ExxonMobil (XOM) Executes SPA for PNG LNG Project With BP
Per Oil Search Limited, Exxon Mobil Corporation XOM, co-venturer and operator of PNG LNG project in Papua New Guinea, announced a mid-term LNG sale and purchase agreement (SPA) with BP plc BP.
Per the SPA, about 0.45 million tons of liquefied natural gas per annum (mtpa) will be delivered to BP for the initial three-year period, which will gradually rise to about 0.9 mtpa for the final two contract years. The contract is expected to begin in August 2018.
With this deal, the total contracted volumes from the project will reach 7.5 mtpa. About 7.0 mtpa of PNG LNG’s annual output is already committed under long-term contracts to JERA, Osaka Gas, Sinopec as well as CPC and PetroChina Company Limited PTR.
Additionally, ExxonMobil, on behalf of the PNG LNG project participants, is in talks with various parties for prospective mid-term LNG supply agreements in place of spot sales for supply of about 0.45 mtpa. These agreements are anticipated to be closed in the near term.
No value for the deal has been disclosed by the parties.
About PNG LNG
The PNG LNG project, valued at $19 billion, is an integrated development that is marketing the gas resources of Papua New Guinea. The operations comprise gas production and processing facilities, onshore and offshore pipelines as well as liquefaction facilities.
Commissioned in mid-2014, the project supplies liquefied natural gas to customers in Asia. In 2017, the project produced 8.3 mtpa of LNG, up 20% from the original design specification of 6.9 mtpa.
The co-venturers of the project include ExxonMobil, Oil Search, Kumul Petroleum Holdings Limited, Santos Limited, JX Nippon Oil & Gas Exploration and Mineral Resources Development Company Limited, holding 33.2%, 29%, 16.8%, 13.5%, 4.7% and 2.8%, respectively.
Price Performance
ExxonMobil has underperformed the industry in the past year. The company’s shares have gained 2.4% compared with the industry's 13.3% rise.
Zacks Rank & Stocks to Consider
ExxonMobil currently carries a Zacks Rank #3 (Hold).
A better-ranked player in the same sector is Petroleo Brasileiro S.A. PBR, or Petrobras, which flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.
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