U.S. energy behemoth
Exxon Mobil Corp.
) announced plans to install a new processing unit at the Slagen
refinery in Norway, for production of high quality vacuum gas oil
feedstock. This would be used to create finished products such as
diesel. The new unit will improve the facility's overall crude
distillation process by replacing production of heavy fuel oil with
lighter, higher-value gas oil.
This project, coupled with the recently announced major upgrade
at the company's Antwerp facility, will further strengthen
ExxonMobil's integrated downstream portfolio in Europe to better
compete in the challenging refining industry.
ExxonMobil is investing for the future in its Slagen unit
despite low refinery margins and industry-wide losses in Europe.
This project demonstrates ExxonMobil's long-term view, with
strategic investments in advantaged refineries to more successfully
face the challenging industry environment. The company is also
evaluating investments in other advantaged assets in its global
The world's largest publicly traded oil company, ExxonMobil is
engaged in oil and natural gas exploration and production,
petroleum products refining and marketing, chemicals manufacture,
and other energy-related businesses. Approximately four-fifth of
Exxon Mobil's earnings come from its operations outside the
Exxon Mobil is one of the world's best-run integrated oil
companies given its track record of superior returns on capital
employed. The energy giant has long been a core holding for
investors seeking a defensive name with continued dividend growth.
Exxon Mobil is fairly active in its investment program. The company
plans to spend about $185 billion over the next five years, up 29%
over the last five-year period.
The strength of Exxon Mobil lies in its balanced operations,
strong financial flexibility, continued efficiency and cost
control. The company's efforts to build an unconventional resource
portfolio both in North America and overseas are aimed at
increasing production through a wider exposure to large energy
resources with a long reserve life and low field declines. However,
we are skeptical about the company's near-term performance due to
its muddled refining fortunes.
Exxon Mobil currently holds a Zacks Rank #3 (Hold). However, in
the near term one can consider better-ranked stocks like Pioneer
Energy Services Corp. (
), TransAtlantic Petroleum Ltd. (
) and Sunoco Logistics Partners L.P (
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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