Wall Street analysts on Feb. 1 gave little credence to the possibility of a megamerger between Exxon Mobil Corp. and Chevron Corp., as news of talks last year between the two largest U.S. oil companies leaked ahead of Exxon’s results that are expected to show the company posting its first-ever annual loss.
Shares in both the companies were down in early trading in New York, despite a rising overall market and weekend gains in global crude prices.
UPDATE:
Exxon Mobil Posts First Annual Loss As a Public Company
“At the depths of the market last year... a cost-cutting focused merger of the two companies may have made sense and also scale matters in this industry so it would have created by far the largest integrated oil company,” said Anish Kapadia, director of energy at London-based Palissy Advisors.
However, anti-trust concerns and the new U.S. administration’s stance on big mergers make it unlikely that a deal resurfaces, Kapadia said, adding that buying smaller, hard-hit oil companies gives Exxon Mobil and Chevron more value.
As oil producers in Europe adapt to investors’ push for a shift into renewables, it is also possible that Chevron or Exxon Mobil could buy the oil-producing business of a European major in the coming years, Kapadia said.
Exxon Mobil’s year-end results scheduled for Feb. 2 are expected to be marred by a charge of up to $20 billion on the value of its natural gas properties.
The collapse in oil prices last April briefly pushed crude into negative territory and created a survival crisis for large parts of the U.S. industry.
“Given the precipitous drop [last year]... it is not surprising that XOM and CVX had a discussion about merging,” said Mark Stoeckle, CEO of Baltimore-based Adams Funds.
“The sharp snapback in prices likely cooled both companies. There would no doubt be significant cost synergies to be had, but the antitrust issues in a Biden administration would probably be too much to overcome.”
Recommended Reading
OPEC+ Brings Oil Overproduction Under Heel—Rystad
2024-07-15 - After years of noncompliance and underreporting of actual crude production, many OPEC+ members are voluntarily reducing output beyond set goals, according to analysis by Rystad Energy.
What's Affecting Oil Prices This Week? (Sept. 9, 2024)
2024-09-09 - Within the context of lower oil prices and disappointing economic data, members of OPEC+ have decided to delay the unwinding of voluntary cuts, which were expected at the end of September.
Paisie: Geopolitics, Economic News Rattle Oil Markets
2024-08-21 - Demand is expected to outstrip supply in third-quarter 2024, with prices in the $80s.
What a Trump Win Would Mean for Oil Prices and Stocks
2024-08-23 - A second Trump administration might move the price needle on oil slightly, but OPEC would retain the upper hand in any outcome.
Pitts: Oh, What a Tangled Web the Supermajors Weave
2024-07-23 - Exxon and Chevron and Guyana and Venezuela—‘Let’s Make A Deal’ meets ‘Love, South American Style.’
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.