ExxonMobil Corp. (XOM) is in advanced talks with Chinese national oil firms for several upstream partnerships. The resources in question include unconventional properties both inside and outside of China.
Exxon said that the company is encouraged by China’s recent gas price increase and is moving towards a more market-based pricing. Effective from June 1, China announced a 25% hike in benchmark onshore gas prices. China believes natural gas is the most efficient way to reduce its carbon footprint, and it is planning to increase its share of natural gas in its energy needs pie to 10% by 2020 from the current 3%.
While oil, natural gas and coal will continue to meet most of the world’s needs, Exxon emphasizes on natural gas as a major source of energy in its program, reflecting its abundance, versatility and economic advantages as an efficient and clean-burning fuel. Exxon anticipates a 55% increase in global natural gas demand by 2030, driven primarily by the power-generation sector.
Despite the challenging business environment, Exxon’s businesses have been delivering strong performances. It remains focused on its business plan, a robust exploration program, record capital investment and a persistent focus on operational excellence.
Though Exxon has been providing assistance in response to the oil spill in the Gulf of Mexico (GoM), it is concerned about the uncertainties and costs associated with the future deepwater GoM drilling scenario. However, we believe that Exxon’s business will be least hampered as the company has very little exposure in the GoM.
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