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ExxonMobil-Grupo to Penetrate Mexican Fuel Business

Zacks Equity Research

ExxonMobil Corporation XOM is planning to reap benefits from Mexico’s new energy policy regime. The company is partnering with retailer — Grupo Orsan — to open Mobil stations in the country.

In December, ExxonMobil plans to open eight Mobil-branded service stations in Querétaro as part of its entry in Mexico’s fuel market. In aggregate, the company intends to open 50 Mobil stations in the Bajio region by the end of first-quarter 2018.

Grupo Orsan will operate the new Mobil-branded stations. The supplies of gasoline and diesel will be transferred from ExxonMobil’s refineries in Texas via rail. Two private fuels terminals located in San Luis Potosi and San Jose Iturbide will be used for this purpose.

Being the first company to capitalize on Mexico’s new energy model, ExxonMobil will benefit by offering an integrated product offering in the entire fuels value chain. Over the next decade, the company plans to invest $300 million in fuel logistics, product inventories and marketing in Mexico.

ExxonMobil’s access to Mexican markets will help it promote Mobil-branded stations and Synergy-branded fuels along with most advanced fuel formulations. ExxonMobil’s Synergy product line enhances engine-cleaning power, improves engine performance, reaction and fuel economy against gasoline meeting lowest Mexican government standards. Mobil Synergy Supreme+, Mobil Synergy Extra and Mobil Synergy Diesel are some of the brands under which the fuels will be promoted.

A Guaranteed Fuels program will be initiated by ExxonMobil to help assure customers through regular visits to stations. This will also guarantee that the fuels meet ExxonMobil’s strict quality requirements and are being sold in accurate quantities. An independent company that specializes in scrutiny, product testing and qualifications will monitor the program.

ExxonMobil presence in Mexico dates back to over 13 decades. The company has had other businesses and sales in the country including chemicals and Mobil-branded lubricants as well as interest in oil and gas exploration, where the company anticipates persistent growth.

Price Performance

Shares of the company have gained 4.7% compared with the industry’s rally of 7.8% in the last three months.

Zacks Rank & Other Key Picks

ExxonMobil currently carries a Zacks Rank 2 (Buy). Other prospective players in the energy sector include Holly Energy Partners, LP HEP, SunCoke Energy Inc SXC and Northern Oil and Gas Inc NOG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners, owner and operator of refined product pipelines and terminals, delivered an average positive earnings surprise of 57.14% in the preceding quarter.

SunCoke Energy produces metallurgical coke in the United States. The company delivered an average positive earnings surprise of 113.52% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average earnings surprise of 175.00% in the last four quarters.

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