Big oil not as agile as smaller companies in responding to new market dynamics

Jeff Reaves, Market Watch:
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... one interesting development of the past few days has been the rather tepid response from Big Oil stocks. Even as these smaller names rallied nicely, giants like Royal Dutch Shell RDS.A, +0.96% RDS.B, +0.65% and Chevron Corp. CVX, +0.19% were only up 3% or so — and Exxon Mobil Corp. XOM, +0.76% was barely in the green with a gain of less than 1%!

So what gives?

Well, the bottom line is still the bottom line for big oil companies — and unfortunately, even a few extra bucks tacked on to a barrel of oil is not going to undo the past 10 years of pain.

Big Oil is stuck in a secular decline. And that means all investors should be wary of thinking a recovery in oil prices is a sign that oil giants like Chevron and Exxon are back.
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These smaller companies are more agile, and have been able to cut back on costs reasonably quickly over the last two years. Conversely, they also will be much quicker in scaling up to respond to more favorable pricing.

Exxon, on the other hand, is a $360 billion behemoth that is naturally less responsive to short-term market conditions. Remember, this is a company that partnered with a Russian state-owned oil company in an expensive long-term drilling project in the icy waters north of Siberia, which includes $3.2 billion in exploration costs alone.

If oil ever gets back to $80 a barrel or higher, that project may turn out to be a smart one … but if it drops back under $40 a barrel for an extended period of time, there’s no way Exxon is breaking even on production there.
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There is much more.

Exxon tends to focus on overseas production increases rather than domestic production.  Chevron used to focus more on offshore production but has lately cut back on that while moving its focus to the Permian Basin where well are making money even at depressed prices.

My recollection is that Exxon got out of the shale play before the  price dropped and has not come back in as new efficiencies have made those plays profitable.  While they are still finding foreign sources of oil, it is not clear why they are ignoring the domestic production market.

With the Trump administration removing many of the impediments to production it would seem to make sense to be more involved locally.

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