Exxon to Trim West Qurna Stake - Analyst Blog
U.S. energy behemoth,
) is expected to trim its holdings in the the West Qurna-1 oil
field in Iraq. The company currently holds the majority stake of
60% in the field while a minority stake of 15% is being held by
Royal Dutch Shell plc
). Located in the south of Iraq, near the city of Basra, the West
Qurna oil field has estimated reserves of 8.7 billion barrels.
The move towards dilution of stake will serve the dual purpose of making funds available for the development of the oil field along with taking steam out of the ongoing political tussle over the ownership of the field.
ExxonMobil's participation in West Qurna remains contested as the Iraqi authority is concerned over the company's venture to tap reserves in the country's semi-autonomous Kurdistan region. The U.S. super major turned out to be the first among the oil giants to gain entry into Kurdistan, after it signed a deal in Oct 2011 to explore six areas. But the signing of this contract annoyed the Baghdad government as it considers the pact as illegal.
In the revamped setup for the oilfield, ExxonMobil will continue to remain the operator while new partners- China's biggest energy firm PetroChina Co. Ltd. ( PTR ) and Indonesia's state-owned Pertamina - would join the fray.
Production from the field is expected to rise to 540,000 barrels per of oil per day (BPD) by mid 2013 from the current 480,000 BPD. With 36 new wells scheduled to come online by the end of 2013, production will likely reach 600,000 BPD. It will eventually hit 900,000 BPD in 2015.
Exxon Mobil is the world's largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon Mobil's earnings come from its operations outside the U.S.
Exxon Mobil is one of the world's best-run integrated oil company 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% from the last five-year period.
Capital expenditure covers as many as 21 important oil and gas projects currently under the anvil and are estimated to accumulate over 1 million net oil-equivalent barrels per day by 2016. It includes the Kearl Oil Sands development project in Canada, four in West Africa and Kashagan Phase 1 in Kazakhstan. Exxon is also engaged in a large liquefied natural gas project in Papua New Guinea, which is expected to begin deliveries in 2014. It will unearth more oil from the development of the Hebron oil field, off the shore of Canadian provinces Newfoundland and Labrador. The development will help in recovering over 700 million barrels of oil and the platform is expected to yield its first oil towards the end of 2017.
Exxon Mobil holds a Zacks Rank #3 (Hold). However, in the near term, stocks like Abraxas Petroleum Corp. ( AXAS ), with Zacks Rank #1 (Strong Buy), are expected to outperform the market over the next few months.
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