With oil prices languishing around or below $40 a barrel, smaller oil companies are being subsumed by bigger ones.
In September, Devon Energy announced its purchase of WPX Energy for $2.6 billion. This month, Chevron paid $5 billion in stock to acquire Noble Energy and ConocoPhillips is buying Concho Resources for $9.7 billion, the biggest oil industry takeover since prices collapsed last spring.
After the Concho purchase was announced, share prices for both companies slid about 3 percent, indicating investors are still not enthusiastic about the oil business.
The most optimistic analysts say oil prices will not recover until at least 2022; others say oil consumption permanently peaked in 2019 and the rise of renewables, along with changing consumer preferences, will keep prices to only modest rises in the future.
Americans drove 12.3 percent fewer miles in August than they did a year earlier, the U.S. transportation department reported. Global oil consumption was down 6 percent in September, year on year, according to the U.S. energy department.
The count of oil and gas rigs working in the U.S. has dropped by half, from 569 last fall to 282 this month.
More than 50 North American oil companies with debts totaling more than $50 billion have filed bankruptcy this year. More failures are expected, especially among shale oil producers, as tens of billions of dollars in bonded debt come due over the next four years.
European oil companies have begun shifting away from petroleum to renewable energy technologies, which have been growing more rapidly.
In contrast, U.S. oil and gas producers have tried to weather the industry’s crash by slashing investment 30 percent or more and laying off more than 100,000 oil industry workers.
TREND FORECAST: Merger and acquisition activity will accelerate as more businesses merge to survive and private equity groups seize opportunities to buy up those going down for cheaper prices.
Indeed, Market Watch reported last summer was the busiest in decades for mergers and acquisitions, with more than $1 trillion worth of transactions around the world in the third quarter.
As the Bigs get bigger, there will growing political movements to break up monopolies as already evidenced by actions being taken again big tech.
