The Wall Street Journal reported over the weekend that Exxon and Chevron discussed a potential merger past year. Oil prices have rebounded this year after a brutal spring 2020 in which United States crude fell into negative territory for the first time.
Together, they would likely form the world's second largest oil company by market capitalization and production-producing about 7 million barrels of oil and gas a day, based on pre-pandemic levels-behind only Saudi Aramco in both measures.
A handful of sizable oil and gas deals were completed previous year, including Chevron's $5 billion takeover of Noble Energy Inc. and ConocoPhillips' roughly $10 billion takeover of Concho Resources Inc., but nothing close to the scale of combining San Ramon, California-based Chevron and Irving, Texas-based ExxonMobil. Revenue, however, came up short of expectations at $46.54 billion.
Exxon has always been under pressure from activist shareholders to focus more on renewable fuels and pivot away from its fossil-fuel legacy.
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"Exxon Mobil shareholders deserve a board that works proactively to create long-term value, not defensively in the face of deteriorating returns and the threat of losing their seats", Engine No.1 said in a statement.
The new business, called ExxonMobil Low Carbon Solutions (ELCS), will initially focus on carbon capture and storage (CCS), according to Exxon, which labeled CCS as one of the critical technologies required to achieve net zero emissions and the climate goals outlined in the Paris Agreement. Exxon is also in the crosshairs of hedge fund D.E. Shaw, which is pressuring the company to cut costs and improve performance. Exxon said that it is talking to other board candidates and that it expects to take further action in the near term.
Exxon specifically has been a continuous target of such campaigns in light of the fact that, dissimilar to European oil giants like BP and Royal Dutch Shell, it has not put resources into environmentally friendly power or looked to set goal-oriented environment targets. "We strengthened our finances - taking out costs and closing major divestments". Exxon highlighted that new CCS projects and partnerships are under evaluation in several regions, including the U.S. Gulf Coast, Wyoming, the Netherlands, Belgium, Scotland, Singapore, and Qatar.
Exxon shares rose 71 cents, or 1.6%, to close Tuesday at $45.63.
