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The Star
4 days ago
- Business
- The Star
Exxon, Chevron set stage for race for prize assets
The high-stakes clash between Exxon Mobil and Chevron over a prized South American oilfield may be a sign of what's to come in the oil and gas industry as competition for a shrinking pool of prime assets heats up. Chevron is set to finalise its US$53bil acquisition of US rival Hess after the companies prevailed in a legal dispute with Exxon over Hess' 30% stake in Guyana's fast-growing Stabroek oil block. The ruling by the Paris-based International Chamber of Commerce marks a key win for Chevron chief executive Mike Wirth, who targeted the Hess acquisition to grow the company's production and keep pace with larger rival Exxon's rapid expansion. The Hess deal, announced in October 2023, was delayed after Exxon, which holds a 45% stake in Stabroek, and the field's third partner China National Offshore Oil Corp argued that they had a contractual right of first refusal to purchase Hess's stake in the block. In fact, the multi-billion-US dollar dispute hinged on the interpretation of a single sentence in the joint operating agreement. Exxon's decision to file this arbitration was likely motivated by a desire to hamper the growth strategy of its key US rival, the latest move in a decades-long rivalry that has helped shape the US energy sector. Stabroek is a highly attractive asset, with 11 billion barrels of oil reserves and production costs of only around US$20 a barrel, among the lowest in the world, according to consultancy Rystad Energy. The Guyanese field's production has soared from zero in 2019 to 668,000 barrels per day (bpd) by the end of March, and is forecast to nearly double to 1.3 million bpd by the end of 2027. Arms race Exxon and Chevron both trace their roots to Standard Oil, the conglomerate formed by John D. Rockefeller in 1870 that came to dominate the American oil industry before being broken up by the US government in 1911. In the past decade, the two majors have competed fiercely for dominance in US shale oil. Chevron had an early advantage given its ownership of large swathes of land in the Permian basin, the shale heartland. But Exxon regained ground in 2010 with its US$41bil acquisition of natural gas producer XTO. It then cemented its position as the largest US producer in October 2023 with its acquisition of US shale producer Pioneer Natural Resources for US$60bil. Chevron responded quickly, however, announcing that it had agreed to acquire Hess only 12 days after Exxon's Pioneer deal. The Hess deal should help Chevron keep pace with Exxon moving forward. Chevron's production is now expected to exceed four million bpd by 2030 from 3.4 million bpd in the first quarter of this year. By contrast, Exxon expects its output to grow from 4.5 million bpd in the first quarter to 5.4 million bpd by the end of the decade. Dwindling reserves Oil and gas companies are facing a future with limited options for building reserves as the unexplored frontier shrinks and shareholders push for cost control. These firms replenish their reserves not only to grow output but also to offset existing fields' natural decline. Depletion has been a major problem for Chevron, whose reserve replacement ratio slid to negative 4% last year, with reserves falling to their lowest point in at least a decade at 9.8 billion barrels, according to LSEG data. That's the equivalent to eight years of production, down from 10 years in 2023, and compared with Exxon's 12 years in 2024. Reserves can be increased either through exploration, a high-risk, high-reward activity, or by acquiring assets and companies. Energy giants have invested billions in exploration over the decades, which has led to the discovery of resources in new basins such as the North Sea, Angola, Brazil and Indonesia. But this activity has slowed in recent years as companies have sought to cut spending to appease shareholders. Moreover, there are fewer accessible fields to tap. Although the world holds vast oil and gas reserves, sufficient to supply around 50 years of current oil consumption, not all resources are created equal. First, many resources are simply far too expensive to develop because of depth, complexity or remoteness. Additionally, over two-thirds of the world's oil reserves are located in countries where Western companies have restricted access. This includes Iran, Venezuela and Russia as well as Organization of Petroleum Exporting Countries (Opec) whose strict terms make operations less attractive for foreign investors. This all explains why the discovery of enormous, low-cost oil resources in Guyana a decade ago was considered such a boon for Western energy companies – and why the two biggest US producers were willing to spend billions battling for access to a single field there. First shot The latest high-profile clash between Exxon and Chevron may be an indication of what the industry can expect in the coming years as competition for low-cost resources intensifies amid the world's transition away from fossil fuels. No one knows exactly when global oil demand will peak. While the International Energy Agency, the global energy watchdog, expects oil consumption to crest by the end of this decade, Opec forecasts demand to grow into 2050. But, regardless, the industry appears to be going through a shift, and the Exxon-Chevron clash, one of the most expensive and consequential legal battles in the sector's history, may be a harbinger of things to come. — Reuters Ron Bousso is the Reuters energy columnist. The views expressed here are the writer's own.
Yahoo
29-05-2025
- Business
- Yahoo
'It Will Have A Chilling Effect On The Creation Of New Foundations,' The GOP Tax Bill's Effect On Billionaire Philanthropy
President Donald Trump's "One Big Beautiful Bill" passed the House late last week Included in the bill are increased levies on private foundations run by the ultra-wealthy Experts are warning that the change will have a negative effect on charitable giving, as billionaires will shift to solutions with fewer giving mandates and more tax exemptions President Donald Trump's "One Big Beautiful Bill" passed the House late last week. The bill, which seeks to make permanent many of the tax cuts included in the 2017 Tax Cuts and Jobs Act, includes several additional changes, including higher levies on private foundations. Private foundations have been the center of billionaire philanthropy for generations. From John D. Rockefeller to Bill Gates, the ultra-wealthy have long preferred to give their fortunes away through organizations they control rather than handing it out to smaller nonprofits. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — These organizations have been largely exempt from federal income taxes, in exchange for a requirement that they spend 5% of their assets each year on charitable causes, according to Bloomberg. Now, experts have told the outlet that a provision in the bill could change all that. The bill will increase the levies on private foundations' investment income from 1.39% to anywhere between 2.78% and 10%. Laura MacDonald, the founder of Benefactor Group, told Bloomberg the move "will have a chilling effect on the creation of new foundations and end up accelerating the growth of donor-advised funds." Trending: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – There has already been some movement away from the private foundation model toward limited liability companies and donor-advised funds, which have fewer mandates, including requirements on how much they give each year. Under the new proposal, it would "make no sense" for billionaires like Gates and Michael Bloomberg to put assets into their foundations when tax-free alternatives exist, FoundationMark founder John Seitz told Bloomberg. "You're taking money that's very transparent and sort of forcing it into these darker pools, where you don't have the 5% distribution requirement," he funds have varying rates at which they pay out the money in their accounts to working charities. The median payout of these funds is 9% over three years, but more than one-fifth paid out no money at all over that period, according to a 2024 report from the DAF Research Collaborative. Meanwhile, a report from the Lilly Family School of Philanthropy found that giving by private foundations went up 1.7% in 2023– the most recent year for which data is available– to $103.53 billion. The Joint Committee on Taxation estimates that the change in tax rate for private foundations would raise almost $16 billion in revenue over the next decade, according to Bloomberg. However, expert Ray Madoff tells Bloomberg that they see the move more as a "challenge to independent organizations" than a legitimate economic move. Read Next: Invest where it hurts — and help millions heal:. 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'It Will Have A Chilling Effect On The Creation Of New Foundations,' The GOP Tax Bill's Effect On Billionaire Philanthropy originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Washington Post
10-03-2025
- Business
- Washington Post
Trump loves the Gilded Age and its tariffs. It was a great time for the rich but not for the many
WASHINGTON — In President Donald Trump's idealized framing, the United States was at its zenith in the 1890s, when top hats and shirtwaists were fashionable and typhoid fever often killed more soldiers than combat. It was the Gilded Age, a time of rapid population growth and transformation from an agricultural economy toward a sprawling industrial system, when poverty was widespread while barons of phenomenal wealth, like John D. Rockefeller and J.P. Morgan, held tremendous sway over politicians who often helped boost their financial empires.
