Speculation that Chevron and Exxon might try to buy rivals BP and Shell intensified over the last two years as the European majors underperformed their U.S. rivals.
Rather than taking the risk of investing in exploration and development, Exxon and Chevron have bought companies to increase production and focused on financial discipline and rewarding shareholders.Exxon, the largest U.S. oil producer, said on October 11 it had agreed to buy Pioneer Natural Resources in an all-stock deal valued at $59.5 billion that would make it the biggest producer in the largest U.S. oilfield and secure a decade of low-cost production.
“A major acquisition like Chevron buying BP is unlikely now. It would simply be too big, and Chevron are going to have their hands tied with the Hess acquisition for a few years,” managing director at MKP Advisors, a specialist advisory firm, Tyler Tebbs said.The unexpected resignation of BP CEO Bernard Looney last month had exposed the company to the risk of takeovers, Exane BNP Paribas analyst Lucas Herrmann said in a Sept. 19 note.
Shares of Shell and BP have underperformed their U.S. rivals since the European companies cut their dividend after the COVID-19 epidemic took hold in early 2020 and as some investors worried about the impact on profits of a spending shift towards low carbon businesses that provided lower returns than fossil fuels.