Chief executives of American oil companies ExxonMobil and Chevron held preliminary talks in early 2020 to explore the combination of the two largest U.S. oil producers in what would have been the biggest merger of all time, according to people familiar with the matter.
The discussions, which are no longer underway, are being seen as a test for the huge corporate marriage after the coronavirus pandemic shook the world last year, the Wall Street Journal reported on Sunday.
These consequent discussions are indicative of the pressure that the most dominant companies in the energy sector faced when Covid-19 consolidated and oil prices plummeted.
The talks between Exxon Chief Executive Darren Woods and Chevron CEO Mike Wirth were serious enough that legal documents involving certain aspects of the merger discussions were drafted, one of the sources told Reuters.
Sources requested anonymity because the matter is confidential. Exxon and Chevron, which have market capitalizations of $ 190 billion and $ 164 billion, respectively, declined to comment on Sunday.
The discussions were described as preliminary and, although they were not in progress, they could return in the future.
Such an agreement would bring together the two greatest descendants of John D Rockefeller’s Standard Oil monopoly, which was disbanded by US regulators in 1911, and reshape the oil industry, the Journal reported.
The market value of a combined company could reach $ 350 billion, creating the world’s second largest oil company by market capitalization and production, second only to Saudi Arabia’s state-owned oil producer, Aramco.
Such a major merger of American oil could run into regulatory and antitrust hurdles in the new Biden, which has led the United States back to the Paris climate deals.
Last week, Biden signed new environmental orders, saying the climate crisis was an existential threat that required urgent remedies and introduced his team, including former Secretary of State John Kerry as the new US global climate envoy.
During the election campaign last October, Biden said he would pressure the United States to “abandon the oil industry”.
One of the people familiar with the talks told the Journal that the sides may have missed the opportunity to consummate the deal under former President Donald Trump, who withdrew from the Paris deal and had a powerful relationship with the fossil fuel industries.