Exxon and Chevron’s shares nosedived last year after a Saudi-Russian price war and fallout from the novel coronavirus outbreak caused the value of oil to crater. Exxon’s stock was hit hardest, as investors raised concerns about the company’s long-term profitability and spending decisions. ― Reuters pic
The talks between Exxon Chief Executive Darren Woods and Chevron CEO Mike Wirth were serious enough for legal documents involving certain aspects of the merger discussions to be drafted, one of the sources said. The reason the talks ended could not be learned. In their talks, the CEOs of Exxon and Chevron envisioned achieving synergies through massive cost cuts to help weather the downturn in energy markets, one of the sources said. At the end of 2019, Exxon employed about 75,000 people and Chevron roughly 48,000.
Now, under the Biden administration, the window might be all but closed as Democrats historically have been less sympathetic to such deals, one of the sources said. President Joe Biden has put climate change at the forefront of his agenda, promoting jobs in renewable energy as opposed to traditional ones in the oil sector.
Exxon reports fourth-quarter results on February 2. Chevron last week reported a surprise US$11 million fourth-quarter loss as low margins on fuel, acquisition costs and foreign currency effects overwhelmed improved drilling results.A combined Exxon-Chevron would be eclipsed in size only by Saudi Aramco, which boasts a roughly US$1.8 trillion market value and has previously pushed many US drillers to the financial brink by flooding the market with oil.
US oil companies each compete among one another and set their own varying production targets, with limited ability of Washington to intervene.