Exxon Mobil Corporation ( XOM Quick Quote XOM - Free Report) is reportedly contemplating to close the Slagenoil refinery in Norway. The refinery, with around 120,000 barrels per day of processing capacity, is expected to be converted into a fuel import terminal.
Built in 1961, the refinery is located at Slagentangen, on the west bank of Oslofjord inlet. It receives crude oil from the North Sea and exports 60% of the final production. Its output is estimated to address more than 50% of Norway’s total petroleum products consumption. The company is expected to consult with employees and authorities before taking a final decision. If the conversion project gets a green signal, the refinery will remain operational during the conversion period.
Importantly, with significant destruction of energy demand due to the coronavirus pandemic, Europe is witnessing reduced fuel demand and surplus refining capacity. The resultant travel restrictions have significantly affected fuel demand. Moreover, fuel markets in Europe are facing immense competition. Also, the rising usage of electric vehicles is shrinking fuel demand in Norway.
ExxonMobil's refinery operations were negatively impacted last year by the pandemic. Even in the fourth quarter, when the market was witnessing a recovery, it recorded lower margins in both U.S. and non-U.S. operations. Its refinery throughput averaged 3.8 million barrels per day (MMBbls/d), lower than the year-earlier level of 4.1 MMBbls/d.
The company is currently focusing more on profitable assets. Last month, it announced a long-term production outlook, with an intention of boosting profits and cash flows but decreasing upstream production. Importantly, the energy major anticipates its investments to generate more than 30% in returns. Also, overall investments in carbon capture are expected to rise in the coming days.
The stock has gained 30.7% in the past year compared with 15.5% rise of the
industry it belongs to. Zacks Rank & Other Stocks to Consider
Currently, ExxonMobil sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include
CrossAmerica Partners LP ( CAPL Quick Quote CAPL - Free Report) , Covanta Holding Corporation ( CVA Quick Quote CVA - Free Report) and Equinor ASA ( EQNR Quick Quote EQNR - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
CrossAmerica’s bottom line for first-quarter 2021 is expected to surge 166.7% year over year.
Covanta Holding’s bottom line for 2021 is expected to surge 109.5% year over year.
Equinor’s bottom line for first-quarter 2021 is expected to rise 111.8% year over year.
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