An increasingly bitter dispute over Guyanese oil rights being waged by the two US majors was played out in front of hundreds of energy executives and officials meeting in Houston last week.
The spat between ExxonMobil and Chevron over the right of first refusal to a 30pc stake in Guyana's massive offshore discovery, currently held by US independent Hess, which is now headed for international arbitration in Paris, was the talk of the CERAWeek by S&P Global conference. Such disagreements are not uncommon in the industry, and are more often than not settled behind closed doors. But with Chevron's $53bn blockbuster deal to take over Hess riding on the outcome of this one, the row has spilled out into the open and the chief executives of both companies took turns in putting forward their respective cases from the stage.
While ExxonMobil's Darren Woods said he wants to assert the company's pre-emption rights over the stake and assess its value, he said he has no interest in bidding for Hess itself. Chevron's Mike Wirth said "constructive" talks with both ExxonMobil and China's CNOOC, the third partner in Guyana, had been underway to resolve the issue. "We were surprised when they — a couple of weeks ago — abruptly ended those discussions and publicly announced they had filed for arbitration," he told the CERAWeek audience.
The backdrop for the annual gathering was a growing backlash against ESG investing — along environmental, social and governance principles — that is seeing limited capital return to the sector. Wall Street is also showing more interest in an industry it had previously shunned, even if oil and gas stocks remain undervalued. Russia's invasion of Ukraine changed the dynamics around energy security, while forecasts for oil demand to remain healthy for years to come have also lifted sentiment. Industry leaders have also become more vocal in their criticism over calls to speed up the energy transition, urging caution given the risks of moving too quickly when new technologies are not yet ready.
The world is not on a path right now to hit net zero by 2050, Woods warned attendees. "One of the challenges here is that while society wants to see emissions reduced, nobody wants to pay for it," he bluntly stated, drawing a rebuke from environmental groups, who have long accused oil producers such as ExxonMobil of dragging their feet when it comes to the climate crisis. His new hard-line stance has also seen the company sue two shareholder activists, who had called on ExxonMobil to set more ambitious emissions-reduction targets, accusing them of hijacking the shareholder proxy process.
Permian plateau
The recent wave of shale consolidation — kicked off by two megadeals in quick succession by ExxonMobil and Chevron late last year — also got a look in at the conference, which has been dubbed the Super Bowl of the energy industry. A maturing shale sector has seen some of the remaining highly prized acreage fall into the hands of the larger players. Those companies are counting on technology breakthroughs to drive further efficiency gains in the Permian basin, the top US shale basin.
ConocoPhillips, which has remained on the sidelines during the latest spate of deals, predicts the sector will continue to see more mergers and acquisitions, citing the need to build scale and cut costs. At the same time, US oil output growth is set to slow after defying expectations last year and reaching a record. However, ConocoPhillips chief executive officer Ryan Lance expects production will surge past 14mn b/d in the not-too-distant future. And even though output will plateau later on in the decade, it will stay there "for a long time", he says.
