Black gold: Oil merger boom is here
Chevron's $57 billion acquisition of Hess comes on the heels of Exxon Mobil's big Pioneer deal. More energy sector M&A could be on the horizon.
There has been a sudden gusher of deals in the energy sector. Chevron’s planned $57 billion takeover of Hess comes shortly after Exxon Mobil’s announcement of a $60 billion acquisition of shale gas leader Pioneer Natural Resources.
So what’s next? Investors should keep an eye on other big US-based energy stocks. The race may be on to gobble up as many companies with a presence in the Permian Basin in the southwest. ConocoPhillips in particular could be a potential acquirer.
Occidental Petroleum could be an intriguing target. The company, backed by Warren Buffett’s Berkshire Hathaway, was reportedly a potential takeover candidate for Chevron (which is another top Berkshire holding by the way) earlier this year. Could OXY, which is a top producer in the Permian Basin, come into focus as a takeover play again?
EOG Resources, Diamondback Energy (the FANG stock of oil…literally. The company’s ticker symbol is FANG) and Devon Energy could also be attractive targets for a larger energy firm. Or they could go on the hunt themselves? Devon, for example, has reportedly been looking at Marathon Oil.
The big energy companies may be looking to take advantage of higher crude prices, which have been pushed up this year in part due to Russia’s invasion of Ukraine and, more recently, the war between Israel and Hamas in the Middle East. So make no mistake. Consolidation in the oil patch likely isn’t over. This could be only the beginning of another energy sector boom.