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Ceos Of Exxonmobil And Chevron Discussed Merger
Oil & Gas | 02 February 2021

The chief executives of oil giants ExxonMobil Corp. and Chevron Corp. discussed uniting the two largest United States-based Oil-producers, which is going to be the greatest merger of all times, after the pandemic that shook the world last year.  

The discussions are no longer ongoing and are being seen as having tested the waters for the huge corporate marriage after the COVID situation, the Wall Street Journal reported on Sunday.

The talks indicate the pressure that the energy sector’s most dominant companies faced as the COVID-19 pandemic took hold and crude prices dropped.

The preliminary talks between Exxon chief executive, Darren Woods, and Chevron CEO, Mike Wirth, were serious enough for legal documents that involved certain aspects of the merger discussions were to be drafted, one of the sources told Reuters. The reason behind the talks ended could not be learned, Reuters reported.

The matter being confidential, sources requested anonymity. Exxon and Chevron, having market capitalizations of $190bn and $164bn, respectively, refused to comment on Sunday.

The two largest descendants of John D Rockefeller’s Standard Oil monopoly would reunite with such a deal, which was broken up by US regulators in 1911, and reshaped the oil industry, the Journal reported.

Such a combined company’s market value could top $350bn, creating the world’s second-largest oil company by market capitalization and production, which would be second only to Saudi Arabia’s state oil producer, Aramco.

Such a big American oil merger could run into regulatory and antitrust hurdles in the new Biden, which has taken the US back into the Paris climate accords. Last week Biden signed new environmental orders, denoting the climate crisis was an existential threat demanding urgent remedies, and introduced his team, including former secretary of state John Kerry as the new US climate global envoy.

One of the people familiar with the talks told the Journal the sides may have missed an opportunity to consume the deal under the former president, Donald Trump, who withdrew from the Paris agreement and had a powerful relationship with the fossil fuel industries.

In their talks, the CEOs of Exxon and Chevron intended to achieve synergies through significant cost cuts to help weather the downturn in energy markets, one of the sources told Reuters. At the end of 2019, Exxon employed about 75,000 people and Chevron roughly 48,000.

Following the end talks with Exxon, Chevron went on to acquire oil producer Noble Energy in a $5bn cash-and-stock deal that was completed in October.

SOURCE: REUTERS, THE WALL STREET JOURNAL

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