Published: Tue, February 02, 2021
Economy | By

ExxonMobil, Chevron Explored Merger in 2020

ExxonMobil, Chevron Explored Merger in 2020

After the pandemic decimated the demand for oil and gas, Mike Wirth of Exxon and Darren Woods of Chevron gathered to discuss the possibilities of joining the forces.

But then again, the report noted that Woods and Mirth's meeting was only preliminary, and the talks about the merger is not an ongoing activity between Chevron and Exxon.

Despite inevitable antitrust concerns, the companies could argue a merger would represent the United States' best shot at taking on the Saudi state-owned conglomerate and the world's other largest state-backed oil producers, one of the sources said.

"Together, they would likely form the world's second-largest oil company by market capitalization and production, producing about 7 million barrels of oil and gas a day, based on pre-pandemic levels, second only in both measures to Saudi Aramco", the Journal wrote.

The combined market capitalization of the two companies would exceed 350 billion dollars, calculated the economic daily including 190 billion for ExxonMobil.

The oil industry has been hit hard by the pandemic, with reduced travel drastically cutting demand for jet fuel, diesel, and gasoline.

At one point in April, the price of U.S. West Texas Intermediate (WTI) crude futures turned negative for the first time ever, signifying sellers needed to pay buyers to take the commodity off their hands.

The company unveiled plans for additional spending cuts of $3 billion in annual expenses expected by 2023, its latest belt-tightening move amid the industry-wide downturn.

Lastly, Bloomberg reported that an industry analyst from Sankey Research, Paul Sankey, stated that the reason why the Exxon and Chevron merger makes sense is that both sides can benefit greatly from the deal.

The shares of Exxon and Chevron nosedived past year, pummelled by fallout from the pandemic that decimated oil prices amid plunging demand.

A deal between Chevron and Exxon would reunite the two greatest descendants of the oil monopoly Standard Oil Of John D. Rockefeller.

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