Business | Oil & Gas
Exxon seen heading for shopping spree
ExxonMobil Corp, the world's largest oil company, may embark upon an acquisition spree this year and snap up assets at "extremely cheap prices" to boost production growth, Sanford C. Bernstein & Co. said
- Bloomberg
- Published: 23:47 January 9, 2009
London: ExxonMobil Corp, the world's largest oil company, may embark upon an acquisition spree this year and snap up assets at "extremely cheap prices" to boost production growth, Sanford C. Bernstein & Co. said.
"Such a scenario could be on the game-changing scale last seen with the wave of mergers in the late 1990s, when the low oil price also put a lot of oil companies under duress," Neil McMahon, a London-based Bernstein analyst, said yesterday.
The company expects to spend as much as $30 billion (Dh110.34 billion) in 2009 to lease drilling rigs and expand fuel plants, a 20 per cent increase from last year, chief executive officer Rex Tillerson said December 11.
The budget may decline by $1 billion or $2 billion if falling prices for steel and other materials lower project costs, he said.
Oil majors like Royal Dutch Shell Plc, Europe's biggest oil company, BP Plc and Norway's StatoilHydro ASA are scaling back budgets or delaying projects amid a slump in oil prices. Oil fell 54 per cent last year.
ExxonMobil has ample cash and untapped credit lines to expand in any of its three main businesses, petroleum production, refining and chemicals, Tillerson said last month.
"ExxonMobil is in a relatively unique position, as it might be able to change the industry structure forever and gap away from competitors in 2009," McMahon said.
It would be the "ideal time" to form a joint venture with Brazil's Petrobras as the company appears to be struggling with financing and Exxon wants a bigger role in Brazil, McMahon said.
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