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ExxonMobil (XOM) to Exit From Romanian Neptun Deep Project

Zacks Equity Research

Exxon Mobil Corporation XOM is reportedly considering leaving the Romanian Neptun Deep offshore project, which is located in the Black Sea. The project has been delayed due to the failure of obtaining timely regulatory approvals. The previous tax regime also created hurdles.

While the largest publicly-traded U.S. energy company possesses a 50% operating interest in the project, Romanian OMV Petrom holds the rest. OMV Petrom is controlled by Austrian company OMV Aktiengesellschaft OMVJF. ExxonMobil has reportedly commenced providing necessary information to potential parties.

Romanian Prime Minister Ludovic Orban expects state-run Romgaz to join the consortium in the Neptun Deep. He wants the buyer to come from the European Union, NATO. ExxonMobil intends to advance the project, while the search for buyer is on.

This divestment will boost the campaign to get rid of non-core assets, while streamlining its portfolio. Per reports from last November, ExxonMobil is looking to divest around $25 billion of hydrocarbon assets through 2025 in order to focus on more profitable projects. The assets to be sold — which are located in Asia, Africa and Europe — are expected to increase competitiveness of the company’s portfolio. Its latest reported divestment program targets $15-billion asset sell-off by 2021. This will likely help the company to finance growth projects in Guyana, Brazil and U.S shale plays.

Notably, it expects a gain of $3.4-$3.6 billion from the recent divestment of Norwegian assets to Var Energi, which is jointly owned by private-equity firm Hitecvision and integrated energy firm Eni SpA E. This is expected to give a boost to fourth-quarter 2019 results. The company’s recent regulatory filing revealed that gains from this divestment can offset lower margins from chemicals and refining businesses in the December quarter of 2019.

Price Performance

ExxonMobil has lost 4.4% in the past year compared with 3.7% decline of the industry it belongs to.

Zacks Rank and Stock to Consider

Currently, ExxonMobil has a Zacks Rank #3 (Hold). A better-ranked stock in the energy sector is Repsol SA REPYY, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Repsol’s bottom line for 2020 is expected to rise 51% year over year.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Eni SpA (E) : Free Stock Analysis Report
 
OMV AG (OMVJF) : Free Stock Analysis Report
 
Repsol SA (REPYY) : Free Stock Analysis Report
 
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