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ExxonMobil (XOM) in Doubt to Submit Bids for Guyana Assets

Zacks Equity Research
·3-min read

Exxon Mobil Corporation XOM is doubtful whether to bid for offshore areas in Guyana as the company is increasing production faster than intended, per a Reuters report.

Guyana has become one of the world’s hottest sources of oil and gas, with an estimated 11 billion barrels of recoverable oil discovered to date. The increasing number of discoveries in recent times provided for the possibility of Guyana becoming a major oil producer.

However, Guyana has insufficient financial stability to develop its natural resources. It is making every effort to decide how to distribute oil properties outside of ExxonMobil’s blocks. Hence, the country delayed a potential auction targeted for this year.

Guyana currently keeps less than 15% of the oil proceeds, while the ExxonMobil-led consortium keeps the remaining and bears the cost of developing the country’s oil infrastructure. Guyana is looking to hold an auction for unallocated exploration areas or hire a national oil company to form a partnership for producing oil from those properties.

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ExxonMobil made multiple world-class oil discoveries at the Stabroek Block, offshore Guyana. Starting producing in 2019, ExxonMobil controls overall production in the nation. The discoveries have turned Guyana into an emerging oil power. The company evaluates a wide range of global exploration opportunities, focusing on investments in advantaged assets.

ExxonMobil increased its production for the second time this year. Per the Ministry of Natural Resources, the company produced 390,000 barrels of oil equivalent per day (Boe/d). It plans to produce 380,000 Boe/d by the year-end, about 40,000 more than its initial 2022 target.

Price Performance

Shares of ExxonMobil have outperformed the industry in the past six months. The stock has gained 12.9% compared with the industry’s 0.4% growth.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

ExxonMobil currently carries a Zack Rank #2 (Buy).

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Natural Resources Limited CNQ is one of Canada’s largest independent energy companies that explores, develops and produces oil and natural gas. CNQ declared a special cash dividend on its common shares of C$1.50 per share recently, reflecting strength in its cash flows.

Canadian Natural Resourceshas witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value and Growth, and B for Momentum. CNQ is expected to see earnings growth of 75% in 2022.

Schlumberger Limited SLB is the largest oilfield services player, with a presence in every energy market across the globe. For 2022, SLB revised its revenue outlook upward to at least $27 billion.

Schlumberger has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company beat the Zacks Consensus Estimate for earnings in the prior four quarters, delivering an earnings surprise of 9.1%. SLB is expected to see earnings growth of 57.8% in 2022.

Cactus Inc. WHD is involved in manufacturing, designing and selling wellhead and pressure-control equipment. At the second-quarter end, Cactus had cash and cash equivalents of $311.7 million, which can provide it with immense financial flexibility. WHD has a strong balance sheet. It revealed that it has no bank debt outstanding as of Jun 30, 2022.

Cactus has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company beat the Zacks Consensus Estimate for earnings in the prior four quarters, delivering an earnings surprise of 12.7%. WHD is expected to see earnings growth of 143% in 2022.


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