ExxonMobil Corp and Chevron Corp reportedly engaged in talks at the outset of 2020 over the possibility of combining the two largest US oil producers to jointly weather the hardships plaguing energy markets, reported Reuters.
According to cited sources, the preliminary talks, now no longer active, had broached what would have potentially resulted in a huge merger, as the energy sector struggled to offset the crippling impact of the COVID-19 pandemic.
As efforts to stop the spread of the respiratory disease forced countries to install lockdown protocols and ground flights, the measures sent demand and crude prices plunging.
Talks between Exxon Chief Executive Darren Woods and Chevron CEO Mike Wirth had reportedly reached a stage when legal documents pertaining to certain aspects of the mulled merger were drafted, claimed sources, while stopping short of providing the reason for the talks eventually being aborted.
There has not been any official comment from Exxon and Chevron, who boast market capitalisations of $190 billion and $164 billion, respectively.
The shares of Exxon and Chevron nosedived last year, pummelled by fallout from the pandemic that decimated oil prices amid plunging demand.
Prices also collapsed in March 2020 after Russia and Saudi Arabia failed to agree whether or not to expand cuts beyond previously agreed-upon levels amid the economic downturn. As Russia hesitated, Riyadh turned on the taps to flood the market, filling importers’ reserves to the brim.
Exxon’s stock, which was hit the hardest, is believed to have led investors to voice concerns over the Texas-headquartered company’s long-term profitability and spending decisions.
In the reported talks, the CEOs of Exxon and Chevron had ostensibly been looking into a spate of measures to offset the downturn in energy markets, including massive cost cuts.
In the wake of the reported negotiations, Chevron looked elsewhere, to acquire oil producer Noble Energy.
CHEVRON BUY NOBLE $5 BLN— WOGNEWS (@WOGNEWS1) July 27, 2020
Chevron Corporation (NYSE: CVX) announced today that it has entered into a definitive agreement with Noble Energy, Inc. (NASDAQ: NBL) to acquire all of the outstanding shares of Noble Energy #Chevron #Noble #Oil #oilandgas pic.twitter.com/NRZr0vWxOD
Completed in October, the cash-and-stock deal - the largest in the US energy sector for 2020 - was worth $5 billion. The deal also gave Chevron access to Noble’s flagship Leviathan field - the largest natural gas field in the Eastern Mediterranean.
In December 2020 Brent crude passed $50 per barrel for the first time since last spring after months that witnessed prices go through the floor, as futures dipped into unprecedented negative territory in April.
2021 is not expected to see a repeat of last year’s catastrophic prices, according to the three largest oil services companies - Halliburton, Schlumberger, and Baker Hughes.