Exxon and Chevron megadeals reveal why days of easy oil are over

Exxon’s oil production is hovering near the lowest level since its merger with Mobil Corp more than two decades ago.

Exxon Mobil Corp and Chevron Corp spent recent days telling investors why they want to spend $114 billion combined on two megadeals. On Friday, their earnings reports revealed why they need to.

“Welcome to the oil patch,” said Pickering, the founder of Houston-based Pickering Energy Partners. Investors “don’t believe this business can be sustainable, they don’t believe the discipline of these companies. They’d rather stare at Amazon today, or maybe any day.” Exxon’s $62 billion purchase of Pioneer Natural Resources Co. announced two weeks ago will make it the dominant producer in the Permian. Chevron said Monday it’s buying Hess for $52 billion, giving it a stake in one of the world’s largest and fastest growing oil projects in Guyana.

Exxon has a much stronger growth profile, having already established a foothold in Guyana and sold higher-cost assets. But the Texan oil giant’s production averaged just 3.69 million barrels of oil equivalent a day in the third quarter, near a two-decade low, as growth from Guyana and the Permian failed to offset those impact of asset sales, OPEC production curtailments and the natural decline in productivity that affects all oilfields.

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