https://www.ft.com/content/f389210f-ea4d-492d-b562-62aadd6ddc42
ExxonMobil chief executive Darren Woods has long contended that oil and gas will remain central to the world’s energy mix despite efforts to drive down emissions created by burning them. This week he placed a $60bn bet on this proposition.
The US energy supermajor’s $59.5bn deal to acquire Pioneer Natural Resources will make it the dominant producer in the oil and gas-drenched Permian Basin of Texas and New Mexico.
Tacking on Pioneer will immediately double Exxon’s Permian production to 1.3mn barrels of oil equivalent per day. Their combined acreage will further drive the basin’s output to about 2mn b/d by 2027. All told, Exxon will have access to 16bn oil-equivalent barrels, with 15 to 20 years of remaining inventory.
“It’s a massive oil deal that demonstrates ExxonMobil’s bullishness on longish-term oil demand and prices,” said Tom Ellacott, an analyst with consultancy Wood Mackenzie.
By 2050, the company anticipates oil and gas will still make up more than half of global energy demand based on rapid growth of the global middle class and a slower transition to greener forms of energy. It said in a recent report that the world was likely to fail to keep global temperature rises below 2C from pre-industrial levels, the target set by the Paris climate agreement.
Wednesday’s announcement of Exxon’s biggest deal since its 1999 merger with Mobil prompted a furious reaction from some environmental campaigners, who accused the company of “doubling down” on fossil fuels.
But - as KiwiGeo point out - it is Permian.....enabling it to wring efficiencies from its drilling programme, including horizontal wells that extend as much as four miles though strata of oil-rich rock.
It aims to cut its average cost per barrel in the Permian to below $35 — a fraction of the current west Texas oil price of about $83 a barrel.
