Saudi Aramco plans to explore for oil and gas globally, adding to challenges for the likes of Chevron (CVX), Exxon Mobil (XOM), BP (BP) and Royal Dutch Shell (RDSA). But Chevron stock, Exxon Mobil stock, Royal Dutch Shell stock and BP stock all rose on the stock market as crude oil prices rallied.
Khalid al Falih, chairman of Saudi Aramco, told the Financial Times that international expansion would be a critical part of the state oil company’s future. It would be the de facto OPEC leader’s first move into an overseas hunt for oil.
“We are no longer going to be inward looking and focused only on monetizing the kingdom’s resources,” said Falih, who is also the kingdom’s energy minister. “Going forward the world is going to be Saudi Aramco’s playground.”
Asked if Saudi Aramco plans to vie with the likes of Exxon Mobil as an international energy player, Falih responded: “Correct.” Aramco will focus its efforts on natural gas, as global demand for the fuel grows.
The company’s value has been estimated at $1 trillion-$2 trillion, topping publicly traded leaders like Microsoft (MSFT) and Apple (AAPL) and dwarfing oil peers like Exxon. But plans for an IPO, which would allow markets to value Aramco, have been shelved for now.
Exxon Mobil stock rose 1.7% to 75.39 on the stock market today building on its rally above the 50-day moving average. Chevron stock advanced 1.5%, BP gained 0.5% and Royal Dutch Shell added 1.1%. Those gains came amid higher crude oil prices as well as a broad stock market rally, after a tentative deal was reached to avoid the federal government shutdown.
Meanwhile, U.S. crude oil prices rallied 1.3% to $53.10 a barrel. Brent crude oil prices increased 1.5% to $62.42.
Saudi Aramco Eyes Permian Basin
In December 2017, the Wall Street Journal reported Saudi Aramco was looking at natural-gas assets in Texas shale basins and was in talks with U.S. liquefied natgas producer Tellurian (TELL) to buy a stake or some of its natural gas.
The report said Armaco has asked about assets in the Permian and Eagle Ford shale formations.
Last month, the Journal said a Tellurian deal remains a possibility and added that Sempra Energy (SRE), which is developing five LNG projects between the U.S. and Mexico, has held talks with Saudi Aramco as well.
If Saudi Aramco makes a push in the Permian Basin, it would join a crowded field in which international oil rivals are increasingly making the low-cost shale play a bigger focus.
Chevron and Exxon Mobil crushed fourth-quarter earnings views Feb. 1 and reported steep increases in Permian production.
BP also plans to ramp up in the Permian after buying $10.5 billion in shale assets from BHP Billiton (BHP) last year.
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