The message seems to be that it is better to take cash now and turn the management attention and long-term risk for the coming decades over to someone else. “Chevron regularly reviews its global portfolio to ensure assets continue to meet our criteria for investment,” the company said in a statement.
BP, the London-based oil giant, was once known as a prolific dealmaker. In recent years, the company, though, has avoided major acquisitions, partly because of the disastrous 2010 Gulf of Mexico blowout on the Deepwater Horizon rig, which has cost the company more than $66 billion in fines and reparations.
When BP’s executives felt secure enough to return to the table in July, they chose to pay $10.5 billion for the shale oil and gas properties in the United States of BHP Billiton, an Australian mining company.
The 470,000 acres acquired in Texas and elsewhere comes with very little risk, in the view of executives. Thanks to the work of BHP and others, they already know that the oil is there. Using finely honed techniques they can drill thousands of wells on the land in an almost industrial manner.
The shale wells will produce oil far more quickly than the years required to set up a deepwater oil project or a liquefied natural gas facility, reducing exposure to price fluctuations and, therefore, soothing the worries of investors and boards. “There is essentially zero underground risk, “ said Dave Lawler, chief executive of BP’s Lower 48, or shale, business.
While shale used to be the realm of smaller oil companies known as independents, most of BP’s rivals, including Exxon Mobil and Chevron, are now moving in, spending hefty portions of their capital on shale.
Many see Mr. van Beurden of Shell as a chief executive who embodies the attributes needed in the industry. Mr. van Beurden, who became chief executive in 2014, knows that the oil and gas business remains vital to a company like Shell. He improved middling financial performance by buying a British energy company called BG for $54 billion in 2016 when oil prices were low, bringing in a rich portfolio of liquefied natural gas, a fast-growing fuel that has a lower carbon footprint than oil. BG brought oil, too, mostly in Brazil.