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ExxonMobil (XOM) to Exit Equatorial Guinea & Focus on Guyana

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Exxon Mobil Corporation (XOM - Free Report) announced its decision to exit Equatorial Guinea in the second quarter of 2024, marking the end of nearly three decades of oil drilling activities in the country.

The oil major will transfer its remaining investments to the local government, concluding a chapter that transformed the small West African nation into a member of the Organization of the Petroleum Exporting Countries.

The move aligns with ExxonMobil’s long-term strategy, focusing on the fastest-growing, lowest-cost opportunities in regions, such as Guyana and the U.S. Permian Basin.

Equatorial Guinea faced significant challenges in attracting investments to revive its oil sector. The decline in output from key assets like the Zafiro field, once a prolific source of crude, underscores the challenges inherent in sustaining long-term production in the region.

The Zafiro field, which yielded more than 1 billion barrels over two decades, now faces diminishing returns, further emphasizing the rationale behind ExxonMobil's strategic exit from the region.

ExxonMobil’s CEO, Darren Woods, has emphasized redirecting capital spending toward the most promising prospects, particularly in Guyana, boasting premium oil assets. Exxon Mobil, along with its partners, is experiencing significant success in Guyana, with three projects already exceeding their designed production capacity, collectively yielding 645,000 barrels of oil per day.

XOM's exit from Equatorial Guinea reflects its evaluation of risk-reward profiles. Despite challenges in the country's oil sector, this move initiates discussions about the region's energy future and changes in global oil investment dynamics.

Zacks Rank & Stock to Consider

Currently, ExxonMobil carries a Zack Rank #3 (Hold).

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

Subsea 7 S.A. (SUBCY - Free Report) helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.

The Zacks Consensus Estimate for SUBCY’s 2024 EPS is pegged at 91 cents. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. SUBCY’s 2024 earnings are expected to soar 277% year over year.

Vaalco Energy (EGY - Free Report) is an independent energy company principally engaged in the acquisition, exploration, development, and production of crude oil and natural gas.

The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $1.49. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days. The company’s earnings for 2024 are expected to surge 325.7% year over year.

Energy Transfer (ET - Free Report) is a publicly traded limited partnership focused on diverse energy assets in the United States. Its core operations involve natural gas midstream services, transportation, storage, crude oil facilities and marketing assets.

The Zacks Consensus Estimate for ET’s 2024 EPS is pegged at $1.22. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. The company’s earnings for 2024 are expected to rise 18% year over year.

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