Diversify, consolidate or die: Energy transition poses stark choices to mid-sized oil companies
Noble Energy realised the independent E&P business model was failing long before Covid-19. Merging with Chevron buys investors some time, but is no silver bullet.
US oil supermajor Chevron’s headline-grabbing USD 13 billion deal to acquire independent outfit Noble Energy was hailed in some quarters as proof that Big Oil is far from dead and buried, no matter what the fossil fuel divest movement might say.
Battered and bruised, the supermajors still have a lot of life left in them. Armed with enviable credit ratings, they are weathering the commodity downturn by borrowing more, slashing capital expenditure, culling jobs, offloading assets and even dumping spare office space.
Some boards have cut shareholder dividends, while other more hawkish bosses have gone the extra mile to avoid doing this—such as stopping paying into their employees’ pension pots.
For companies like Chevron, with a deep global asset base and market capitalisation of USD 167 billion, there are many levers to pull in times of adversity.
But what about smaller independent exploration and production (E&P) players like Noble Energy, which was valued at USD 5 billion in the Chevron…