Exxon Mobil Corporation (XOM) & A Major Challenge

According to estimates by Wood Mackenzie, the consultancy, annual development costs in offshore Latin America and sub-Saharan deepwater are rising at between 5% and 10% a year. Â

And according to estimates by Bernstein Research, production costs among the 50 largest listed oil and gas companies globally surged 26% year over year in 2011, bringing their marginal costs — the expenses associated with producing the last barrel — to a whopping $92 per barrel that year.

The trend is undeniable: The marginal barrel of oil is now increasingly being extracted from harder-to-reach and more expensive-to-drill locales, as opposed to the conventional Saudi fields in days of yore.

And with marginal costs heading toward $100 a barrel, the floor beneath oil prices will probably continue to edge higher, with one resounding implication for the future of energy — cheap oil isn’t just hiding temporarily; it’s gone forever.

The article ExxonMobil: $4 Billion Under the Sea originally appeared on Fool.com is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron, Petrobras, Statoil, and Total.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.