A possibility that was already mentioned last year:
It's important to remember that the leaders of Chevron and Exxon Mobil discussed the possibility of a merger last year when they were feeling the full brunt of the negative effects of the Covid-19 pandemic on the industry.
Mike Wirth, CEO of Chevron, and Darren Woods, CEO of Exxon Mobil, discussed the possibility of a merger at a time when demand for oil and gas was plummeting, particularly because of the restriction and containment measures to limit the spread of the virus around the world, as reported by sources close to the issue.
The same sources have stated that these preliminary discussions are no longer ongoing but could be resumed in the future.
A capitalization of more than 350 billion dollars for the possible new entity:
It should also be noted that if this transaction were to take place, the combined market capitalization of these two companies would be over $350 billion, as calculated by the Wall Street Journal. More than $190 billion would come from the capitalization of Exxon Mobil, which is the larger of the two groups.
The newspaper also stated that together, the two American giants would probably form the second largest oil company in the world in terms of market capitalization but also in terms of production. The production of this group would indeed be 7 million barrels of oil and gas every day on average, based on pre-pandemic levels. The market leader remains Saudi Aramco.
However, it is also important to remember that such a merger may run up against anti-competitive regulations. However, several different experts in the oil and gas sector believe that consolidation in the oil and gas industry is essential and necessary to reduce costs and help companies overcome the post-pandemic slowdown.
According to these experts, the industry must prepare for an uncertain future as many countries seek to reduce their dependence on fossil fuels in an effort to combat climate change. Indeed, let us recall here that the new American President Joe Biden has announced the return of the United States to the Paris climate agreement. As a result, the oil giants are likely to face a Democratic administration that is less favourable to the sector in general.
Finally, it should also be noted that the Chevron group announced last Friday that it had recorded a net loss of 5.5 billion dollars in 2020 after being affected by the sharp drop in barrel prices.