ExxonMobil Corporation (XOM - Free Report) intends to boost its West Qurna 1 spending for this year from the 2012 level. The increased expenditure is planned for the development of the oil field.
ExxonMobil was once determined to exit the giant Iraqi oil field West Qurna-1. Now, it aims to expend as much as $1.65 billion against last year’s $1.6 billion.
Located in the south of Iraq, near the city of Basra, the West Qurna oil field has estimated reserves of 8.7 billion barrels. In 2010, ExxonMobil and its minority partner Royal Dutch Shell Plc (RDS.A - Free Report) had entered into an agreement for the project with an output target of 2.825 million barrels per day by 2017.
ExxonMobil's participation in West Qurna remains contested as the Iraqi authority is concerned over the company’s venture to tap reserves in the country's semi-autonomous Kurdistan region. The U.S. super major turned out to be the first among the oil giants to gain entry into Kurdistan, after it signed a deal in Oct 2011 to explore six areas. But the signing of this contract annoyed the Baghdad government, which considers the pact as illegal.
Hence, last year, ExxonMobil planned to sell its 60% stake in the West Qurna-1 project mainly due to anticipated narrow profits from the planned $50 billion venture as well as for the unending political debate.
But now the company’s increased spending level for the region confirms its intention to continue developing in West Qurna. Production from the field is expected to rise to 540,000 barrels per of oil per day (BPD) by mid-2013 from the current 480,000 BPD. With 36 new wells scheduled to come online by the end of 2013, production will likely reach 600,000 BPD. It will eventually hit 900,000 BPD in 2015.
ExxonMobil holds a Zacks Rank #3, which is equivalent to a Hold rating for a period of 1 to 3 months. Meanwhile, there are certain other companies in the oil and gas sector that are expected to perform well and are worth buying now. These include Range Resources Corporation (RRC - Free Report) with a Zacks Rank #1 (Strong Buy) and Statoil ASA with a Zacks Rank #2 (Buy).