Exxon to Sell Stake in West Qurna - Analyst Blog


U.S. oil major ExxonMobil Corporation ( XOM ) has proposed to divest over 50% of its 60% stake in Iraq's West Qurna-1 oilfield project to China's biggest energy firm, PetroChina Co. Ltd. ( PTR ), and Indonesia's Pertamina. The deal is likely to be completed in another two to three weeks.

As per Reuters, ExxonMobil intends to sell 25% of its stake to PetroChina and 10% to Pertamina. The company, operator of West Qurna-1 oilfield, had offered to sell its entire stake in 2012, following a conflict with Baghdad over contracts it signed with autonomous Kurdistan. These deals were considered illegal by the central government.

The company had set aside $50 billion for the development of the field which currently yields just below 500,000 barrels per day. Later, as the oil major planned to make more investments for the project, it decided to retain part of its stakes.

A final agreement is subject to ExxonMobil getting improved terms for its technical service contract at West Qurna-1. Though investments in southern Iraq face tough terms and narrow margins, Baghdad has offered to sweeten the deal, according to sources. However, details have not been disclosed.

ExxonMobil is the world's best-run integrated oil company given its track record of superior return on capital employed. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking a defensive name with continued dividend growth.

ExxonMobil carries a Zacks Rank #3 (Hold). However, there are other Zacks Ranked #1 (Strong Buy) stocks in the oil and gas sector - Range Resources Corp. ( RRC ) and Dril-Quip, Inc. ( DRQ )  - that appear more rewarding in the short term.

DRIL-QUIP INC (DRQ): Free Stock Analysis Report

PETROCHINA ADR (PTR): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DRQ , PTR , RRC , XOM



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