Conflict Is Brewing in Libya Once Again

Politics, Geopolitics & Conflict

The Libyan Parliament (controlled by the eastern Tobruk-based government) on Tuesday voted to end the rival Tripoli-based Government of National Unity (GNU), led by Prime Minister Abdul Hamid Dbeibah, who was originally intended as an interim PM but then refused to step down until elections could be held. The Libyan Parliament also voted that the eastern-based government of Osama Hammad was the only legitimate government in Libya until elections could be held to vote for a new, unified government.  At the same time, Parliament named Aguilla Saleh (speaker) as the new commander of the Libyan Armed Forces. The Tripoli-based GNU (Dbeibah) is growing increasingly concerned that moves are afoot in the east to break the deadlock, with General Haftar recently being hosted by Egypt, which is an overt provocation on the part of Cairo, and suggests the nation is once again betting on Haftar to force an end to the stalemate. There are also other indications that rival factions are regrouping for a fight. There are armed groups gathering outside the Tripoli-based Central Bank, which is part of the rivalry because Tripoli controls the oil revenues through the bank, but Benghazi largely controls the ports and oilfields.

In Sudan, peace talks to end the 16-month war got off to a bad start when both sides failed to show up in Geneva, where the U.S.-sponsored talks were scheduled on Wednesday. In the meantime, some 100,000 Sudanese are said to have fled the civil war, attempting to cross the Sahara to seek shelter in Libya. Some 10 million people have been displaced so far. The Sudanese army refused to join the talks, while the paramilitary forces fighting for control showed up in Geneva but did not attend the talks in the end. There is not likely to be any type of power-sharing deal on the table if the two sides ever make it to negotiations.

In Venezuela, the U.S., Brazil, and Colombia have all called for new elections, as Maduro refuses to relinquish power and continues on his campaign of terror to root out all opposition. 

Discovery & Development

Chevron and TotalEnergies have successfully commenced oil and gas production from the Anchor deepwater HPHT project in the U.S. Gulf of Mexico. This project introduces groundbreaking technology, enabling operations at pressures up to 20,000 psi and depths of 34,000 ft below sea level, showcasing significant industry advancement. The semi-submersible floating production unit at Anchor has a design capacity of 75,000 barrels of oil per day (bopd) and 28 million cubic feet of gas per day (MMcfgd), with seven subsea wells linked to the unit. Chevron and TotalEnergies' innovative design for the Anchor FPU incorporates all-electric operations and advanced waste heat recovery, ensuring direct transportation of oil and gas to the U.S. Gulf Coast while reducing carbon emissions.

Gran Tierra Energy, a Canadian oil company, has announced its fifth oil discovery in Ecuador, specifically at the Charapa-B6 well in the Oriente basin. This well marks the third discovery for the company in 2024 and follows a series of successes since resuming exploration post-Covid-19. Situated west of other recent finds, the well has shown promising results, producing oil at 2,118 barrels per day with a gas-oil ratio of 21 standard cubic feet per barrel. CEO Gary Guidry emphasizes that these discoveries showcase the company's strategic focus on high-impact exploration in Ecuador and Colombia's Oriente and Putumayo basins.

Deals, Mergers & Acquisitions

Maverick Natural Resources, a Houston-based oil and gas producer owned by private equity firm EIG, is considering a sale that could value the company at around $3 billion, including debt. Investment bankers from Jefferies are assisting with the confidential sale process, targeting potential buyers among energy producers and investment firms. The sale would involve assuming approximately $800 million of Maverick's debt, primarily tied to an asset-backed securitization structure based on future oil and gas production revenues. 

Argentina's state-run oil company, YPF, is intensifying its focus on the Vaca Muerta shale formation by divesting several non-core assets. CEO Horacio Marin announced plans to sell business units in Brazil and Chile, its 50% stake in refiner Refinor, and a 70% stake in Metrogas SA, contingent on President Javier Milei's free-market reforms increasing its value. The strategy aims to streamline YPF and prioritize investments in Vaca Muerta, where shale now represents 52% of the company's production, up from 45% last year. While YPF is not divesting from all non-core sectors, it plans to retain and enhance its stake in Profertil SA and refocus its R&D arm, Y-TEC, solely on shale drilling initiatives.

A Marathon Oil Corp. shareholder has sued to block the $17B acquisition by ConocoPhillips, arguing that the deal significantly undervalues Marathon. Martin Siegel claims that Marathon and its advisors misrepresented the transaction in their proxy statement, potentially costing investors over $6 billion. Siegel is seeking to delay the investor vote until either a trial is held or corrective disclosures are made. The deal, part of a broader M&A wave in the U.S. oil and gas sector, would see ConocoPhillips gain assets in Texas, North Dakota, and the Permian. Siegel also alleged potential conflicts of interest, noting that Marathon's CEO could gain over $70 million in stock grants and Morgan Stanley, one of the advisors, stands to earn $42 million in fees if the deal goes forward.

Tourmaline Oil has announced a C$1.3 billion deal to acquire Crew Energy to strengthen its position in northeast British Columbia's natural gas sector. The agreement involves issuing 18.8 million Tourmaline shares and assuming approximately C$240 million in Crew's debt, valuing Crew shares at C$6.69 each-a 72% premium. This acquisition will enhance Tourmaline's presence in the South Montney region and is expected to boost key financial metrics and free cash flows by over C$200 million next year. Tourmaline, already a leading producer in Alberta's Deep Basin, plans to ramp up production to 750,000 oil-equivalent barrels daily over the next five years. The transaction is set to close in early October.

Schlumberger's acquisition of Russia's Eurasia Drilling Co has been delayed due to U.S. sanctions on Russia, according to Russian Deputy PM Arkady Dvorkovich. The sanctions, introduced in response to alleged Russian interference in the 2016 U.S. presidential election, restrict energy sector cooperation. Schlumberger's attempt to buy a stake in EDC, which began in late July, faces additional scrutiny due to these geopolitical tensions. This deal would mark the first U.S. involvement in Russia's oil and gas sector since sanctions were imposed following Russia's annexation of Crimea in 2014.

Pemex has secured a $1.65B deal with CME Oil and Gas to redevelop the Bacab and Lum oil fields in the Gulf of Mexico. This partnership aims to increase output from these mature fields, which are part of the Ku-Maloob-Zaap complex, to 40,000 barrels per day by 2028. The investment will enhance well depths and extend operations, with a projected total output of 73.4 million barrels and revenues of $4.3 billion. Pemex, facing declining production and rising debt, is leveraging private sector expertise to rejuvenate aging assets. This strategy contrasts with the asset sales approach often used by international firms.