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ExxonMobil (XOM) Selects Four Firms to Divest Adriatic Assets

Exxon Mobil Corporation XOM shortlisted four international firms to divest its stake in the Adriatic liquefied natural gas (“LNG”) regasification terminal offshore Italy, per a report by Reuters.

The transaction is expected to value the overall LNG terminal at €800 million.

The terminal is situated in the northern Adriatic Sea, 15 kilometers off Porto Viro in the Veneto region. Last year, the terminal’s regasification capacity was increased to nine billion cubic meters (bcm) of natural gas per year from 8 bcm.

In March 2023, ExxonMobil was considering divesting its majority stake in Adriatic LNG as part of plans to offload non-core assets to focus on more lucrative prospects.

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Rothschild & Co. is advising ExxonMobil on the divestment process, which attracted interest from several international groups and infrastructure funds as Italy is expected to increase its LNG imports to partly replace Russia gas.

Companies shortlisted for the majority stake in the terminal include Igneo Infrastructure Partners, BlackRock, German asset manager IKAV and energy infrastructure group VTTI.

ExxonMobil, through its subsidiary, owns a 70.7% interest in the Adriatic terminal. Italy-based gas grid operator Snam holds a 7.3% interest. QatarEnergy owns the remaining stake in the terminal. Snam has the right to refuse should a partner decide to divest and can increase its stake.

Divesting non-core assets is a preferable strategic move for most of the major oil and gas companies. ExxonMobil’s move is part of a wider trend of divestment by oil majors to rationalize their businesses and explore opportunities.

Price Performance

Shares of XOM have outperformed the industry in the past three months. The stock has lost 5.4% compared with the industry’s 5.9% decline.

 

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Picks

ExxonMobil currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Enterprise Products Partners LP EPD and Sunoco LP SUN, each currently sporting a Zacks Rank #1 (Strong Buy), and Murphy USA Inc. MUSA, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enterprise Products reported first-quarter 2023 adjusted earnings per limited partner unit of 64 cents, which beat the Zacks Consensus Estimate of 62 cents. This was primarily due to higher contributions from the Natural Gas Pipelines & Services business.

In the first quarter, Enterprise Products generated an adjusted free cash flow of $1,347 million against a negative free cash flow of $1,618 million in the year-ago quarter. EPD recorded a distributable cash flow of $863 million in the same time frame.

Sunoco reported first-quarter 2023 earnings of $1.41 per unit, beating the Zacks Consensus Estimate of $1.21. Better-than-expected quarterly earnings were primarily driven by higher contributions from the Fuel Distribution and Marketing segment.

For 2023, SUN revised its adjusted EBITDA guidance upward to $865-$915 million from the previously mentioned $850-$900 million.

Murphy USA announced first-quarter 2023 earnings per share of $4.80, which beat the Zacks Consensus Estimate of $4.06. The outperformance can be attributed to higher volumes and retail fuel contribution.

MUSA is committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the motor fuel retailer recently approved a repurchase authorization of up to $1.5 billion following the completion of the existing $1-billion mandate. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.

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Murphy USA Inc. (MUSA) : Free Stock Analysis Report

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