With the U.S. pumping record amounts of oil, one might assume that the largest oil companies would be basking in the glow—and perhaps working out a deal or two to capitalize on the domestic boom.
But they’re not.
The urge may be there to snap up smaller and more nimble oil producers, but analysts say the domestic Big Three (ExxonMobil, Chevron and ConocoPhillips) are encumbered by sprawling size and underperforming assets that make acquisitions less likely.
Even as other industries undertake a flurry of mergers amid low interest rates and a bull market, major oil companies appear gun shy on large purchases.
“They have to reinvent themselves—these companies are too big to grow,” said Fadel Gheit, managing director of oil and gas research at Oppenheimer & Co. He compared the Big Three to “an aging Yankees team” that has a long history and expensive talent but that routinely underperforms.
In 2010, Exxon acquired XTO for $41 billion—a deal Gheit branded “an absolute disaster” because it failed to boost domestic production at the world’s largest oil company.
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