Exxon CEO says low natural gas prices not sustainable
(Wall Street Journal; June 27) - ExxonMobil is making "no money" on U.S. natural gas due to prices that have fallen below the cost of production, CEO Rex Tillerson said June 27. U.S. prices - which fell below $2 per million Btu earlier this year to the lowest level in a decade - aren't sustainable, as companies won't be able to continue drilling unless prices rise, Tillerson said during a breakfast event in New York. "We are losing our shirts," he said. Prices have recovered a bit since the low, and closed at $2.88 June 27.
The comments from Exxon's chief come amid a massive U.S. gas-supply glut that has kept prices depressed and helped to reduce energy costs for many consumers and businesses. In recent months, demand for natural gas from utilities has surged as firms turn to gas instead of more expensive coal to supply electricity.
Exxon's $26 billion acquisition of XTO Energy in 2010 made the company the largest producer of natural gas in the U.S. Tillerson said last month during Exxon's shareholder meeting that he had "no regrets" on the timing of the XTO purchase, which occurred just before the steep slump in U.S. gas prices. But he acknowledged June 27 that Exxon had "grossly underestimated" the speed of the U.S. natural gas boom.