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ExxonMobil (XOM) to Explore for Hydrocarbons Offshore Crete

Zacks Equity Research

Exxon Mobil Corporation XOM and TOTAL S.A. TOT recently received offshore oil and gas exploration licenses from financially-struggling Greece. The licenses will allow the companies to engage in hydrocarbon exploration offshore Crete in Greece’s Exclusive Economic Zone.

Notably, Hellenic Petroleum will create a consortium with ExxonMobil and TOTAL, and explore for oil and gas in two offshore blocks located at the south of Crete. Greek Prime Minister, Alexis Tsipras expects to get a clear view regarding the reserves under the blocks within two-four years of exploration.

The Crete offshore area spanning 40,000 square kilometres, which includes the licensed regions in discussion, is yet to be explored for oil and gas. With the current financial situation of the country, it expects to mirror the success of Israel and Cyprus. Greece’s prime minister Alexis Tsipras said, “Today, Greece is not only a country that is a critical energy hub in the Eastern Mediterranean and the Balkans but is also starting to implement a plan that ultimately aims to turn it into an energy-producing country.”

The plan was criticised by environmentalists as the project can affect marine life habitats. However, the prime minister promised strict environmental safeguards for the project to keep marine life intact.

The move, however, came at a time when political tension in the area is rising. In the Eastern Mediterranean region, natural gas resources off the coast of Cyprus are a cause of strained relations involving Cypriots and Turkey.

Price Performance

ExxonMobil has gained 11.2% year to date compared with 9.1% growth of the industry it belongs to.

Stocks to Consider

ExxonMobil currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Chevron Corporation CVX and Earthstone Energy, Inc. ESTE. While Chevron sports a Zacks Rank #1 (Strong Buy), Earthstone has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Chevron’s second-quarter 2019 earnings per share are estimated to rise 14% year over year.

Earthstone Energy’s 2019 revenues are estimated to rise 15% year over year.

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