Smaller, nimbler companies pioneered the U.S. shale boom. But as American production scales up, those frackers are losing ground to Big Oil, The Wall Street Journal reports.
Giant companies such as Chevron Corp. and Exxon Mobil Corp. are increasing shale production faster and with fewer complications than their smaller rivals. Their superior size and deeper pockets give them an edge in planning large drilling projects and locking in the pipeline and labor deals needed to ensure profitability.
Exxon doubled its shale rigs across the U.S. from the end of last year through September and became the most active driller in the country, according to industry tracker RigData. Chevron’s output in the Permian Basin of Texas and New Mexico rose 80% for the year ended in September, eclipsing some of the small producers that spent years building up their fracking positions.
Size also helps larger companies weather volatility in the oil markets, where U.S. crude prices have plunged more than 20% in the past month to about $56 a barrel. The bigger companies kept spending in check as oil rallied earlier in the year, making them less vulnerable to the recent selloff. As a result, Exxon shares have fallen only 4% in the past 30 days, compared with the 17% decline in the index of smaller producers, according to FactSet.
