PsychoticDan
26-07-2007, 23:41
And the news just keeps pouring in.
Scramble for oil catches up with Exxon
Commentary: Race for resources tightens as crude prices march ever higher
SAN FRANCISCO (MarketWatch) -- Exxon Mobil Corp is the world's biggest oil company. It didn't get there without lots of hard, smart field work.
While other companies have increasingly boosted oil and gas reserves through acquisitions, Exxon stuck to the drill bit, scouring the globe for new fields and making big, long-term investments to find, develop and produce petroleum.
This has kept Exxon at the head of its class in the reserve replacement derby so closely watched in the industry. Simply put, reserve replacement measures a company's ability to find oil as fast as it pumps it. Anything less means the company is going backward.
Today Exxon announced it went backward. Its second-quarter earnings report showed a production decline of 1% from a year ago. See full story.
While that hardly seems a significant drop, investors used to Exxon's stellar track record were alarmed enough to push Exxon's (XOM : exxon mobil corp com
News , chart , profile , more
Last: 87.73-5.06-5.45%
6:16pm 07/26/2007
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XOM87.73, -5.06, -5.5%) share price nearly 5% lower -- its biggest one-day drop in five months.
This is not the first time Exxon's output has dropped. And it certainly won't be the last as global demand for energy continues to push the hunt for oil ever farther into hostile environments, politically unstable or downright dangerous corners of the world.
Add to this the rise of national oil companies, many of which are moving beyond their own borders to compete for access to new exploration tracts. China is a prime example of a country pushing state-owned energy companies into the international arena to secure fuel for its booming domestic economy.
The search has taken China to Latin America, where it is fast-becoming a player in a region once dominated by U.S. oil companies. At the same time, Exxon last month decided to exit Venezuela rather than bow to government pressure to hand over majority control of its oil projects there to state-run Petroleos de Venezuela SA.
All this means Big Oil's romping ground is shrinking. The "easy" oil is long gone, the rest is getting harder to find, and competition for it is tougher than ever.
If there's any silver lining in all this for investors, it's that tight supplies and surging demand are keeping plenty of upward pressure on prices. Crude futures topped $77 a barrel Thursday in New York. And the view that energy prices can only go higher in the long run has supported a 15% increase in Exxon's share price this year.
But higher crude prices cannot offset losses from a creeping production decline for long. Which is why Wall Street goes so glum on the sector when its leader stumbles -- even just a little bit.
Scramble for oil catches up with Exxon
Commentary: Race for resources tightens as crude prices march ever higher
SAN FRANCISCO (MarketWatch) -- Exxon Mobil Corp is the world's biggest oil company. It didn't get there without lots of hard, smart field work.
While other companies have increasingly boosted oil and gas reserves through acquisitions, Exxon stuck to the drill bit, scouring the globe for new fields and making big, long-term investments to find, develop and produce petroleum.
This has kept Exxon at the head of its class in the reserve replacement derby so closely watched in the industry. Simply put, reserve replacement measures a company's ability to find oil as fast as it pumps it. Anything less means the company is going backward.
Today Exxon announced it went backward. Its second-quarter earnings report showed a production decline of 1% from a year ago. See full story.
While that hardly seems a significant drop, investors used to Exxon's stellar track record were alarmed enough to push Exxon's (XOM : exxon mobil corp com
News , chart , profile , more
Last: 87.73-5.06-5.45%
6:16pm 07/26/2007
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
XOM87.73, -5.06, -5.5%) share price nearly 5% lower -- its biggest one-day drop in five months.
This is not the first time Exxon's output has dropped. And it certainly won't be the last as global demand for energy continues to push the hunt for oil ever farther into hostile environments, politically unstable or downright dangerous corners of the world.
Add to this the rise of national oil companies, many of which are moving beyond their own borders to compete for access to new exploration tracts. China is a prime example of a country pushing state-owned energy companies into the international arena to secure fuel for its booming domestic economy.
The search has taken China to Latin America, where it is fast-becoming a player in a region once dominated by U.S. oil companies. At the same time, Exxon last month decided to exit Venezuela rather than bow to government pressure to hand over majority control of its oil projects there to state-run Petroleos de Venezuela SA.
All this means Big Oil's romping ground is shrinking. The "easy" oil is long gone, the rest is getting harder to find, and competition for it is tougher than ever.
If there's any silver lining in all this for investors, it's that tight supplies and surging demand are keeping plenty of upward pressure on prices. Crude futures topped $77 a barrel Thursday in New York. And the view that energy prices can only go higher in the long run has supported a 15% increase in Exxon's share price this year.
But higher crude prices cannot offset losses from a creeping production decline for long. Which is why Wall Street goes so glum on the sector when its leader stumbles -- even just a little bit.