ExxonMobil has said it is still looking for deals even after announcing its biggest transaction this century, the $60 billion acquisition of Pioneer Natural Resources.
ExxonMobil on Friday noted that it had together with its rival, Chevron, reported profits that fell short of expectations.
Exxon’s chief financial officer, Kathy Mikells, said in an interview with the Financial Times that the deal does not preclude the company from pursuing further M&A activity in the near term.
- “It’s important to say that we’re always looking,” Mikells said. “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.'”
Financials: Exxon reported earnings of $9.1 billion, down sharply from $19.7 billion last year on the back of lower crude prices, but also shy of the $9.6 billion anticipated by analysts, according to LSEG.
Chevron’s earnings for the period of $6.5 billion were down from $11.2 billion a year ago and short of the $6.9 billion penciled 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%.
Chevron’s latest earnings came just days after announcing its mega-deal: a $53 billion takeover of Hess that accelerates the pace of M&A activity in the sector.
Expectations: Analysts and dealmakers expect more multibillion-dollar transactions as big producers look 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% of total crude production.
The deal was Exxon’s second significant transaction of the year after it bought Denbury Resources for $5 billion in July to bolster its carbon management business. Denbury owns the biggest pipeline network in the US for transporting and storing CO₂.
Chevron — whose purchase of Hess will give it access to the biggest oil discovery in a decade off the coast of Guyana —also announced a deal to snap up oil producer PDC Energy for $6.3 billion in May, a transaction it closed this quarter.
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’s chief Mike Wirth said the company was “investing to profitably grow our traditional and new energy businesses to drive superior value for shareholders”.
