In 2023, the Oil and Gas Industry went on a massive buying spree, spending a whopping $250 billion to secure lower-cost reserves and prepare for future industry upheavals. The surge in oil demand as the world economies recovered from the pandemic has stoked acquirers’ enthusiasm.
Companies like Exxon Mobil, Chevron, Occidental Petroleum, and ConocoPhillips made acquisitions worth a total of $135 billion in the same year. The Permian Basin in west Texas and New Mexico was the grand prize in these deals, and the four companies are now positioned to control about 58% of future production there, aiming to pump at least one million barrels per day from the oilfield.
The Reason for the Buying Spree
As we mentioned earlier, the surge in oil demand as the economies recovered from the pandemic was the primary reason for the buying spree, and the acquirers wanted to take advantage of the companies’ high stock prices. By doing so, they were securing lower-cost reserves and preparing for future industry upheavals.
The Companies Involved
The companies that were most active in the buying spree included Exxon Mobil, Chevron, Occidental Petroleum, and ConocoPhillips. They completed the majority of the acquisitions, with ConocoPhillips completing two significant deals in the last two years. The Permian Basin in west Texas and New Mexico was the most desirable acquisition in these deals.
Permian Basin – The Grand Prize
The Permian Basin is the largest U.S. shale-oil field, and the four companies are now positioned to control about 58% of the area’s future production. With each company aiming to pump at least one million barrels per day from the oilfield, which is expected to produce seven million barrels per day by the end of 2027. This acquisition has been a significant milestone for the industry, as the Permian Basin is considered one of the most valuable and largest oil reserves globally.
The Future of the Industry
According to a survey conducted by the Federal Reserve Bank of Dallas in December, 75% of energy executives polled expected more oil deals worth $50 billion or more to pop up in the next two years. The oil and gas industry is preparing for more industry upheavals in the future, and these acquisitions are strategies to prepare for that. Consolidation within the industry has been a steady trend, with mergers and acquisitions playing a significant role.
Final Thoughts
The oil and gas industry has always been a dynamic, ever-changing industry with ups and downs. The recent buying spree supported by high stock prices is another development that signifies the industry’s considerable potential. The Permian Basin acquisition has positioned the industry leaders to control future production, with the aim of delivering at least one million barrels per day. The survey conducted by the Federal Reserve Bank of Dallas further reinforces the industry’s drive for more consolidation. The industry’s resilience and adaptability will continue to shape its future, with these acquisitions being a significant part of the journey.
In conclusion, the oil and gas industry leveraged high stock prices to secure lower-cost reserves and prepare for future industry upheavals. Companies like Exxon Mobil, Chevron, Occidental Petroleum, and ConocoPhillips made acquisitions worth a total of $250 billion in 2023. The Permian Basin was the grand prize, and the four companies are now positioned to control 58% of future production there, aiming to pump at least one million barrels per day. Furthermore, the industry is preparing for more industry upheavals in the future, as consolidation has been a steady trend within the industry, with mergers and acquisitions playing a significant role. The industry’s future is dynamic, resilient, and ever-changing, with these acquisitions being a significant part of its journey.
