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ExxonMobil (XOM) Nears Deal to Sell Adriatic LNG Stake to Vitol
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Exxon Mobil Corporation (XOM - Free Report) and QatarEnergy are reportedly in advanced discussions to divest their majority stake in Adriatic LNG, Italy’s largest liquefied natural gas (LNG) import terminal, to Vitol, per a Reuters report.
This transaction could mark a pivotal shift for Vitol, granting it a substantial role in the European LNG market at a time when Italy’s LNG inflows are witnessing an upward trend.
Adriatic LNG, officially known as Terminale GNL Adriatico Srl, is strategically positioned off the Adriatic coast in northern Italy and serves as the nation’s main LNG import facility. ExxonMobil, through its subsidiary ExxonMobil Italiana Gas, currently owns a 70.7% share of the terminal. The remaining ownership is split between a QatarEnergy unit holding a 22% stake and the Italian gas grid operator Snam, which possesses 7.3%.
The divestiture aligns with ExxonMobil’s broader strategy to offload non-core assets to streamline operations and focus on its most lucrative ventures. The sale process, initiated last year, attracted attention from several institutional investors and infrastructure funds, including BlackRock, the world’s largest asset manager. Initially, the transaction was anticipated to value Adriatic LNG at approximately $868 million (800 million euros).
However, as of the end of 2023, BlackRock had exited the discussions, leaving Vitol, through its energy storage arm VTTI, as a frontrunner in the acquisition. The exact financial details of the deal remain undisclosed but the implications for the stakeholders and the European LNG market are profound.
For Snam, the Italian gas grid operator and a minor shareholder in Adriatic LNG, the transaction presents a critical juncture. Once a deal is formalized, Snam will have a 45-day window to exercise its right of first refusal, an opportunity to increase its stake in the terminal. Under existing agreements, Snam could potentially raise its share to either 15% or 30%, depending on its strategic interests and investment capacity.
The potential acquisition by Vitol signifies a strategic expansion into the European LNG market, which is increasingly vital given the continent’s growing demand for diversified energy sources. The deal not only underscores the shifting dynamics within the global energy landscape but also highlights the strategic importance of LNG as a bridge fuel in the transition toward cleaner energy sources.
Zacks Ranks & Stocks to Consider
ExxonMobil currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Valaris (VAL - Free Report) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, the company has experience operating in nearly every major offshore basin.
The Zacks Consensus Estimate for VAL’s 2024 earnings per share (EPS) is pegged at $4.75. Valaris has witnessed upward earnings estimate revisions for 2024 in the past 60 days. VAL’s 2024 earnings are expected to soar 118.5% year over year.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $25.58. The company has a Zacks Style Score of B for Value and Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Energy Transfer (ET - Free Report) is a publicly traded limited partnership focused on diverse energy assets in the United States. The company’s 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 $1.44. The company has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 32.1% year over year.
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ExxonMobil (XOM) Nears Deal to Sell Adriatic LNG Stake to Vitol
Exxon Mobil Corporation (XOM - Free Report) and QatarEnergy are reportedly in advanced discussions to divest their majority stake in Adriatic LNG, Italy’s largest liquefied natural gas (LNG) import terminal, to Vitol, per a Reuters report.
This transaction could mark a pivotal shift for Vitol, granting it a substantial role in the European LNG market at a time when Italy’s LNG inflows are witnessing an upward trend.
Adriatic LNG, officially known as Terminale GNL Adriatico Srl, is strategically positioned off the Adriatic coast in northern Italy and serves as the nation’s main LNG import facility. ExxonMobil, through its subsidiary ExxonMobil Italiana Gas, currently owns a 70.7% share of the terminal. The remaining ownership is split between a QatarEnergy unit holding a 22% stake and the Italian gas grid operator Snam, which possesses 7.3%.
The divestiture aligns with ExxonMobil’s broader strategy to offload non-core assets to streamline operations and focus on its most lucrative ventures. The sale process, initiated last year, attracted attention from several institutional investors and infrastructure funds, including BlackRock, the world’s largest asset manager. Initially, the transaction was anticipated to value Adriatic LNG at approximately $868 million (800 million euros).
However, as of the end of 2023, BlackRock had exited the discussions, leaving Vitol, through its energy storage arm VTTI, as a frontrunner in the acquisition. The exact financial details of the deal remain undisclosed but the implications for the stakeholders and the European LNG market are profound.
For Snam, the Italian gas grid operator and a minor shareholder in Adriatic LNG, the transaction presents a critical juncture. Once a deal is formalized, Snam will have a 45-day window to exercise its right of first refusal, an opportunity to increase its stake in the terminal. Under existing agreements, Snam could potentially raise its share to either 15% or 30%, depending on its strategic interests and investment capacity.
The potential acquisition by Vitol signifies a strategic expansion into the European LNG market, which is increasingly vital given the continent’s growing demand for diversified energy sources. The deal not only underscores the shifting dynamics within the global energy landscape but also highlights the strategic importance of LNG as a bridge fuel in the transition toward cleaner energy sources.
Zacks Ranks & Stocks to Consider
ExxonMobil currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Valaris (VAL - Free Report) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, the company has experience operating in nearly every major offshore basin.
The Zacks Consensus Estimate for VAL’s 2024 earnings per share (EPS) is pegged at $4.75. Valaris has witnessed upward earnings estimate revisions for 2024 in the past 60 days. VAL’s 2024 earnings are expected to soar 118.5% year over year.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $25.58. The company has a Zacks Style Score of B for Value and Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Energy Transfer (ET - Free Report) is a publicly traded limited partnership focused on diverse energy assets in the United States. The company’s 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 $1.44. The company has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 32.1% year over year.