ExxonMobil remains on the hunt for deals even after unveiling its biggest transaction this century, the company said on Friday as it 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 deal 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 acquisition 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’.”
Her comments come days after Chevron, the company’s biggest rival, unveiled a $53bn bid for Hess in another seismic transaction as dealmaking gains pace in the sector.
The Exxon and Chevron deals rank as the sector’s fourth- and ninth-largest, respectively.
Exxon on Friday reported third-quarter earnings of $9.1bn, up from $7.9bn in the previous three months on the back of a rise in crude prices and greater refining activity.
But the figure was shy of the $9.6bn expected by analysts, according to S&P Capital IQ. The company blamed the shortfall on weaker margins in its chemicals business and a hit to its trading business.
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 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 in an effort 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 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.”
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