Making sense of Shell's exit from the Permian Basin

The big picture: The deal comes as Shell, like other European majors, is moving to diversify its business into low-carbon sectors. The company says its oil production likely peaked in 2019.

• "The shift in focus among the industry’s largest players seems to be creating opportunities for Conoco, which remains more aligned with traditional oil and gas production," Andrew Dittmar, senior M&A analyst at Enverus, said in a note.
• ConocoPhillips said in the deal announcement that it's also boosting its 2030 goals for cutting emissions intensity — that is, emissions per unit of output.
• Northland Capital Markets analyst Subash Chandra tells the Wall Street Journal that environmental issues are becoming a more important part of oil patch deals.
• "Shell doesn’t want to sell to someone who is going to make them look bad on their ESG metrics even after the sale," he said.

The intrigue: "Shell has been under pressure to accelerate its strategy for the energy transition after a Dutch court ruled that the company must sharply reduce its CO2 emissions this decade," Argus Media notes of the May decision.

Yes, but: Bloomberg unpacks Shell's decision to send $7 billion of the proceeds from the Permian deal back to shareholders even as some European peers spend big on renewables projects.