Oil and gas supermajors Exxon Mobil Corp. and Chevron Corp. are in no rush to acquire new assets or companies in the Permian basin but are still looking for good deals, top executives from both companies said.
"I expect consolidation to happen over some period of time. Our focus is on understanding what value opportunities are out there, and making sure that we're aware of and participating in the valuation," Exxon CEO Darren Woods said Sept. 4 at the Barclays CEO-Energy Power Conference in New York City.
Exxon will watch for potential M&A deals, particularly in the U.S. Permian Basin, Wood said. He sees oil and gas continuing to "play a critical role" in meeting growing global energy demand in the near to medium term. As consumption rises, additional supplies and investments in the oil and gas sectors will be needed, he said.
"While we are happy with the projects we have in our portfolio, we continue to look for additional opportunities. In the depletion business, to sustain long-term value, you have to [keep looking]," Woods said. The company's previously announced $15 billion divestment program will allow Exxon to high-grade its portfolio, he said. "The size of this [divestiture] program can grow if we continue to capture more attractive opportunities, which is exactly what we're working to do through active exploration and evaluation of potential acquisitions."
Leveraging its scale, Exxon plans to spend $30 billion this year and $33 billion to $35 billion in 2020. The Permian is a big part of those spending plans as the company hopes to increase production to 1 million barrels of oil equivalent per day in the next five years. In the second quarter, Exxon's Permian output was 274,000 boe/d, soaring nearly 90% on the year.
Following a failed deal to buy Permian producer Anadarko Petroleum Corp. earlier this year, California-based Chevron also is taking a conservative approach in terms of future M&A but is still looking for potential deals.
"We're not under any pressure to transact. That said, we're always looking. We'll take an opportunistic approach like we always have to M&A and that includes what's going on in the Permian Basin," Chevron's North American head Jeff Gustavson said Sept. 4 at the Barclay conference.
Chevron's Permian production rose 55% on the year to 421,000 boe/d in the second quarter. The company hopes to hike that output level from the region to 900,000 boe/d by 2023.
"But ... we're looking out well beyond 2023. If you think about our position, we have tens and tens of thousands of wells that have been prioritized, both operated and nonoperated wells that have been prioritized, and we're working on developing that queue," Gustavson said.
