Exxon Struggles to Find Oil

Source: Wall Street Journal, Feb 1, 2011

HOUSTON—Exxon Mobil Corp., the world's largest publicly traded oil company, is struggling to find oil.

Instead, it is stocking up on natural gas, mostly through its acquisition of XTO Energy Inc. last year, according to an annual financial report by Exxon on Tuesday. This shift toward gas is troubling some investors, since gas sells for less than the equivalent amount of oil and companies are finding a lot of gas, putting downward pressure on prices.

Also, Exxon's sheer size has become an issue with investors. It pumps out of the earth the oil and gas equivalent of 1.6 billion barrels of oil each year. And finding a new barrel in the earth for every one it produces—a 100% reserve replacement rate—has become extraordinarily tough. Exxon boasted this was the 17th consecutive year of hitting this mark, but analysts agree that without the XTO deal, Exxon would have fallen far short this year.


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