Exxon Fails to Replace Oil, Gas Production for First Time in 22 Years
20 Février 2016 - 1:38AM
Dow Jones News
By Bradley Olson
Exxon Mobil Corp. disclosed Friday that for the first time since
1994, it failed to find enough new oil and gas to replace what it
produced last year.
The company said it replaced only two-thirds of its 2015 oil and
gas output, joining energy conglomerates such as Royal Dutch Shell
PLC and BP PLC in failing to replace 100% of its reserves.
The development speaks to the depth and power of a price crash
that has intensified this year as crude continues to sell for
around $30 a barrel.
Finding new oil and gas is a major indicator of the future
prospects of energy conglomerates like Exxon. Reserve barrels have
long acted as a signal to investors about the stability of the
business model. When prices fall, some wells can no longer turn a
profit, and companies must recognize the loss of value on their
balance sheets.
Much of the decline for Exxon came from U.S. natural gas wells,
which the company said it expects will eventually be developed and
produced. Exxon's proved reserves totaled 24.8 billion barrels of
oil and natural gas at the end of 2015, enough to last 16 years at
the rate of its current output. In the past 10 years, Exxon has
replaced an average of 115% of the oil and gas it has tapped every
year.
Exxon leaders such as former Chief Executive Lee Raymond have
described replacing the company's own oil and gas production as one
of their most significant day-to-day concerns. Because Exxon is
about double the size or more of any of its Western peers such as
Shell or Chevron Corp., it has always had to find far more oil and
gas every year.
"This is one of the drawbacks for Exxon, it's just too big,"
said Fadel Gheit, an energy analyst with Oppenheimer & Co.
"It's very difficult for the company to grow, especially at these
price levels."
It was the first time in 22 years that Exxon hasn't been able to
find enough oil and gas to replace its annual output. BP replaced
only 61% of production. Shell's reserves declined by more than the
company's 2015 output, a rare negative replacement ratio.
Chevron and French oil giant Total SA said they found more oil
and gas than they drilled for last year, each replacing 107% of
reserves.
Write to Bradley Olson at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
February 19, 2016 19:23 ET (00:23 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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