In an interview on Friday, Bill Smead, the chief investment officer of Smead Capital, spoke with CNBC’s “The Exchange” about Exxon Mobil Corp.’s (XOM, Financial) potential $60 billion takeover of Pioneer Natural Resources Co. (PXD, Financial), which is its largest deal since 1999.
Smead said he hopes there is more consolidation in the industry as, despite the efforts to reduce oil growth, the commodity will still be necessary for the next several decades for both gasoline as well as generating electricity.
The guru noted that increasing opposition to fossil fuels around the world has resulted in the energy sector falling out of favor. As such, he believes many activist groups and regulators who are opposed to expansion efforts are “out of line” in their thinking since the bigger producers are growing their earnings and extending their productivity by buying out smaller operators as opposed to drilling new holes in the ground.
Smead added the federal government has only exacerbated the problem with its push for electric vehicles and alternative energy sources.
“They are all expecting the industry to die,” he said. “They are creating the problem. The people that are criticizing this are the ones that have created the problem. They are restricting the supply of the commodity and are only going to drive the prices higher as time goes forward.”
Oil prices spiked along with the broader market on Monday following the escalation in the Israeli-Palestinian conflict over the weekend as the militant group Hamas staged an invasion.
West Texas Intermediate crude oil future rose 3.80% to above $86 a barrel, while international Brent futures gained 3.80% to $87.80.
Watch the full clip from the interview below.
As of June 30, 13F filings for the Smead Value Fund (Trades, Portfolio) show it has positions in Occidental Petroleum Corp. (OXY, Financial), ConocoPhillips (COP, Financial), Ovintiv Inc. (OVV, Financial), APA Corp (APA, Financial) and Devon Energy Corp. (DVN, Financial).
