Oil merger
Chevron Texaco, the #2 US oil and gas company and the #5 largest in the world, won a bidding war to purchase Unocal, the #9 US oil and gas company. The pPurchase, set at $16.4 billion, gives Chevron Texaco larger reach in Asia and in Africa especially, expanding Chevron Texaco's reach. The acquisition is the sixth largest in the history of the US oil industry. Chevron Texaco beat out rivals Eni SPA (an Italian energy company) and China National Offshore Oil Corp.
One of the motivators for the acquisition was the enormous profits being taken in by Chevron and other major oil companies, as the price of oil has soared to all time highs. Further mergers are expected in the industry which has had a major consolidation the last ten years. The high prices are not encouraging extensive (and risky) new exploration, as some had hoped, but rather the purchase of proven reserves. Other buyout candidates include Occidental Petroleum, Anadarko Petroleum, and Devon Energy.
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