Shine Trader Live reports:
ConocoPhillips, the world’s largest independent oil and gas company, has made its second blockbuster acquisition in less than a year in anticipation of continued strong global demand for US shale oil and oil.
Conocophillips’ $9.5 billion acquisition of Royal Dutch Shell’s West Texas assets on Monday is subject to regulatory approval. Nine months earlier, Conocophillips had bought rival Concho Resources for $13.3 billion.
Conocophillips has its future firmly in shale, after exiting Canadian oil sands, US offshore oil and the UK North Sea. The strategy is based on strong global demand for cheap oil and Conocophillips’ confidence that it can extract oil with less carbon emissions.
While Shell, BP and Statoil are poised to move away from shale gas in favor of renewable fuels, Conocophillips CEO Ryan Lance doesn’t see oil and gas being replaced anytime soon.
He told analysts in June:
“We do not believe there is an imminent existential threat to the business.”
The deal would make Conocophillips one of the largest Permian producers in terms of production, rivaling Pioneer Natural Resources and Chevron. Lance, who became CONocophillips’ chief executive in 2012, told analysts on Tuesday:
“With this acquisition, we will create more value for the next 10 years and beyond.”
U.S. companies such as Conocophillips and Exxon Mobil are taking a starkly different path to transition and dispose of their oil and gas assets than European oil companies, which have mostly turned to solar, wind and batteries.
Lance promised to deliver better returns to shareholders than a one-off dividend. Shareholders want the company to focus on its strengths, he says. “That’s what we’re good at, we’re really good at it.” Lance was referring to strong cash flow generation through modest investments in new oil and gas assets.
He also said Shell’s efficient assets would help Conocophillips halve its carbon emissions per unit of production to 2016 levels by 2030.
But the acquisition was not well received by environmentalists, who this year urged Conocophillips to address the emissions caused by customers using the fuel it produces. Mark Van Baal, founder of Dutch environmental advocacy group Follow This, said:
“Buying fossil fuel assets is the exact opposite of what investors really want.”
Reprint indicated source：Shine Trader Limited Live information