U.S. M&A party, throw on his oil-drenched dancing shoes, and tango back into the Permian? Only time will tell. But one thing’s for sure: in the high-stakes game of oil, it’s go big or go home.

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