Big Oil Making Big Acquisitions To Shore Up Declining Reserves

Faced with dwindling oil and natural gas holdings, and record prices, energy companies are thirsty to add to reserves. They can do it the old-fashioned way by exploring and drilling. Or, if they’re in a hurry, they can simply buy rivals with proven reserves in the ground.

A spate of acquisitions shows that many players are in a hurry. Last week, ConocoPhillips (COP) agreed to buy Burlington Resources (BR) for $36.5 billion, nearly doubling its natural gas production.
What’s behind this trend?

“The most obvious factor is the huge amount of cash and borrowing capacity that has built up in the larger companies,” said Jim Norman, senior writer with Platts, an energy intelligence service.

Sky-high energy prices have sent cash flying into the coffers of energy companies like never before. And the higher value of their oil and natural gas reserves is money in the bank to lending officers.

With few opportunities to hike growth, many big oils have been buying back their stock