Are oil super majors falling behind the competition?(Read article summary)
Oil super majors' performance hasn't been very impressive of late, Alic writes. They might have to get smaller to get bigger if they wish to avoid being rendered irrelevant by the growing ranks of juniors, she adds.
This is what happened in the late 1990s to create the super majors we have today:
â€˘Â Â Â BP Plc (NYSE: BP)took over Amoco and Arco
â€˘Â Â Â Exxon (NYSE: XOM)acquired Mobil
â€˘Â Â Â Total SA acquired Fina and Elf
â€˘Â Â Â Conoco (NYSE: COP)and Phillips merged
â€˘Â Â Â Chevron (NYSE: CVX) and Texaco merged
That worked then, but it may not be working now. The performance of these giants hasnâ€™t been that impressive of late. There have been production gains, but they havenâ€™t been significant and since the massive wave of mergers, these companies havenâ€™t really grown in any noticeable way. More importantly, most of the bottom line improvement has been because of gas, not oil.
Some of the more notable ambitious juniors include:Â (Related Article:Â The Petroleum Rollercoaster)
â€˘Â Â Â Canadian-based Africa Oil â€“ operating in Somalia (Puntland) and Kenya
â€˘Â Â Â Tullow with its big finds in Kenya (and Africa Oilâ€™s partner there)
â€˘Â Â Â Turkeyâ€™s Genel Energy â€“ the key operator in Iraqi Kurdistan and the first explorer Somaliland
â€˘Â Â Â UK-listed Heritage Oil â€“ pushing ambitiously into the majorsâ€™ game in Nigeria
â€˘Â Â Â Canadaâ€™sÂ Emperor OilÂ â€“ operating in Sudan and Turkey
These are the new exploration champions, and while the smaller juniorsâ€™ major goal is to be bought out by a major, the larger juniors may go it alone and theyâ€™ve been very successful so far.
In Iraqi Kurdistan, it was the juniors who got there first; the majors followed suit once they saw the potential based on junior exploration and development.
1.Â Â Â Â Emperor Oil (TSXV:EM);Â current price: $0.41;Â year-to-date gain: 561.54 percent
2.Â Â Â Â Africa Oil (TSXV:AOI);Â current price: $6.75;Â year-to-date gain: 323.42 percent
3.Â Â Â Â PetroAmerica Oil (TSXV:PTA);Â current price: $0.35; year-to-date gain: 238.10 percent
4.Â Â Â Â Wellstar Energy (TSXV:WSE.H);Â current price: $0.15; year-to-date gain: 211.11 percent
5.Â Â Â Â Primeline Energy Holdings (TSXV:PEH);Â current price: $0.57; year-to-date gain: 171.43 percent
6.Â Â Â Â Kingsland Energy (TSXV:KEC);Â current price: $0.54; year-to-date gain: 170.00 percent
7.Â Â Â Â Petromin Resources (TSXV:PTR);Â current price: $0.10; year-to-date gain: 150.00 percent
8.Â Â Â Â Eaglewood Energy (TSXV:EWD);Â current price: $0.43; year-to-date gain: 145.71 percent
9.Â Â Â Â Bayshore Petroleum (TSXV:BSH);Â current price: $0.33; year-to-date: 113.33 percent
10.Â Â Contact Exploration (TSXV:CEX);Â current price: $0.33; year-to-date: 113.33 percent
Right now, the only clear benefit of the super majors is their technology development capabilities.
So what is a super major to do? They are going to have to engage in a solid fitness regime, shed some pounds and tone some muscles. They might have to get smaller to get bigger if they wish to avoid being rendered irrelevant by the growing ranks of juniors with solid management teams, an eye for exploration potential and a new no-risk-is-too-scary attitude.