Major oil firms have biggest war chests for takeovers

By Money Times

Nov 16, 2015 01:37 AM EST

The continuous oil price fall is one side of the coin. The other side is showing rosy picture as six major oil companies have more than enough funds to snap up competitors. It's estimated that world's top six listed oil companies have over $0.5 trillion in stocks and cash enough to fund takeovers plans. ExxonMobil lead the pack, while Chevron, BP Plc, Shell, ConocoPhillips and Total are in the top-six positions.

With $320 billion, Exxon Mobil Corp is topping the list of oil companies with huge liquidity. Chevron figures at second slot with $65 billion cash reserves and it's followed by BP Plc with $53 billion, according to data from Bloomberg. With below $50billion funds, Shell, ConocoPhillips and Total were at remaining three slots among the top-six.

According to Bloomberg news report, the speculations about possible mergers in the global oil and gas sector are making rounds after Anadarko Petroleum Corp withdrawing from buying Apache Corp for an undisclosed amount. Apache had rejected the offer and wouldn't give internal financial data. Again Capital LLC predicts that both the companies are now takeover targets.

ConocoPhillips has $31.5 billion and Total SA with $30.5 billion. Over 90 percent of ConocoPhillips' funds are in stocks held in its treasury. Total's funds are 85 percent in cash.

The Irving, Texas-based Exxon Mobil has $316 billion of its shares stockpiled in company's treasury. It can use this for any possible takeover plan. The world's largest oil company by market capitalization made two major takeovers in the past 20 years using stock. The $88 billion Mobil deal in 1999 and $35 billion XTO transaction in 2010. 

Royal Dutch Shell Plc has $32.4 billion funds availability in cash. The Hague-based company may not go for major takeover considering the fallout of its offer to take over BG Group Plc for $69 billion. Shell made the offer in cash and stock in April.

The huge liquidity options are facilitating oil companies to acquire smaller exploration and production (E&P) companies, which are reeling under pressure owing to lower oil prices, as reported by Business Finance News. The continuous drop of oil price over one year has adversely hit E&P companies' liquidity and profitability.

Despite low oil price regime, the oil production has been continued as US remained on its decision to keep up shale oil production, while Opec didn't yield to any pressure. As a result, it's become unviable for drilling companies to continue as low prices hit their operational efficiency. Over half of the drilling activity in

Canada and other nations fell and the US shale oil producers also at last have started slowing down their drilling activity. It's learnt that Opec may also follow the suit.

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