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ExxonMobil Plans $1B Sale of Permian Assets Amid Shale Focus
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ExxonMobil Corporation (XOM - Free Report) ), the U.S. energy giant, is reportedly looking to sell a package of conventional oil assets in the Permian Basin, aiming to streamline its portfolio and focus on shale production. The transaction could potentially fetch around $1 billion, depending on oil prices at the time of the sale, according to a Bloomberg report.
XOM Puts Some Permian Assets on the Block
The assets are located in the Central Basin of the Permian, spanning across West Texas and Southeast New Mexico. These include older wells, which, while still producing stable quantities of oil, are considered less productive compared to the newer shale operations.
This move aligns with ExxonMobil’s strategy to optimize its asset portfolio by divesting from older, conventional assets and focusing on more profitable shale operations. The company has not disclosed the specific number of wells included in the sale but emphasized that the decision to explore market interest for these assets is a regular part of its business strategy.
ExxonMobil’s Shift Toward Shale Production
ExxonMobil's decision came on the heels of its acquisition of Pioneer Natural Resources earlier this year, which marked a significant push toward enhancing its shale production capabilities. Shale oil extraction, known for its lower costs and faster returns, is increasingly becoming the focal point for major oil companies as they seek to improve profitability and reduce exposure to volatile oil markets.
XOM’s exploration of market interest for select conventional assets in West Texas and Southeast New Mexico aligns with its ongoing strategy to assess and optimize its portfolio, according to the report.
Will the Sale Benefit XOM?
The potential sale is part of a larger trend in the oil and gas industry, where the total value of deals has doubled to $210 billion this year, according to data compiled by Bloomberg. This surge in transactions reflects a dynamic market where companies are continuously reshaping their portfolios to adapt to changing economic conditions and technological advancements.
For ExxonMobil, the shift from conventional to shale assets underscores its commitment to adapting to market demands and positioning itself for future growth. As the company moves forward with the sale, the outcome will likely depend on oil price movements and investor appetite for older, conventional oil-producing assets.
ExxonMobil’s planned sale of its Permian Basin assets signals a strategic movement toward more efficient and profitable shale production. As the company continues to refine its asset portfolio, this sale could provide valuable capital to further invest in its core operations, reinforcing its position in the evolving energy landscape.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
SM Energy is set to expand its oil-centered operations in the coming years with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for its shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.57. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.25. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
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ExxonMobil Plans $1B Sale of Permian Assets Amid Shale Focus
ExxonMobil Corporation (XOM - Free Report) ), the U.S. energy giant, is reportedly looking to sell a package of conventional oil assets in the Permian Basin, aiming to streamline its portfolio and focus on shale production. The transaction could potentially fetch around $1 billion, depending on oil prices at the time of the sale, according to a Bloomberg report.
XOM Puts Some Permian Assets on the Block
The assets are located in the Central Basin of the Permian, spanning across West Texas and Southeast New Mexico. These include older wells, which, while still producing stable quantities of oil, are considered less productive compared to the newer shale operations.
This move aligns with ExxonMobil’s strategy to optimize its asset portfolio by divesting from older, conventional assets and focusing on more profitable shale operations. The company has not disclosed the specific number of wells included in the sale but emphasized that the decision to explore market interest for these assets is a regular part of its business strategy.
ExxonMobil’s Shift Toward Shale Production
ExxonMobil's decision came on the heels of its acquisition of Pioneer Natural Resources earlier this year, which marked a significant push toward enhancing its shale production capabilities. Shale oil extraction, known for its lower costs and faster returns, is increasingly becoming the focal point for major oil companies as they seek to improve profitability and reduce exposure to volatile oil markets.
XOM’s exploration of market interest for select conventional assets in West Texas and Southeast New Mexico aligns with its ongoing strategy to assess and optimize its portfolio, according to the report.
Will the Sale Benefit XOM?
The potential sale is part of a larger trend in the oil and gas industry, where the total value of deals has doubled to $210 billion this year, according to data compiled by Bloomberg. This surge in transactions reflects a dynamic market where companies are continuously reshaping their portfolios to adapt to changing economic conditions and technological advancements.
For ExxonMobil, the shift from conventional to shale assets underscores its commitment to adapting to market demands and positioning itself for future growth. As the company moves forward with the sale, the outcome will likely depend on oil price movements and investor appetite for older, conventional oil-producing assets.
ExxonMobil’s planned sale of its Permian Basin assets signals a strategic movement toward more efficient and profitable shale production. As the company continues to refine its asset portfolio, this sale could provide valuable capital to further invest in its core operations, reinforcing its position in the evolving energy landscape.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company (SM - Free Report) , MPLX LP (MPLX - Free Report) and TechnipFMC plc (FTI - Free Report) . While SM Energy currently sports a Zacks Rank #1 (Strong Buy), MPLX and TechnipFMC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is set to expand its oil-centered operations in the coming years with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for its shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.57. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.25. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.