With $6.1 billion in cash, over 3.75 billion common shares in its treasury, and a credit rating that exceeds the US government's, Exxon Mobil remains the financial press' perennial favorite to ink a big-time oil and gas acquisition, despite already doing so in 2010 and with investors now shunning Big Spending from Big Oil (E1F Aug.13' 14). Hess, Anadarko and BP are the most frequently mooted targets. But these discussions often pay little, if any, attention to whether there are systemic strategic benefits to gain, or just an immediate boost in production. This is not to say that hypothetical musings about M&A opportunities for Exxon — or any of its peers for that matter — are inherently off base. The majors have struggled to grow production, and slimmer reserves replacement rates may soon follow as capital discipline reigns supreme (EIF Feb.26'14). Exxon has already said 100% reserves replacement is not a company target, yet access to big reserves is clearly on the minds of management. This is visible not just through its purchase of XTO — still the most aggressive move into shale by a major — but also its headfirst jump into Kurdistan despite expected backlash from Baghdad, and its industry-leading foray into Russia's Arctic and tight oil frontiers (EIF Mar.21' 12). But Iraq's security meltdown and Western sanctions on Russia now muddy the resource clarity Exxon sought to build, and the supermajor has made clear in places like Abu Dhabi that the priority is adding high-return reserves, not just reserves (EIF Oct 15'14).
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