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ExxonMobil remains on the hunt for deals even after unveiling its biggest transaction this century, the company said on Friday, as it and rival Chevron reported profits that fell short of Wall Street expectations.
The largest US oil company announced this month it was buying Pioneer Natural Resources in a $60bn acquisition that fired the starting gun on what is expected to be a race to consolidate the sector.
Kathy Mikells, Exxon’s chief financial officer, said the deal did not preclude the supermajor from striking again in the near term.
“It’s important to say that we’re always looking,” she told the Financial Times. “Many times I’ve described us as very inquisitive but also very picky. A deal has got to be what we say is ‘one plus one equals three’.”
Chevron announced its own mega-deal this week: a $53bn takeover of Hess that accelerates the pace of M&A activity in the sector. Pierre Breber, the company’s finance chief, declined to say whether more could follow.
“We’re focused on this transaction,” Breber said in an interview. “It’s a big transaction . . . we’ll focus on executing this one well.”
Exxon reported earnings of $9.1bn, down sharply from $19.7bn last year on the back of lower crude prices, but also shy of the $9.6bn anticipated by analysts, according to LSEG.
Chevron’s earnings for the period of $6.5bn were down from $11.2bn a year ago and short of the $6.9bn pencilled in by analysts, according to LSEG. Surging oil prices last year pushed producers to record profits.
Exxon’s shares were steady in pre-market trading, while Chevron’s dropped 2 per cent.
Analysts and dealmakers expect more multibillion-dollar transactions as big producers aim to stock up on prime drilling spots that they can exploit into the coming decades despite warnings that fossil fuel demand could peak by 2030.
“It’s important to understand that we’re in a depletion business with upstream,” said Mikells. “I think [the deal] puts us in a good position for the long term.”
Pioneer is the biggest operator in the Permian Basin, the engine room of the US oil industry, which sprawls across Texas and New Mexico. By snapping up the company, Exxon will hold a dominant position in the oilfield, with 15 per cent of total crude production.
The deal was Exxon’s second significant transaction of the year after it bought Denbury Resources for $5bn in July to bolster its carbon management business. Denbury owns the biggest pipeline network in the US for transporting and storing CO₂.
In a statement on Friday, Exxon’s chief executive Darren Woods said: “Pioneer will help us grow supply to meet the world’s energy needs with lower carbon intensity while Denbury improves our competitive position to economically reduce emissions in hard-to-decarbonise industries.”
Chevron also announced a deal to snap up oil producer PDC Energy for $6.3bn in May, a transaction it closed this quarter. Its purchase of Hess will give it access to the biggest oil discovery in a decade off the coast of Guyana, where it will be working alongside Exxon, which operates the project known as the Stabroek block.
Both companies have increased capital expenditures this year as they pursue production growth. Exxon spent $18.6bn in the first nine months versus $15.2bn in 2022. Chevron’s outlay over the period rose to $11.5bn from $8.1bn last year.
Chevron’s chief Mike Wirth said the company was “investing to profitably grow our traditional and new energy businesses to drive superior value for shareholders”.
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