Changing faces: Mergers, acquisitions and upstarts

The years between 1986 and 2000 saw major changes to the structure of the upstream industry, with a wave of mega-mergers and the emergence of some of today’s best known independents.

In a rather ironic twist, the century closed with the merger of two companies that could trace their origins back to legendary oilman John D. Rockefeller, whose Standard Oil was broken up into 34 unrelated companies—earlier in the century after years of litigation—over antitrust concerns.

The union of Exxon Corp. (formerly Standard Oil Company of New Jersey) and Mobil Corp. (whose ancestors were the Standard Oil Company of New York and Socony-Vacuum Oil Company) was finalized on Nov. 30, 1999, giving birth to Exxon Mobil Corp. “This merger will enhance our ability to be an effective global competitor in a volatile world economy, and in an industry that is more and more competitive,” Lee Raymond and Lou Noto, chairmen and CEOs of Exxon and Mobil, respectively, said at the time. British Petroleum also was active during the period. In 1998, the company agreed to buy Amoco Corp. (formerly the Standard Oil Company of Indiana) for $43.2 billion. In 2000, the newly formed BP Amoco acquired Atlantic Richfield Company (ARCO) for $27 billion and changed its name to BP plc.

On the service-and-supply side of the industry, the era kicked off with the unification of Baker International Corporation and Hughes Tool Company on April 3, 1987. The merger gave rise to Baker Hughes Incorporated, which was organized into three groups with a total of 21 divisions. In 1990, Baker Hughes acquired Eastman Christensen Company, a maker of directional and horizontal drilling equipment, and in 1992 the Eastman Christensen division was merged with the Hughes Tool Company division to form Hughes Christensen. The other notable deal of the era was National Supply’s merger with USS Oilwell to form National Oilwell in 1987. The company would later merge with Varco to form National Oilwell Varco and is now known as NOV.

Meanwhile, the era also saw the emergence of a new generation of independent producers. Toward the start of the era, the late Aubrey McClendon and Tom L. Ward formed Chesapeake Energy in 1989 with an investment of $50,000. The era closed with the emergence of EOG Resources. In 1999, EOG, formerly Enron Oil & Gas Company, adopted its new name and declared its independence from Enron Corp.