Exxon’s Dominance May Not Be Good For Exxon: Reuters Columnist

Exxon Mobil is surging ahead of rival Chevron.

Exxon also said cost cuts, previously estimated at $2 billion a year, were exceeding expectations. I Photo: ExxonMobil Australia

Second-quarter figures reported recently showed the $520 billion oil giant churned out $9.2 billion in profit, thanks to its $60 billion deal for Pioneer Natural Resources and record production in oil fields in Texas and offshore South America, Robert Cyran wrote for Reuters Breakingviews.

The company, led by Darren Woods, is growing its dominance, but that has risks, too.

It could use friends at home and abroad, yet it’s punishing its biggest potential ally. The company’s production has two gems.

Output from the Permian Basin in Texas and New Mexico is now 1.2 million barrels of oil equivalent a day, over three times as much as it produced three years ago, thanks to higher production from legacy acreage and output added from its deal, which closed in May.

Exxon also said cost cuts, previously estimated at $2 billion a year, were exceeding expectations.

Likewise, production from the nation of Guyana exceeded 630,000 barrels per day, roughly five times as much as three years ago. Chevron is both smaller, pumping 1.1 million fewer barrels per day, and posted slower growth than Exxon.

While rising production in Texas helped, problems in Australia didn’t. The bigger snag is its $53 billion deal for Hess.

Chevron, which is moving its headquarters from California to Texas, is gunning for a stake in the same Guyana oilfield as Exxon.

But that deal is in arbitration, thanks to an arrangement that Exxon says gives it the right of first refusal. The resolution of that dispute is set to drag into the spring of 2025, at the earliest, giving Chevron’s biggest rival another year to make its life difficult while also getting ahead.