Exxon Mobil Corporation XOM has canceled its major oil and gas asset divestment plan in Australia's Bass Strait, per the Australian Financial Review. The latest move came after six weeks following the deadline for bids set by JPMorgan, a financial advisor. The energy major had put its stake in the giant Bass Strait oil and gas fields for divestment, located off the coast of Victoria, more than a year ago.
The company was looking for potential buyers for its interest in the assets in the 50-year-old Gippsland Basin joint venture. It has BHP Group BHP as the joint venture partner in the basin. Notably, this was the second time ExxonMobil was attempting to shed oil and gas operations in southeast Australia over the past few years. The sale was expected to be a lucrative opportunity for domestic companies to boost their portfolio. However, the aging fields in southeast Australia might bear significant decommissioning costs, which could have reduced its potential of fetching big bucks.
Moreover, the complex tax arrangements with ExxonMobil’s partner in the basin might have been added to the cons list by the potential buyers. Plus, the weak energy demand environment caused by the coronavirus pandemic has affected oil and gas prices. This might have made the assets less lucrative for the bidders. As such, the divestment process did not yield tempting offers.
However, ExxonMobil decided to keep the assets following an extensive evaluation of the properties. The assets in focus, including offshore platforms, Longford gas plants and Long Island Point plant, are crucial as these are major suppliers of gas in the east coast market.
ExxonMobil’s stock has lost 13.2% in the past six months against 1.5% growth of the industry.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Covanta Holding Corporation CVA and Ameresco, Inc. AMRC, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.
Ameresco’s bottom line for 2020 is expected to rise 21.7% year over year.
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