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🌎 THE GREAT SHALE SHAKE-UP #199

The big deal with O&G’s big deals

 * Newsletter

by  CTVC
on June 03, 2024
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Happy Monday! Congratulations to Mexico’s first female, IPCC contributing,
climate scientist president! 

This week, we’re riding the wave of mega-mergers among oil & gas majors. Looking
at swells ahead as the industry pours money into maturing basins and
consolidates assets in a bet on continued energy demand (in the short term, at
least). We dive into what makes shale's big deals a big deal.

In other news, Shell fights with activist shareholders, Oklo nuclear power for
data centers, and e-SAF deals.

In deals, $7.7bn for climate tech across five new funds, $80m for cooling chips,
and $37m for climate credit cards.

Thanks for reading!

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📩 Submit deals and announcements for the newsletter at hello@ctvc.co.

💼 Find or share roles on our job board here.

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A BUNDLE OF ENERGY M&AS

A wave of mega-mergers and acquisitions is crashing through the energy sector.
In just the past week alone, two notable deals were announced:

 * ConocoPhillips purchased Marathon Oil in an all-stock deal valued at $22.5bn,
   including debt. This acquisition will expand ConocoPhillips' assets across
   key shale regions, including North Dakota and Texas .
 * Hess Corporation shareholders approved the company's $53bn merger with
   Chevron, giving the supermajor shale assets in North Dakota, the Gulf of
   Mexico, and Guyana, despite an ongoing dispute with Exxon over Guyanese
   assets .

These recent deals come in the wake of a record high of oil and gas upstream M&A
activity in Q1 2024, which saw over $54bn in US deals. Highlights include:

 * Diamondback Energy's $26bn acquisition of privately-owned Endeavor Energy
   Resources, marking the largest deal involving a family-owned producer .
 * Apache Corp.'s $4.5bn deal to acquire rival Callon Energy.
 * Chesapeake Energy's $7.4bn acquisition of Southwestern Energy.

This flood of consolidations follows a 21st-century high deal total of $192bn in
2023. Exxon's $59.5bn purchase of Pioneer Natural Resources was announced in
October (now pending FTC approval), and Occidental Petroleum's agreement to
acquire CrownRock for $12bn in December.




THE BIG DEAL WITH THE BIG DEALS 

The US shale revolution, starting around 2005, transformed the global energy
landscape. Initially driven by numerous small-time drillers, now a handful of
major players are racing to acquire valuable assets and reserves to bolster
their inventories and production capabilities. Factors driving this include:

 * Growth in cash reserves. Between January 2021 and September 2023, five of the
   largest oil companies generated $613 billion in operating cash flow. This
   allowed them to dramatically reduce their debt and return cash to
   shareholders while growing their cash reserves and kickstarting the M&A
   activity that we’ve seen extend into this year. Acquisitions like these allow
   the companies to convert cash reserves to long-term free cash flow. 
 * Maturing reserves. Supermajors have shifted to focusing on creating returns
   for the long-term future through very mature reserves. The consolidations
   also aim to increase operational efficiency and reduce production costs,
   building long-term economies of scale in the most commercially viable areas,
   like the Permian Basin and the Bakken oil field, which the majority of these
   deals touch. 
 * Skyrocketing energy demand. Increasing demand for natural gas, driven by data
   centers, AI, manufacturing, and electrification, means that natural gas is
   expected to remain a crucial energy source at least in the 2020’s.
   Additionally, oil and gas production hit new highs in 2023 following the
   surge in crude prices due to geopolitical tensions such as the Russian
   invasion of Ukraine .
 * De-risking the future. Companies are increasingly focused on technology to
   extend the life of Tier 1 assets. Expensive exploration activities to build
   out new reserves carry significant risks, especially with changes to oil use
   creating uncertainty in projected future demand. Having extensive proven
   domestic reserves of natural gas, for which the Permian is a prime resource
   with access to LNG export infrastructure, protects these companies from a
   range of macroeconomic risks.


KEY TAKEAWAYS

While the drivers for the wave of consolidation has not been directly related to
climate technologies, climate solutions may still be affected. 

 * Creation of (even more, even bigger) fossil fuel giants. These mergers and
   acquisitions are creating larger fossil fuel giants with significant market
   and policy influence. Indeed, the sheer value of these deals, combined with
   the industry's strategy to demonstrate long-term returns, indicates that
   major energy companies are betting on an “all of the above” future energy mix
   that’s still heavily reliant on oil and gas, even as renewable energy
   continues to gain. Still, the consolidation wave has attracted increased
   antitrust scrutiny, with the FTC reviewing several multi-billion dollar
   deals. 
 * A potential for some improvement in O&G emissions. Last year, the National
   Ocean Industries Association (NOIA) found that US oil production resulted in
   23% less CO2e emissions per barrel than the international average. So a focus
   on investment in domestic production should allow US developers to show lower
   overall emissions per unit fuel compared to international expansion.
   Furthermore the consolidation trend could lead to increased opportunities for
   Enhanced Oil Recovery (EOR). According to one estimate, around 41% of Permian
   injection wells are permitted for CO2, but less than 30% of those are
   actively engaging in CO2-EOR. With increased activity around CCUS technology
   and IRA tax credits, these acquisitions may provide an opportunity to take
   advantage of those permits and claim both emissions reductions and tax
   credits.
 * …but sucking the air away from climate solutions. The deployment of
   significant resources in acquiring more O&G assets, in both strategic effort
   and cash reserves, aligns with the stated shifts of O&G majors away from more
   ambitious climate goals. Given O&G have been the largest acquirer of climate
   tech start ups in recent years, their appetite and focus is crucial to many
   climate tech sectors. 

Special thanks to Mudit Agrawal and Oliver Booth for their contributions to this
piece.

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DEALS OF THE WEEK (5/27 - 6/2)


LATE-STAGE / GROWTH

🏠 Frore Systems, a San Jose, CA-based active device cooling maker, raised $80m
in Series C funding from Fidelity, Addition, Alumni Ventures, Clear Ventures,
MVP Ventures, and others.

💸 Doconomy, a Stockholm, Sweden-based climate-focused credit card provider,
raised $37m in Series B funding from CommerzVentures, UBS Next, Motive Ventures,
PostFinance, S&P Global Inc., and Tenity. 

🚗 Euler Motors, a New Delhi, India-based electric 3- and 4-wheelers maker,
raised $24m in Series C funding from Blume Ventures, British International
Investment, and Piramal Alternatives India Access Fund.


EARLY-STAGE

🏠 Cloover, a Stockholm, Sweden-based renewable energy financing platform,
raised $108.5m in Debt funding and $5.5m in Seed funding from 9900 Capital,
Lowercarbon Capital, and QED Investors. 

 🏭 EthonAI, a Zürich, Switzerland-based AI-powered manufacturing analytics
platform, raised $17m in Series A funding from Earlybird Venture Capital,
Founderful, General Catalyst, and Index Ventures. 

🛰 WindBorne Systems, a Stanford, CA-based long-duration smart weather balloons
maker, raised $15m in Series A funding from Khosla Ventures. 

🌱 Lumo Ag, Napa, CA-based connected irrigation platform company, raised a $7m
funding round from Active Impact Investments and Fall Line Capital.

🚗 Turno, a Bengaluru, India-based commercial EV distribution and financing
platform, raised $6m in Series A funding from B Capital Group, British
International Investment, Quona Capital, and Stellaris Venture Partners. 

🌱 Vizcab, a Lyon, France-based carbon impact analysis software platform, raised
$4.9m in Series A funding from KOMPAS, Brick & Mortar Ventures, and Global
Brain. 

⚡ Delta Green, a Prague, Czech Republic-based grid stability software platform,
raised $2.4m in Seed funding from Tilia Impact Ventures, Credo Ventures, and
Purple Ventures. 

⚡ Plural Energy, a San Francisco, CA-based blockchain platform for climate
assets, raised $2.3m in Pre-Seed funding from Compound, Maven11, Necessary
Ventures, and Volt Capital.

⚡ Eneryield, a Lund, Sweden-based grid monitoring solutions platform, raised
Seed funding from ABB and Chalmers Ventures AB. 

💨 Chloris Geospatial, a Newton, Massachusetts-based natural capital carbon MRV
provider, raised an undisclosed amount of Seed funding from AXA Investment
Managers, At One Ventures, Cisco Foundation, Counteract, NextSTEP, and Orbia
Ventures. 


OTHER

🔋 Zenobe Energy, a London, England-based battery storage developer, raised
$523m in Debt funding from ABN AMRO, Aviva, CIBC, Lloyds Bank, MUFG Bank,
NatWest Group, Rabobank, Santander, Scottish Widows Investment Partnership,
Siemens, and Societe Generale. 

🍎 FarMart, a Gurgaon, India-based SaaS-based food supply chain platform, raised
$2.9m in Debt funding from responsAbility Investments. 


EXITS

🌱 Traace, a Paris, France-based emissions traceability and management platform,
was acquired by Tennaxia. 


NEW FUNDS

Energy Capital Partners, a Summit, NJ-based investment firm, held a final close
of their $6.7bn fifth flagship fund that invests across energy transition,
electrification and decarbonization infrastructure assets. 

Eurazeo, a Paris, France-based investment firm, announced the launch of their
$800m fund that will invest in solutions that promote planetary stability. 

ETF Partners, a London, UK-based investment firm, held a final close of their
$309m fund that invests in companies working on environmental challenges. 

Clean Energy Ventures, a Boston, MA-based investment firm, held a final close of
their $305m second fund that invests in decarbonization solutions. 

The Bezos Earth Fund, a Washington, DC.-based investment firm, announced an
additional $100m for new research on plant-based alternatives. 

Can’t get enough deals? See full listings and deal analytics on Sightline
Climate

Request a Sightline Climate demo

--------------------------------------------------------------------------------


IN THE NEWS

In a blow to investor activism, Shell shareholders rejected a climate resolution
brought by activist shareholder Follow This, which sought more aggressive
emissions reduction targets, at its annual shareholder meeting last week. A
majority of Shell shareholders also supported its decision to weaken climate
targets, with 78% voting for a revised energy transition strategy that reduces
emissions more slowly than initially planned.

Duke Energy announced agreements with Amazon, Google, Microsoft, and Nucor to
accelerate the adoption of clean energy through new rate structures designed to
lower the long-term costs of investing in technologies like new nuclear and
long-duration storage through early commitments. This effort signals a new
industry mechanism for how major players can buy RECs, reflecting a shift in how
capital is deployed for new deals.

Google is investing $1.1bn in a data center expansion in Finland, leveraging the
country’s abundance of renewable energy, as well another $2bn in Malaysia to
establish the first data center there. Meanwhile, Microsoft and G42 announced a
$1 billion initiative to develop a digital ecosystem in Kenya, aiming to enhance
the country's technological infrastructure and capabilities with focus on
AI-climate innovation.

Oklo announced a partnership to supply 100MW of nuclear power to a hyperscale
data center in Wyoming, a significant step towards integrating advanced nuclear
energy into data center operations. 

In a major demand signal, BCG signed a purchase agreement with Twelve to buy
E-Jet sustainable aviation fuel (SAF), a power-to-liquid jet fuel made from CO2,
water, and renewable electricity.

One of the UK’s largest wind farm operators, Beatrice Offshore Windfarm Limited
(Bowl), had to pay $42m for overcharging the government for curtailment of their
generation. This is the largest payment the UK has mandated from an energy
company for license breaches.

Leading energy developer RWE announced it would build the first eight-hour
lithium battery in Australia, with a planned capacity of 50+ megawatts (MW) and
400+ megawatt hours (MWh). RWE also reached an FID for a large, two-phase, 1.6
GW offshore wind farm in Germany’s North Sea.

Automakers seem to be making a macro play for hybrids in the short term amid
broader EV troubles, with BYD launching a next-gen plug-in hybrid system with
2100-km range, while Subaru, Toyota, and Mazda said they’re building new
internal combustion engines for the “electrification era.” 

A new federal partnership with 21 states will expand the use of grid-enhancing
technologies (GETs) and advanced conductors to improve the existing transmission
system's efficiency. It aims to increase cooperation on transmission planning,
explore innovative partnership models, and jointly plan infrastructure
development.

The European Commission approved up to $1.5bn in developing hydrogen
technologies for various transport means, including vehicles, ships, and
aircraft. 

The National Grid announced plans to raise $8.9bn to strengthen electricity
networks in the US and UK as part of a $76.4bn investment plan over the next
five years, driven by the transition to renewable energy. 

In a big move to secure fuel supply for advanced nuclear, TerraPower and
Framatome North America are building a pilot plant to metallize high assay low
enriched uranium (HALEU) from uranium oxide in Washington. This initiative aims
to demonstrate Framatome's metallization capabilities and advance TerraPower's
efforts to develop a domestic HALEU supply chain.

Follow us on LinkedIn

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POP-UP

China’s CO2 emissions may have peaked in 2023, but manufacturing could threaten
that.

Crude cargo tankers are stranded in the North Sea, as European and Asian
refinery thirst dries up.

Hydrogen's hype, a superbubble quietly popped.

Buckle up — climate change is turning air travel into a rocky ride.

Google, Meta, Microsoft, and Salesforce pledged to contract 20m tons of carbon
credits by 2030.

New Climate Capital Guidebook for all federal government programs dropped.

Students drill into action, aiming to seal abandoned wells.

Deep-sea mining gets a nod from Congress, aiming to chip away at China's mineral
monopoly.

From rubble to reusable, scientists from Cambridge find a concrete solution.

As EV sales slow, the future of policy incentives for the sector is hitting a
roadblock.

Meanwhile, California's bright solar future looks uncertain.

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OPPORTUNITIES & EVENTS

📅 ClimaTech 2024: Register to attend the 2024 ClimaTech conference in Boston
alongside Massachusetts Governor Maura Healey and Boston Mayor Michelle Wu on
June 3-5th to network with thinkers, leaders and innovators in the climate tech
industry.

📅 Ecosummit Berlin: Join startups and investors driving decarbonization on June
4-5th, 2024, at Spindler & Klatt in Berlin.

📅 Founder Dinner: Apply to attend the Early Climate Tech Founder Dinner hosted
by Lowercarbon Capital on June 5th to meet, share ideas with, and collaborate
with other early-stage founders.

📅 Blue Tech Happy Hour: Register to attend the Blue Tech Happy hour in SF on
June 5th to engage an network with the local blue economy community.

📅 Sustainability Conference: Register to attend the Sustainability World Summit
from June 5-7th for a conference that aims to shift the conversation from
sustainability rhetoric to actionable change through engaging discussions, case
studies, and innovative presentations.

💡 Compute for Climate Fellowship: Apply to the Compute for Climate Fellowship
co-hosted by the IRCAI and AWS by June 7th to participate in a pioneering
program designed to fund R&D projects for Climate Tech startups using advanced
cloud computing and AI.

📅 43North Accelerator: Startups in Buffalo, NY can apply to this accelerator by
June 7th.

📅 Planet Jam: RSVP to join Planet Jam on June 12th for a casual get together of
professionals working in climate or sustainability-related roles in startups,
corporates, policy.

📅 The Forest Valley Institute’s Sandbox: Early stage B2B startups with a focus
on climate impact Startups can apply to the Forest Valley Institute’s network by
June 23rd

💡 Hack for Clean Energy: Apply to join Lowercarbon Capital, OpenAI, and Crusoe
on June 28th this summer for an AI hackathon aimed at accelerating the scale-up
of solar, wind, batteries, and other renewable energy technologies in the US. 

💡 Stripe Climate Fellows: Apply to be a Stripe Climate Fellow by July 15th and
receive grant funding to work on ambitious yet feasible proposals to catalyze
voluntary or policy actions, aiming to increase carbon removal demand.

📅 Greentown Labs Climate Tech Summit: Register to attend the Climate Tech
Summit at Greentown Labs on October 22nd in Houston and October 24th in Boston
to explore climate tech solutions from 200+ startups and network with
climate-action trailblazers. 

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JOBS

Revenue Operations Manager, Backend Engineer, Research Intern @Sightline Climate

Climate Technology Investor @Vectors Capital

Accounting Associate @Clean Energy Ventures

Vice President of Engineering @Relyion Energy Inc

Head of Strategy @Dioxycle

Analyst @Energy Capital Ventures 

CFO @Greentown Labs

Find and share jobs here

--------------------------------------------------------------------------------

📩 Feel free to send us deals, announcements, or anything else at hello@ctvc.co.
Have a great week ahead! 

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