ExxonMobil Corporation (XOM) hit natural gas deposits at the first deepwater exploration well in the Romanian sector of the Black Sea. The U.S. energy behemoth is working jointly with a Romanian subsidiary of Austrian OMV – OMV Petrom – in this drilling activity.
The companies revealed that natural gas has been encountered in the exploration well – Domino 1 – in the Neptun Block. The block is located 170 kilometers (105 miles) east of the Romanian coast, covering a surface area of approximately 9,900 square meters at a depth of about 1,000 meters (3,300 feet).
Although the companies remain optimistic about the natural gas discovery and the ongoing drilling operations which took place at the end of 2011, it’s commercially viability cannot be predicted any time soon.
In November 2008, ExxonMobil have inked an acquisition agreement with OMV Petrom for a 50% share in the deepwater portion of the Neptun Block. Since then, the companies purchased more than 3,000 square kilometers of 3D seismic data of the Neptun Block, utilizing the largest seismic program ever undertaken in Romania. Earlier, an Exxon representative revealed that the company aims to invest $3 billion to $10 billion on the project upon major discovery.
We believe that the combined treaty between the world’s largest publicly traded oil company, ExxonMobil, and the OMV Petrom, the largest oil and gas company in Romania, is expected to prove beneficial going forward for further future exploration success.
Exxon boasts of diversified operations across the world with several new projects coming online through 2013. Significant exploration successes in its wide ranging 2011 program, with key wells in the Gulf of Mexico, the Black Sea, Tanzania and Argentina, are believed to be major catalysts going forward. New volume additions are also expected from U.S., Canada, Kazakhstan, Nigeria, Australia, Russia, Angola and Iraq.
Exxon, the largest U.S. oil firm by market value ahead of Chevron Corp. (CVX), retains a Zacks #3 Rank, which translates into a short-term Hold rating. Longer-term, we are maintaining our Neutral recommendation on the company.
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