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ExxonMobil Anticipates Higher Production from Cepu Block

ExxonMobil CorporationXOM expects output at Cepu block in Indonesia to increase to 200,000 barrels per day (bpd) from the current production level of 185,000 bpd.

However, the increase in production is subject to approval by the government as well as environmental impact assessment.

ExxonMobil faced several obstacles and challenges while developing Cepu, which included a worker dispute that reduced output last August.

Cepu is Indonesia's biggest oil and gas find in the last 10 years. Therefore, yield from the Banyu Urip project in the Cepu block in East Java province is pivotal for Indonesia's long-term efforts. This includes meeting the growing domestic oil demand as production declines at other ageing fields.

In 2015, crude production from Cepu more than tripled from 2014 and touched 130,000 bpd in December. At the same time, ExxonMobil commenced operations at the project's central processing facility.

ExxonMobil, operates the Banyu Urip project in partnership with Indonesian energy company, Pertamina. Per Indonesia's upstream oil and gas regulator, SKKMigas, the government needs to assess the potential production increase from the Cepu block since it would involve an increase in expenses.

In the first quarter of 2016, Indonesia's average daily crude output jumped to 835,000 bpd from an average daily output of 785,000 bpd in 2015. The upside was mainly attributable to increased output from Banyu Urip.

ExxonMobil is the world's best run integrated oil company given its track record of high return on capital employed. The company's strength lies in its balanced operations, strong financial flexibility and continuous efficiency and cost control.

Currently, ExxonMobil carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include CVR Refining, LP CVRR , Murphy USA Inc. MUSA and Braskem S.A. BAK . All these stocks sport a Zacks Rank #1 (Strong Buy).

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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 Nasdaq, Inc.


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

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