US oil majors shun ‘Green Strategy’ in M&A fossil fuel deals

By Rhod Mackenzie

A competition has emerged between the two largest oil and gas companies in America, both striving to secure their oil supply for several decades to come. Although predictions anticipate oil demand peaking in 2030 before dwindling, both Chevron and ExxonMobil have signed multi-billion-pound acquisition agreements. By entering into such major deals, Chevron and ExxonMobil must have faith that there will be continued demand for oil well beyond 2030.

Two weeks ago, ExxonMobil agreed to purchase Pioneer Natural Resources, one of the largest operators in the Permian Basin, for £60 billion. Two days ago, on October 23rd, Chevron announced its official acquisition of the oil and gas company Hess for £53 billion. This acquisition will enable entry into Guyana, a Latin American country wherein gigantic oil deposits were discovered few years back, and where a future of Latin American “Kuwait” is anticipated.

According to the Financial Times, there haven’t been any transactions of this size since the late 90s and early 2000s when similar mega-deals were made between BP-Amoco, Exxon-Mobil and Chevron-Texaco, which gave rise to modern supermajors, who are referred to as the largest oil and gas companies globally.

In total, mergers and acquisitions worth £186 billion were reported and executed in 2023. This is the highest value since 2014.

“It’s an arms race,” remarked an analyst regarding the increase in M&A activity in the oil and gas industry. “Typically, a deal in most sectors does not trigger one or two more. However, I believe these transactions will create a domino effect. Timing and the involvement of key players are the key factors here.”
Analysts predict that two other European oil and gas giants, BP and Shell, are likely to respond to the Chevron and ExxonMobil deals. BP and Shell have frequently voiced their dissatisfaction with being undervalued compared to Exxon and Chevron.
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US oil majors shun ‘Green Strategy’ in M&A fossil fuel deals

By Rhod Mackenzie A competition has emerged between the two largest oil and gas companies in America, both striving to secure their oil supply for several…