The Exxon Mobil Success

The Exxon Mobil Success

oilIn 2017 Exxon spent $6 billion buying drilling right from the Bass family in the Permian basin. Analyst have thought Exxon Mobil could purchase the largest privately held oil producer Endeavor Energy Resources LP. If they would acquire it, the purchase could be up to $10 billion. With more than $3 billion of cash on its balance sheet and low debt according to Bloomberg data.

One of the core values for Exxon Mobil Corp. to pursue an acquisition is not the scope of the target but whether if the company finds more value in it than the market does. Darren Woods, chief executive officer of the Irving, Texas-based firm, said at the New Economy Forum in Singapore.  Exxon Mobil is looking for opportunities to purchase assets even as it plans to expand output at existing fields from West Texas to Mozambique.

“We have the capacity to do any size opportunity that can come about, so it’s really a function of looking at the value that Exxon Mobil can extract, and how we would integrate that into our portfolio,” Woods said in a Bloomberg TV interview, while declining to comment on any specific targets.

There is a great future in the oil industry, with 2.5 billion people set to enter the middle class in the next 20 years. With more usage of the liquefied natural gas for electricity, additional petrochemicals for plastic and more oil to fuel the heavy-duty transportation required to move consumer goods. There is in this effect a higher demand that is not going to decrease anytime soon.

The company is still growing its production with a focus on Guyana, Brazil, Papua New Guinea, Mozambique and the Permian Basin in West Texas and New Mexico.

Exxon has already exceeded its forecast plan to mobilize about 30 rigs in the U.S shale region by year’s end; the company had 38 machines drilling Permian wells as of last week, a 40% increase in just six months.

Still, Woods said the company remains committed to not rushing development in the region. West Texas Intermediate crude prices had risen 26% this year through early October before giving back nearly all of the gains in the past month.

“The price in the oil markets are going to go up and come down again, and our view is the business we build in the Permian, we’re building for the long-term,” he said. “It needs to be efficient, low-cost and effective, so we’re making sure the pace we go at allows that to happen.”

Looking at the offshore development Exxon Mobil has made significant discoveries in Guyana that has attracted other investors.

The smart move for Exxon has been to do not relay on latest market trend but instead focusing on what is best for the company.