ExxonMobil (XOM) to Divest Iraq Assets After Receiving Approval
Exxon Mobil Corporation’s XOM stake in the massive West Qurna 1 oilfield will be acquired by the Iraq National Oil Company after receiving approval from the country’s government for the acquisition.
Located in the southern part of Iraq, West Qurna 1 is one of the largest oilfields in the world, with expected recoverable reserves of more than 20 billion barrels. Operated by ExxonMobil, the oilfield has a production capacity of about 500,000 barrels per day.
In 2010, ExxonMobil was awarded a contract by Iraq to develop the West Qurna 1 oilfield. The company was among the first western oil explorers to enter Iraq as the country intended to redevelop its energy industry after years of conflict.
Last year, ExxonMobil was planning to divest its 32.7% stake in the West Qurna oilfield as part of plans to reduce debt and increase cash flow. At that time, the Iraq ministry of oil claimed that the country was aiming to acquire the stake itself.
Asset divestments are considered to be a crucial factor of ExxonMobil’s strategy to reduce debt and maintain its hefty dividend. XOM's divestment of its stake in West Qurna 1 would follow its 32% interest sale last year in a key exploration block in Iraq’s Kurdistan region. Foreign interest in developing oil and gas fields in southern Iraq has declined significantly as the country, together with other top producers, hampers production to support prices.
Company Profile & Price Performance
Headquartered in Irving, TX, ExxonMobil is one of the leading integrated energy companies in the world.
Shares of ExxonMobil have outperformed the industry in the past six months. The stock has gained 16.9% compared with the industry’s 15.9% growth.
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Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Williams Companies, Inc. WMB, based in Oklahoma, is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing and transporting natural gas and natural gas liquids.
In the past year, the stock has gained 37.3% compared with the industry’s growth of 22.1%. Williams Companies' debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. Williams is also paying its shareholders an attractive dividend yield of nearly 6%. The company's board recently approved a new share repurchase program worth $1.5 billion, highlighting the commitment to shareholders.
Core Laboratories N.V. CLB is an oilfield services company that operates in more than 50 countries. The firm deals with providing reservoir management and production enhancement services to the oil and gas companies. Notably, Core Labs generated revenues of $487.3 million in 2020.
With the gradual recovery from the coronavirus-induced economic disruption, Core Labs issued an improving outlook for the current year’s U.S. land business and international growth opportunities. An uptick in client's activity coupled with the company's cost reductions is expected to generate incremental margins going ahead.
Halliburton Company HAL is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The company operates in over 80 countries.
In the past year, the stock has gained 28.3% compared with the industry’s growth of 20.1%. The overall depth of Halliburton’s global oilfield service franchise is evident from the fact that the company generated a free cash flow tally of more than $1.1 billion in a year as volatile as 2020. It followed it up with approximately $900 million of free cash flow in the first three quarters of 2021. Halliburton’s ample cash flows provide it with the flexibility to pursue a growth-oriented initiative.
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