An interesting question is whether Exxon’s famed investment discipline holds in the case of their recent $4 billion acquisition in Ghana.
Alan von Altendorf thinks they can't make a good return unless they sell the oil for $100/barrel. Presumably the company is reckoning on more oil in the field than current estimates suggest. But even if von Altendorf's calculations are off by a factor of two, it still seems to signal a change in philosophy for a company that has historically been extremely careful with its investments in order to maintain its position as a very low-cost producer.If I recall correctly, Exxon’s longtime breakeven hurdle was $22/bbl, so this would indeed signal a sizeable shift unless we are missing something. But then again, given that oil bottomed out around $35/bbl during the scariest recession the world has faced in a generation, so some change in worldview is certainly justified.
