ExxonMobil's planned takeover of Pioneer Natural Resources will drive supply costs lower and make the major producer better able to withstand price fluctuations, the company's head of shale said today.
"We approach it in a way to try and drive our cost of supply down to a bare minimum," said ExxonMobil senior vice president upstream unconventional Bart Cahir at CERAWeek by S&P Global conference in Houston. "That gives us the greatest resilience."
ExxonMobil's Permian output will more than double to 1.3mn b/d of oil equivalent (boe/d) when the deal is done, rising to about 2mn boe/d in 2027. The $59.5bn acquisition is expected to close this year provided it clears anti-trust hurdles.
Inherent to being nimble and competitive in a volatile, geopolitical-influenced market is the never-ending pursuit of lowering operating costs at the source of supply, which is a prime motivator for the surge in consolidation in North America's oil patch.
Applying proprietary technology to the Permian acreage is a key strategy in ExxonMobil's takeover of Pioneer, and part of its plan to drive down costs and create more slack should prices dip.
"The unconventional space, expanding in that area, it gives us that flexibility that we like," said Cahir, noting when demand lessens, ExxonMobil could dial down production to "preserve the asset" until demand returned.
That flexibility helps oil and gas operators adjust to the "tremendous uncertainty" introduced in recent years from the Covid-19 pandemic and the wars in Ukraine and Gaza.
"There may be short term disruptions but we have a rich history, as an industry, of meeting that [demand]," said Cahir.
