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Exxon Struggles To Find New Oil by avengador1
Started on: 02-16-2011 10:05 PM
Replies: 8
Last post by: cliffw on 02-17-2011 11:28 AM
avengador1
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Report this Post02-16-2011 10:05 PM Click Here to See the Profile for avengador1Click Here to Email avengador1Send a Private Message to avengador1Direct Link to This Post
http://online.wsj.com/artic...SJ_hp_LEFTTopStories
 
quote
HOUSTON—Exxon Mobil Corp., the world's largest publicly traded oil company, is struggling to find more oil.

In its closely watched annual financial report released Tuesday, the company said that for every 100 barrels it has pumped out of the earth over the past decade, it has replaced only 95.

Exxon now has more natural gas in reserve for future production than oil.
It's a conundrum shared by most of the other large Western oil-producing companies, which are finding most accessible oil fields were tapped long ago, while promising new regions are proving technologically and politically challenging.

Exxon said in the report that it more than made up for the shortfall in oil by stocking up on natural gas, mostly through its acquisition of XTO Energy Inc. last year.

But the shift toward gas is troubling some investors, because gas sells for less than the equivalent amount of oil. Many observers feel the move toward gas—a trend across the oil industry—is dictated more by shrinking access to oil fields than by a strong desire to emphasize gas production.

"The good old days are gone and not to be repeated," says Fadel Gheit, an analyst with Oppenheimer and Co. Bringing additional reserves from gas "is not going to give you the same punch" that oil would, he said.

Finding the equivalent, in either oil or natural gas, of a barrel in the earth for every one the company produces—a 100% reserve replacement rate—has become extraordinarily tough. Exxon boasted this was the 17th consecutive year of hitting this mark, but analysts agree that without the XTO deal, Exxon would have fallen far short this year.

Investors look at these reserve figures as an important gauge of future profitability and business strength.

Exxon now has more natural gas in reserve for future production than oil. And while the company has been very successful at finding or buying new natural gas, it has struggled to do the same with oil. For every 100 cubic feet of gas it has extracted , it has found or bought an additional 158.

Company spokesman Alan Jeffers says the company's "focus is on resources and projects that add shareholder value." That can be accomplished by finding oil, he says, but value can also be delivered through a corporate acquisition.

Exxon has become the largest U.S. company by market capitalization with a business model that stresses size and integration of assets. It has traditionally found crude oil, refined it into gasoline and other fuels and then sold these products.

But the stock market has recently favored oil companies, such as ConocoPhillips, that are shedding assets to get smaller. Smaller oil and gas finds can have a material impact on slimmed down companies.

The shift toward gas—and troubles with finding oil—has emerged as a theme for the giant Western oil companies. Royal Dutch Shell PLC's chief executive said last month the European company will produce more gas than oil next year for the first time in its 104-year history.

In the past few years, new technologies have unlocked vast resources of natural gas, depressing prices in North America and raising the possibility of falling prices in other regions also. Meanwhile, growing demand from emerging economies has sent crude-oil prices up strongly since prices cratered in 2008 during the worst of the recession. Natural gas prices closed today at $3.98 per million British thermal units, down 25% from a year ago, whereas a barrel of West Texas crude is up about 9.5% over that time, closing at $84.32 in trading on the NYMEX Tuesday.

Big oil companies are having trouble cashing in on the strong prices for crude oil. They have limited ability to drill in many oil-prone regions, such as Russia and part of the Middle East, due to politics. And even in promising Iraq, where many Western companies have won contracts, much infrastructure must be rebuilt. Exxon and others have also flocked to the oil-rich sands of Northern Alberta, Canada, but digging out the oil across vast swathes of forest comes at relatively high cost and generates concerns about the environmental impact.

One place where Western oil companies have found open doors is in deep-water exploration, because state-backed oil companies in Russia, China and the Middle East have little experience drilling these tricky wells. This has given Western companies access to new opportunities, such as Exxon's recent deal with Russian oil giant OAO Rosneft to explore the Black Sea.

The hunt for oil explains why these companies are so keen to restart work in the Gulf of Mexico, after a halt imposed by the Obama administration following the Deepwater Horizon spill. Some companies also are seeking permission to drill exploratory wells above the Arctic Circle. The Arctic remains one of the few unexplored regions of the world and the region above Alaska and western Canada is believed to be oil rich.

But deep-water projects take a long time to turn from a prospect that a geologist has identified into a producing asset. Chevron Corp.'s chief executive said last week that he expects to add new barrels of oil to its reserves from "several major deep-water projects" in future years. In 2010, he warned that Chevron added only one new barrel for every four it produced.

Given the difficulties these companies are facing, some investors have begun to wonder if Exxon bought XTO last year to "mask the extent of their replacement problem," said R. Blair Thomas, chief executive of EIG Global Energy Partners, an energy asset -management firm.

The market didn't like Exxon's announcement, sending the bellwether stock down 2.3% to $82.97 in 4 p.m. trading Tuesday on the New York Stock Exchange.


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Formula88
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Report this Post02-16-2011 11:39 PM Click Here to See the Profile for Formula88Send a Private Message to Formula88Direct Link to This Post
Sorry, that was my fault. I bought some Exxon stock yesterday. My bad.
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ryan.hess
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Report this Post02-16-2011 11:43 PM Click Here to See the Profile for ryan.hessClick Here to Email ryan.hessSend a Private Message to ryan.hessDirect Link to This Post
Peak oil has happened!
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Isolde
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Report this Post02-16-2011 11:50 PM Click Here to See the Profile for IsoldeSend a Private Message to IsoldeDirect Link to This Post
If we just force China and India to abandon oil and create their new infrastructures around gas, we can have all the oil that our old infrastructure was created for, plus we can sell our excessive gas reserves to them, keeping America on top!
In the meanwhile, I may need another S-10 for a CNG conversion
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jaskispyder
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Report this Post02-17-2011 07:45 AM Click Here to See the Profile for jaskispyderSend a Private Message to jaskispyderDirect Link to This Post
Really? They are whining? They are just trying to increase the price of oil by starting rumors that there will be a shortage in the future.

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maryjane
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Report this Post02-17-2011 08:41 AM Click Here to See the Profile for maryjaneSend a Private Message to maryjaneDirect Link to This Post
 
quote
Among stocks in the spotlight, Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 83.95, +0.26, +0.31%) said Tuesday it added 3.5 billion barrels of oil equivalent to its proved reserves in 2010.

The new reserves came in at 209% above the oil major’s 2010 production.

Excluding the impact of asset sales, Exxon replaced 211% of production in 2010.

Exxon said it has now replaced more than 100% of its annual production for 17 consecutive years.

Broken out, Exxon Mobil replaced 102% of its oil production, and gas additions totaled 328% of production.

Exxon’s total reserves at the end of 2010 stood at 24.8 billion oil equivalent barrels -- 47% liquids and 53% gas.

“The 2010 proved developed reserves...was the highest since the Exxon and Mobil merger,” the company said. Exxon and Mobil closed their merger in 1999.


http://www.marketwatch.com/...xon-weigh-2011-02-15

[This message has been edited by maryjane (edited 02-17-2011).]

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fierobear
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Report this Post02-17-2011 11:06 AM Click Here to See the Profile for fierobearClick Here to Email fierobearSend a Private Message to fierobearDirect Link to This Post
Don't worry about it. Obama says we'll all be driving electric cars with solar panels on the roof, next week.
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maryjane
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Report this Post02-17-2011 11:14 AM Click Here to See the Profile for maryjaneSend a Private Message to maryjaneDirect Link to This Post
 
quote
Originally posted by fierobear:

Don't worry about it. Obama says we'll all be driving electric cars with solar panels on the roof, next week.


Guess I'll stay home--it's gonna be raining with heavy cloud cover starting Sunday.
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cliffw
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Report this Post02-17-2011 11:28 AM Click Here to See the Profile for cliffwClick Here to Email cliffwSend a Private Message to cliffwDirect Link to This Post
Exxon Struggles To Find New Oil
I drill oil wells.
NEWS FLASH ! ! !
Finding oil has always been a struggle.
I am drilling in a booming patch. Perhaps, Exxon needs better Land Men who research land mineral rights. Perhaps, government needs to get out of the way.
 
quote
Originally posted by ryan.hess:
Peak oil has happened!

News Flash ! You have past your prime. Are you gonna quit looking for puzzie ?
Peak oil ? Of known reserves, .
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