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Exxon Mobil Corporation (XOM) - $25 value - yours FREE >>
Marathon Oil Corporation (MRO) - $25 value - yours FREE >>
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ExxonMobil (XOM) May Have to Pay Higher Oil Royalty to Guyana
South American country, Guyana — which has become a major name in the upstream energy space in the past few years — is seeking to increase oil royalties from the profit-sharing agreement (PSA) with Exxon Mobil Corporation (XOM - Free Report) -led group, per reports. The company has Hess Corporation (HES - Free Report) and China's CNOOC Ltd. as partners in most of the discoveries.
ExxonMobil has made multiple world-class oil discoveries at the Stabroek Block, located off the coast of Guyana. With the latest oil discovery at the Whiptail-1 well, the company has added to its previously estimated 9 billion barrels of oil equivalent of recoverable resource in the block.
The discoveries made so far at the site have the potential to add at least six FPSO vessels that will likely be capable of yielding 800,000 barrels of oil per day (bpd) by 2025. Furthermore, production is expected to reach 1 million bpd by 2027. ExxonMobil expects multibillions of exploration potential to be still left in Guyana.
The country is likely to create a regulatory body for energy this year. The vice president of Guyana, Bharrat Jagdeo expects the new PSA to be tougher than the previous ones. The regulatory body is likely to address the deficiencies in the contracts. Also, Guyana is expected to select a company this month for signing a contract to market oil from the Stabroek block for one year.
Higher oil royalties from future production are expected to help the tiny country to further improve its economic situation. Also, the country is expected to update some of the other contract terms.
Price Performance
ExxonMobil has gained 32% in the year-to-date period compared with 22.6% rise of the industry it belongs to.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Marathon Oil Corporation (MRO - Free Report) and Equinor ASA (EQNR - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marathon Oil’s bottom line for 2021 is expected to surge 191.4% year over year.
Equinor’s bottom line for 2021 has witnessed three upward estimate revisions and no downward movement in the past 60 days.