Exxon eyes oil M&A because clean energy shift may take decades

Exxon Mobil CEO Darren Woods is eyeing oil and natural gas deals despite calls to reduce emissions, saying any shift in the world's energy supply will take decades.

"Energy transitions take a long time," Woods said last week at the Barclays CEO Energy-Power Conference in New York. "In the meantime, the world's rising demand for energy must be met."

Exxon sees oil demand growing at 0.6% per year over the long term and demand for natural gas increasing 1.3% per year even as policymakers look for ways to wean countries off fossil fuels. That means significant new investments will be needed, Woods said, even though shareholders are calling for Big Oil to reduce spending and return more cash to shareholders.

More consolidation is in the offing for independent shale drillers, and Exxon will be watching for potential acquisition targets, he said.

"If there is the opportunity to acquire something that [brings] unique value to Exxon Mobil, we'll be in a position to transact on that," Woods said.

In the Permian Basin of West Texas and New Mexico, where share prices of frackers have plunged in the past year, Exxon is keeping a "watchful eye" for deals, Woods said. "I expect consolidation to happen over some period of time."

While its biggest U.S. rival, Chevron, made an unsuccessful attempt to buy Anadarko Petroleum earlier this year — eventually losing out to a $38 billion offer from Occidental Petroleum — Exxon has remained on the sidelines. That wait-and-see approach comes as frackers struggle with well performance and relentless cash burn.

Chevron will be "opportunistic" in making acquisitions, Chevron's North America head Jeff Gustavson said at the same conference. Any deal would have to be a strategic fit and be a good value, he said without naming any targets. But it's not just the Permian that's of interest to the majors. Even though Exxon is spending heavily on megaprojects including deepwater oil drilling in Guyana and liquefied natural gas production in Papua New Guinea, the company will "retain the capacity for a sizable acquisition," Woods said.

The company will look for deals at the bottom of the price cycle, he said. "Those are where we'll see value opportunities."