According to market sources, oil major ExxonMobil Corporation ( XOM ) plans to make a potential takeover bid of Kurdistan focused explorer Gulf Keystone Petroleum valued at £7 billion ($10.9 billion).
ExxonMobil has not confirmed or revealed any detail with respect to this news. Its bid offer values each share of Gulf Keystone Petroleum, which has made massive oil discoveries in the semi-autonomous Kurdistan province of Iraq, at 800 pence.
The U.K. based Gulf Keystone has holdings in one of the world's recently discovered major oil fields - Shaikan, nearly 50 miles north-west of Erbil, one of the major cities in the province. However, the regional government wants a giant oil company on board for proper fund management and further development of the field.
Per the sources, Gulf Keystone Petroleum might reject Exxon's offer, citing the bid price as undervalued. There are a number of other companies including China's Sinopec and Californian giant Chevron Corporation ( CVX ), which have shown interest and are following the developments between ExxonMobil and Gulf Keystone Petroleum.
ExxonMobil turned out to be the first among the giant oil companies to gain entry in Kurdistan, after it signed a deal in mid October to explore six areas. But the signing of this contract has angered the Baghdad government.
The world's largest publicly traded oil company, ExxonMobil, has made other significant discoveries including its Deepwater Hadrian North and South prospects in the Gulf of Mexico. Exxon management remains optimistic about this discovery and plans to work closely with other companies through joint ventures for maximum development and utilization of the resource.
The search for growth has pushed ExxonMobil into riskier regions like the Middle East where it may face geo political risks as a result of ongoing turmoil in the region.
ExxonMobil holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock.
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