Be as clear and concise as possible in your posts, and avoid using jargon or unnecessarily complex language. Use proper spelling and grammar, and make sure that your posts are easy to understand.
- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 5
No. of Recommendations: 20
I set aside other planned work and chores this morning to first listen to the Oxy interview. I thoroughly enjoyed it.
Vickie did a nice job of explaining the shale/fracking process in layman's language. But the more enjoyable part was learning of her background, her oil-patch experiences, and her current high level thinking about where she's trying to take OXY going forward. She does an excellent job of marketing herself and OXY.
Of particular interest to me was her statement that they expect to use CO2 EOR to double ultimate oil recovery from the Permian shale. Every company is working on this with the same goal. Exxon has announced that it is testing some 40 different technology approaches to accomplish this. Vickie also dropped some interesting comments on OXY's operating costs and break-even oil prices.
I think she has a tough challenge going forward because of OXY's heavy debt load. Her major competitors have much stronger balance sheets, much larger technology organizations, larger scale, and a broader asset base. But she does have a good basic position in the Permian, is focusing on what strengths she does have, and seems a strong leader. The biggest threat would be some extended period of low oil prices.
Worth the hour to listen if you wish to better understand BRK's OXY investment.
No. of Recommendations: 2
Great insight thanks for the heads-up. Word today Shell is in early discussions to buy BP. Could be some consolidation. Do you see more consolidation and possible dance partners?
No. of Recommendations: 10
Word today Shell is in early discussions to buy BP. Could be some consolidation. Do you see more consolidation and possible dance partners?
I have no scuttlebutt on deals. Let me know if you find some.
What I do see is a general retreat - especially Shell and BP - from their rush to spin off O&G and focus on renewables. I'm enjoying my schadenfreude. Spinning off O&G assets may have helped their environment footprint, but did nothing to reduce world CO2 emissions. Just shifted them to another owner. And they brought no competitive advantages to wind and solar. It was politically driven, not logically sound. Now they are paying the price of underinvesting in O&G - and realizing they must refocus on it to make any competitive returns. Acquisitions are a logical route to try - consolidation benefits and better scale. But that doesn't help them actually improve reserves - just changes ownership. And they're starting to reorganize their operations for higher efficiency. Chevron is also moving in that direction - but they never pulled back the way Shell and BP did. They just slowed down and underinvested.
Exxon and Darren Woods spelled this all out in early 2018 - and caught hell from the analyst community. XOM had already acquired some great assets on the cheap during the Saudi-Russia price wars, and their focus was on developing them. Guyana, Permian, natural gas for LNG, Brazil, etc. They "leaned in" when others were backing away. Competitors were cutting back on capex and focusing on buybacks. And Woods has completely reorganized XOM - saving $13 billion a year run rate so far on the way to $18 billion. They're now seven years ahead of their major competitors. And it was done when interest rates and were much lower. A third key was focusing on breakthrough technologies and not cutting back on R&D.
So let others play catchup. As XOM said in their last plan update, XOM's now playing in a league of their own. And continuing to pull away from the pack in terms of performance.
Vickie, the OXY CEO, said in the interview that Buffett was bullish on oil prices. If so, it makes no sense that he's not actively buying XOM. XOM has done $20 billion in buybacks without moving the market, and expects the same in 2026. How much could BRK have deployed? Woods was very happy to be buying back the stock he issued for Pioneer at $105 a share and under. So the current price boost will spike short term profits, but raise buyback costs until things settle down again. IF they do. And acquisitions by others are going to get very expensive for a while if they don't.
I think Woods may soon be the best CEO in XOM's history since WWII. I already have him in the same class as Lee Raymond and M.J. Rathbone II.
So, no specific info on acquisitions. But the direction of what's coming seems clear. Shell & BP would not be a surprise.
No. of Recommendations: 1
Vickie seems to have a knack for paying big $$$ for deals at the top of the oil price cycle.
No. of Recommendations: 1
No. of Recommendations: 0
Texrish,
Any comments on the possible arbitration ruling between Xom vs CVX regarding Hess?
It seems CVX is very confident they will prevail. But if they don’t, OXY may become in play again
No. of Recommendations: 0
She also mentioned AI in one of the earning calls.
I did remember sometimes last year OXY hired a head of AI who is doing modeling works such as predictive maintenance.
No. of Recommendations: 4
Thanks so much your insightful and thoughtful response, Tex!
BP went all-in renewables and is now trying to completely change course with O&G. It’s also amazing how not just shareholders but even the general public supports this pivot.
Perhaps BP + Shell would provide scale to put them in the ballpark of Exxon & Chevron. But, yes, Exxon sure looks smart—rising above political pressure to get the energy mix right.
