<
--------------
STRATFOR.com
--------------
THE INTERNET SOURCE FOR GLOBAL INTELLIGENCE
If it’s in the news, it’s too late...
Bigger Not Necessarily Better for ConocoPhillips
November 28, 2001
Summary
After years of proclaiming the merits of corporate bachelorhood, U.S. oil majors Conoco Inc. and Phillips Petroleum Co. are getting hitched. But the future of ConocoPhillips is far from assured despite strong refining operations and the minimal fuss expected from anti-trust regulators. Unlike the other energy supermajors, ConocoPhillips will lack presence in the natural gas industry. It will be in no danger of dying, but it cannot be an industry mover and shaker in the years ahead.
From left, Archie W. Dunham, Conoco CEO, and Jim Mulva, Phillips CEO.
Photo Credit: Phillips Petroleum.
Analysis
Conoco Inc. and Phillips Petroleum Corp. announced Nov. 18 that they will formally merge operations. The combined company will be the sixth-largest energy firm in the world and the third-largest in the United States.
Despite longtime efforts by both companies to remain independent, Conoco and Phillips will make a nice fit. Both hold extensive production and refining assets and have little geographic overlap, and this will ease federal regulatory approval. But a cheerful marriage will not greatly improve either company's prospects. ConocoPhillips will survive but will not thrive in an energy industry where natural gas is fast becoming king.
For competitors -- such as No. 1 ExxonMobil and No. 2 British Petroleum -- the merger is both bad and good. On one hand, it spells a lost opportunity to acquire the attractive refining capacities of either Conoco or Phillips and thus become a bigger threat within the industry. The combined company is now much too big for anyone else to absorb. But its lack of diversity means that even with its new girth, it will remain the meekest of the global oil giants.
+++++++ NOTICE +++++++
This is an abbreviated version of a full-length STRATFOR report previously seen by our Members. To access STRATFOR's complete range of in-depth, objective intelligence and analysis on the globe, including our award-winning daily full text and graphics reports, click here and become a Member today!
+++++++ NOTICE +++++++
(Story Source)
(c) 2001 Stratfor, Inc.
Dan
Bigger Not Necessarily Better for ConocoPhillips . . .