Oil titans go on a buying spree, betting that a green future is a distant future
Barreling forward… Big Oil’s had a slick month, sealing two massive deals. First, ExxonMobil said it’s buying Pioneer Natural Resources for $60B — Exxon’s largest oil-and-gas acquisition since it merged with Mobil in 1999. The deal would double Exxon’s control of the US’s highest-producing oil field, the Permian Basin. Then Chevron bought rival Hess for $53B in a deal that would expand its footprint in the States and abroad.
Black gold rush: The acquisitions are a big bet on future demand for American oil, and could be the beginning of a land grab, as major cos acquire smaller competitors for primo access to coveted fields.
Profit flush: Oil giants have plenty of $$ to spend after having a better 2022 than Corn Kid. The five biggest Western oil cos raked in $200B in profits last year, with Exxon’s $56B annual windfall setting an industry record.
Green isn’t the new black?… For years, oil giants touted their renewable-energy commitments with idyllic, nature-filled commercials. Now oil execs aren’t being shy about betting big on a gassy future. The day after Chevron’s acquisition, the International Energy Agency said that gas and oil demand would peak by 2030, and then drop off as renewable energy rises. Pioneer’s CEO responded that all the oil bigwigs disagree, and that the IEA doesn’t understand oil demand.
ReNoable: BP (which reports tomorrow) significantly walked back its 2030 goal to slash gas production by 35% of 2019 levels.
Deflated: On the other side of the pump, GM ditched its goal of building 400K EVs by mid-2024, as automakers start to second-guess the electric market.
Being bigger could cushion the fall… When fossil-fuel demand eventually wanes, oil cos that ate up smaller rivals might be better positioned to keep their prices competitive. Execs also say consolidation frees up more funds to invest in clean technologies (like carbon capture and hydrogen fuel). FYI: it’s estimated oil reserves will run out by as early as 2052. But if the world goes green earlier than they expect, Big Oil could be left with a glut.