Exxon Eyes Oil M&A as Clean Energy Shift Prolonged

Exxon Eyes Oil M&A as Clean Energy Shift Prolonged
Exxon CEO Darren Woods is eyeing oil and natural gas deals despite calls to reduce emissions, saying any shift in the world's energy supply will take decades.

(Bloomberg) -- Exxon Mobil Corp. Chief Executive Officer Darren Woods is eyeing oil and natural gas deals despite calls to reduce emissions, saying any shift in the world’s energy supply will take decades.

“Energy transitions take a long time,” Woods said Wednesday at the Barclays CEO Energy-Power Conference in New York. “In the meantime, the world’s rising demand for energy must be met.”

Exxon sees oil demand growing at 0.6% per year over the long term and demand for natural gas increasing 1.3% per year even as policy makers look for ways to wean countries off of fossil fuels. That means significant new investments, including acquisitions, will be needed, Woods said, even though shareholders are calling for Big Oil to reduce spending and return more cash to shareholders.

More consolidation is in the offing for independent shale drillers, and Exxon will be watching for potential acquisition targets, he said.

“If there is the opportunity to acquire something that bring unique value to Exxon Mobil, we’ll be in a position to transact on that,” Woods said.

In the Permian Basin of West Texas and New Mexico, where share prices of frackers have plunged in the past year, Exxon is keeping a “watchful eye” for deals, Woods said. “I expect consolidation to happen over some period of time.”

While its biggest U.S. rival, Chevron Corp., made an unsuccessful attempt to buy Anadarko Petroleum Corp. earlier this year -- eventually losing out to a $38 billion offer from Occidental Petroleum Corp. -- Exxon has remained on the sidelines. That wait-and-see approach comes as frackers struggle with disappointing well performance and relentless cash burn.

“Right now there’s some time,” Woods said. “I think people need to recalibrate what they’re experiencing in that unconventional space and that will have an impact on how people value companies.”

Chevron will be “opportunistic” in making acquisitions, Chevron’s North America head Jeff Gustavson said that the same conference. Any deal would have to be a strategic fit and be good value, he said without naming any targets.

But it’s not just the Permian that’s of interest to the majors. Even though Exxon is spending heavily on megaprojects including deepwater oil drilling in Guyana and liquefied natural gas production in Papua New Guinea, the company will “retain the capacity for a sizable acquisition,” Woods said..

He’ll look for deals at the bottom of the price cycle, he said. “Those are where we’ll see value opportunities.”

To contact the reporter on this story:
Kevin Crowley in Houston at kcrowley1@bloomberg.net

To contact the editors responsible for this story:
Simon Casey at scasey4@bloomberg.net
Christine Buurma, Joe Ryan


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Randy Verret  |  September 06, 2019
All this ongoing & building "climate hysteria" and vilification of energy PROVIDERS is a useless exercise. The U.S is beginning a long term energy TRANSITION. With that will come attendant environmental protection. Regardless of your position on the climate impacts of CO2, only ONE fundamental question matters if both fossil fuels & nuclear are eliminated from existence: "What CLEAN, SUSTAINABLE, alternative do you "activists" propose to REPLACE 95% of our transportation fuel & industrial heat and 85% of our electricity generation?" Slogans like "100% renewables by X Date" are no more valid than just promoting openly defying gravity by a target date. No basis in REALITY. Time to change the conversation in energy to a thoughtful, well informed debate in an effort to formulate (finally) a coherent national energy policy. The oil & gas industry needs to LEAD the way in this critical discussion and STOP environmental "know nothings" from hijacking a sensible debate. I'm TIRED of seeing nothing but focus on production. Time to ENGAGE and start lending our technical expertise to the energy transition discussion and (rightfully) re-establishing our "social license." Let's get off the sidelines and in the game. Otherwise, our nation will continue to be done a tremendous (and unnecessary) disservice...
Rob62  |  September 05, 2019
The Earth has been changing its' climate since it was created. It is supposed to occur. Ice Ages come and go and heat waves come and go. Always have and always will and man created none of it.