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ExxonMobil (XOM) Announces 5th Oil Production Project in Guyana

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Exxon Mobil Corporation (XOM - Free Report) is gearing up to approve its fifth oil production project in Guyana and is looking to take additional exploration acreage, per a Reuters report.

The fifth development, located in the Uaru oilfield, is expected to extract 250,000 barrels of oil per day at its peak. This would be ExxonMobil’s largest and most expensive project.

The development is expected to cost $12.68 billion, 27% more than the company’s fourth development. According to the Guyana government’s estimate, its oil would start flowing in 2027 and continue for two decades.

Guyana is one of the hottest sources of oil and gas, with about 11 billion barrels discovered so far. A consortium managing the country’s crude production expects to extract 1.2 million barrels per day (bpd) by 2027, nearly triple of last year’s peak production.

Guyana estimates its fields to hold 25 billion barrels and aims to produce 1.64 million bpd by the end of the decade. The project would require up to 600 workers at the peak of drilling activity and hire up to 160 people later. The project is expected to release 1 million tons per year of carbon dioxide emissions.

ExxonMobil submitted a development plan for the Uaru oilfield. If the plan is approved by the Guyana government, the company and its partners could sanction spending on the project. It will consider bids on new blocks as Guyana is due to hold its first competitive auction for new exploration areas.

In 2022, Guyana revealed a fiscal regime that raised the country’s share of oil riches to 27.5% from 14.5% through a combination of royalties and shared production. The government of Guyana will continue to employ apparent and innovative practices to manage the nation’s hydrocarbon resources to attain maximum returns and improve the livelihoods of all citizens.

Price Performance

Shares of ExxonMobil have outperformed the industry in the past six months. The stock has gained 27.9% compared with the industry’s 24.4% rally.

 

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Zacks Rank & Key Picks

ExxonMobil currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector can look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oceaneering International, Inc. (OII - Free Report) is one of the leading suppliers of offshore equipment and technology solutions to the energy industry. OII’s third-quarter 2022 adjusted profit of 23 cents per share beat the Zacks Consensus Estimate of 13 cents.

OII is expected to see an earnings rise of 82.4% for 2022. For 2022, Oceaneering projects consolidated EBITDA of $215-$240 million and continued significant free cash flow generation of $25-$75 million.

Helmerich & Payne Inc. (HP - Free Report) is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most efficient drilling fleet. HP’s third-quarter fiscal 2022 adjusted profit of 27 cents per share beat the Zacks Consensus Estimate of 5 cents.

Helmerich & Payne is expected to see an earnings surge of 280% in 2022. HP boasts a strong balance sheet, carrying $542.6 million in long-term debt. The company’s debt-to-capitalization stands at just 16.4% compared with many of its peers that are hugely burdened with debts, accounting for around 50% of their total capital structure.

Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States. MUSA’s third-quarter 2022 earnings per share of $9.28 beat the Zacks Consensus Estimate of $7.82.

Murphy USA is expected to see an earnings surge of 80.9% in 2022. MUSA is committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer approved a repurchase authorization of up to $1 billion, which can be completed by Dec 31, 2026.

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