A growing oil industry divide

A pair of analyses are laying bare the divide between major oil companies and their smaller peers.

Driving the news: A new Rapidan Energy Group note explores plans by Democratic White House hopefuls to thwart oil-and-gas development on federal lands and waters.

• A Democratic president "would likely halt virtually all new federal leases via executive order on day 1," they write, while also noting likely efforts — albeit ones less likely to be implemented — to block projects on existing leases.

Why it matters: These areas account for 24% of U.S. crude oil production, and Rapidan also notes that the policies would "negatively impact investor sentiment and plans for future growth on private lands."

What they're saying: This hardly affects everyone equally. "While Democrats like to swing at 'Big Oil' the washout of these policies would disproportionately impact smaller producers," Bob McNally, Rapidan's president, tells Axios.

Quick take: It's majors and huge independent players that have more options internationally if the U.S. playing field gets tougher, while they're also more equipped to handle new domestic regulations.

There's a growing shale patch divide between oil giants' appetite for growth and what's happening with smaller and independent players.

• IHS Markit sees very slow U.S. production growth next year and then a flattening out in 2021.

But, but, but: The majors aren't dealing with the same financial pressures and reliance on capital markets as independents. Last week's Q3 earnings presentations of Exxon and Chevron, which both have acquired lots of Permian acreage, show steep production increases there into the mid-2020s.

What they're saying: "IHS Markit does not see the current price environment as a threat to the majors’ shale plans — they will increasingly drive new Permian volumes," IHS analyst Raoul LeBlanc said. More broadly, they see the majors growing from roughly 15% of U.S. onshore production now to around 20% in 2023.

What's next: "Robust majors’ spending will increasingly drive incremental growth in the Permian. But it will not significantly offset the effect of the independents’ newfound austerity," he notes.

The big picture: On top of all of this, the big players are better equipped to navigate in a world that could become much more serious about reining in emissions.

• The majors have been increasing their investments in areas like renewables and electricity services, EV charging, carbon removal, and more, although it's still a very small fraction of their overall fossil fuel business.
• "Majors and large independents have the capacity to transition to becoming energy companies, not just oil and gas companies, more than other oil companies do," said Jason Bordoff, head of a Columbia University energy think tank.

Go deeper:

• The slowing U.S. shale boom
• How climate change concerns could affect Saudi Aramco's IPO
• Shell reports third-quarter profit dip but still beats forecasts