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ExxonMobil (XOM) Begins Sale Process of Texas Gas Properties

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Exxon Mobil Corporation (XOM - Free Report)  initiated the process to divest its natural gas properties in the Barnett shale field in northeast Texas, per a report by Reuters.

The move is part of ExxonMobil's plans to restructure its portfolio to focus on more productive assets. About three years ago, the company set a target to make $15 billion from asset divestments to reduce debt. XOM offered several U.S. and international assets for sale as fuel prices recovered from the pandemic-induced crisis.

The Barnett shale assets could be valued at $400-$500 million. The properties involve 2,700 wells, covering about 182,000 acres in north Texas. In the first half of 2021, production from the properties reached 227 million cubic feet per day, which has declined by almost 50% since 2016.

ExxonMobil plans to continue operating the assets during the marketing process. So far, there are no agreements on the sale. XOM expects to secure bids in December and aims to close a potential sale transaction in January 2022. ExxonMobil is also planning to divest assets in Africa, Asia and Europe.  XOM intends to focus its efforts on production ventures in Guyana, offshore Brazil and the Permian Basin.

ExxonMobil incurred a significant $22.4 billion loss in 2020. A large portion of the loss came from $19.3 billion in write-downs in the last few months of the year as ExxonMobil marked down the value of the natural gas fields acquired when gas prices were significantly higher.

In August 2021, ExxonMobil launched the sale of its shale gas properties in the United States to reduce debt and discard unwanted assets. The sale included 4,104 non-operated and 844 operated wells in the Fayetteville shale in Arkansas. The assets were part of the natural gas projects, which reported lower production capacity and reduced market value.

Company Profile & Price Performance

Headquartered in Irving, TX, ExxonMobil is one of the leading integrated energy companies in the world.

Shares of ExxonMobil have underperformed the industry in the past three months. The XOM stock has gained 21.1% compared with the industry's 19% growth.

 

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Zacks Rank & Other Stocks to Consider

ExxonMobil currently has a Zack Rank #2 (Buy).

Some other top-ranked players in the energy space are Diamondback Energy, Inc. (FANG - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and SM Energy Company (SM - Free Report) and Continental Resources, Inc. , carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Midland, TX-based Diamondback is an independent oil and gas exploration and production company. FANG primarily focuses on the Permian basin, with around 414,000 net acres. The upstream operator focuses on growth through a combination of acquisitions and active drilling in America's hottest and lowest-cost shale region. As of 2020-end, Diamondback held 1,316 million barrels of oil equivalent in proved reserves.

In the past year, shares of Diamondback have increased 198% compared with the Zacks Exploration and Production Industry's growth of 148.3%. FANGis expected to see an earnings growth of 268.1% in 2021. The company has also witnessed 10 upward revisions in the past 30 days. Diamondback's board of directors recently declared a quarterly dividend of 50 cents per share for the third quarter, indicating an 11.1% hike in its quarterly payout from the previous level of 45 cents.

SM Energy is one of the most attractive players in the exploration and production space, which engages in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. SM's operations focus on the Permian basin, and the South Texas and Gulf Coast region. SM has total 443,188 net acres under its possession, of which 33.5% is developed.

In the past year, shares of SM Energy have increased 1000.1% compared with the industry's growth of 148.3%. SM's earnings for 2021 are expected to surge 695.7% year over year. SM currently has a Zacks Style Score of A for Growth and B for Momentum. The upstream energy player beat the Zacks Consensus Estimate thrice in the last four quarters and missed once, ending with an earnings surprise of 126.3%, on average.

Oklahoma City, OK-based Continental Resources is an explorer and producer of oil and natural gas. CLR operates resources across the east, south and north areas in the United States.  Continental Resources' strategic water assets add huge value to its operations in Bakken and Oklahoma. As of Dec 31, 2020, CLR's estimated proved reserves were 1,103.8 MMBoe.

In the past year, shares of Continental Resources' have increased 223.4% compared with the industry's growth of 148.3%. CLR's earnings for 2021 are expected to surge 484.6% year over year. CLR currently has a Zacks Style Score of B for Value and A for Growth. Notably, CLR's board of directors increased its quarterly dividend payment to 20 cents per share from 15 cents in the previous quarter. Continental Resources also resumed its existing stock repurchase program. CLRalready executed $65 million of share repurchases in the September-end quarter, while $618 million of the share-repurchase capacity remains available.


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