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ExxonMobil (XOM) Completes Barnett Shale Asset Divestment

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Exxon Mobil Corporation (XOM - Free Report) completed the divestment of its operated and non-operated Barnett Shale gas assets in Texas to BKV Corporation.

The transaction involved $750 million in cash, along with additional payments contingent on future natural gas prices.

Per the terms of the deal, BKV Corp acquired 160,000 net acres, primarily situated in the Tarrant, Parker and Johnson counties. The company also obtained additional smaller positions in other counties.

The acquired upstream assets include low decline wells, which are favorable to generate steady cash flow and high average working interests of about 93% in more than 2,100 wells. The acquisition also comprised 1,270 kilometers of gathering pipelines, compression and processing midstream infrastructure.

Following the deal completion, BVK Corporation’s total production capacity is estimated to be 900 million cubic feet equivalent per day. Notably, the company owns more than 7,500 producing wells across 487,000 net acres.

The extensive synergistic opportunities will enable BVK Corporation to work toward certifying responsibly sourced gas at the wellhead through a credible third party and providing additional access to major Gulf Coast markets.

ExxonMobil had been operating in the Barnett Shale reliably and efficiently for almost two decades. The divestment supports ExxonMobil’s strategy to focus on more profitable assets with the lowest cost of supply.

Asset divestments are crucial components of ExxonMobil’s strategy to optimize cash management. In 2018, the company established a goal to raise $15 billion from asset divestments to reduce debt and focus on low-cost oil production. Notably, it is halfway toward achieving its goal.

ExxonMobil currently carries a Zack Rank #3 (Hold). Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources (AR - Free Report) has positioned itself among the fast-growing natural gas producers in the United States. The leading natural gas producer is expecting a free cash flow yield of 25% in 2022, which could be the highest among Appalachian players.

Antero Resources is targeting a capital return program of 25-50% of free cash flow annually, beginning with the implementation of the share repurchase program. The company’s board authorized a share repurchase program of up to $1 billion of outstanding common stock.

Alberta-based Suncor Energy, Inc. (SU - Free Report) is Canada’s premier integrated energy company. The company hiked its dividend by 12% to 47 Canadian cents per share and increased the buyback authorization to roughly 10% of its public float.

Suncor has strong liquidity to manage through the commodity price cycle. The company has debt maturities of a mere C$1.8 billion during 2021-2022 and sits on more than C$4 billion in total liquidity. Further, Suncor has cash and cash equivalents of C$2.1 billion. The company’s robust liquidity position will allow it to sustain its dividend, even if oil prices stay lower for longer.

Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States. MUSA’s unique high-volume low-cost business model helps it retain high profitability, even in the fiercely competitive retail environment.

MUSA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a repurchase authorization of up to $1 billion, which will commence once the existing $500-million authorization expires and be completed by Dec 31, 2026. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.