Jack Williams, a senior vice-president of Exxon, told analysts on a call to discuss the company’s first-quarter earnings that he “would be surprised if over time we did not pick up more Permian acreage”, either through small-scale purchases of assets or a larger acquisition.
His comments show Exxon’s interest in further consolidation in the Permian region, which is at the centre of the takeover battle between Chevron and Occidental Petroleum for control of Anadarko Petroleum.
Chevron also reported earnings on Friday morning, and on their call with analysts its executives emphasised the merits of their agreed deal with Anadarko, including opportunities for cost savings.
Mr Williams was speaking as Exxon reported a 50 per cent drop in earnings per share for the quarter to 55 cents, well below the average of analysts’ forecasts, as it was hit by “extremely challenging” conditions in its refining and chemicals operations.
The group’s refining operations fell to a $256m loss in the quarter as their margins were crushed by oversupply in world gasoline markets. They also lost the benefit they had gained last year from some very low prices for Canadian crude, caused by a shortage of export pipeline capacity.
In the chemicals division, profits dropped by 49 per cent to $518m, as the wave of investment in new capacity in recent years led to increased supplies and put downward pressure on prices.
The upstream oil and gas production division was more resilient, but profits still fell 18 per cent at $2.88bn, hit by lower prices.
In the Permian Basin, Exxon’s production is booming: it rose 126 per cent from the first quarter of 2018 to reach 226,000 barrels of oil equivalent per day, and is on course to reach the company’s target of 1m boe/d in 2024.
However, Permian production is only about 6 per cent of the global total for Exxon. The group’s worldwide output rose by just 2 per cent in the first quarter to 3.98m boe/d, hit by declines at other fields.
Exxon built its position in the Permian through a series of deals, culminating in the $6.6bn purchase of drilling rights on about 250,000 acres from the Bass family in 2017, but has since then put a brake on acquisitions.
Mr Williams told analysts that Exxon did not need to buy any more assets to achieve its current projections for production growth in the Permian region, but suggested that it was still looking for further deals.
He added that the company was not interested in buying assets that were already in production and generating cash, but was looking for reserves with development potential.