World Bank rules on ExxonMobil Venezuela case
On October 9, 2014, the World Bank’s international arbitration court awarded ExxonMobil Corporation (XOM) $1.6 billion in the case the company brought against the Venezuelan government. ExxonMobil alleged that the Venezuelan government illegally expropriated its Venezuelan assets in 2007 and paid unfair compensation. Read more in Market Realist’s article ExxonMobil wins $1.6 billion in arbitration case against Venezuela.
ExxonMobil’s (XOM) international operations are critical to the company. From the above graph, we note that the United States accounts for only 25% of ExxonMobil’s proved developed reserves, while ExxonMobil’s international proved reserves account for 75%. Investors should note ExxonMobil’s changes in its international acreages/holdings.
ExxonMobil starts project in Malaysia
During 3Q14, ExxonMobil (XOM) announced the Tapis enhanced oil recovery (or EOR) project. The startup project is Malaysia’s first large-scale EOR project. The project aims to utilize the immiscible water-alternating-gas process to increase overall field recovery. ExxonMobil will bring in its technology application to maximize reserves recovery from producing fields.
Exxon and Linn Energy agree to asset swap
On September 18, 2014, Linn Energy (LINE) and ExxonMobil Corporation (XOM) announced a nonmonetary asset swap deal. The deal involved oil and gas assets in California and Texas. This will add 17,800 net acres to ExxonMobil in the Permian Basin to its U.S. oil and natural gas portfolio. Currently, these assets are managed by ExxonMobil’s subsidiary XTO Energy. In exchange for the Permian assets, Linn Energy will receive ExxonMobil’s interest in its Hill Property, which consists of 500 net acres in the South Belridge oil field in the San Joaquin Valley in California.
This agreement extends ExxonMobil’s total Permian basin holding to more than 1.5 million acres and production to more than 95,000 barrels of oil equivalent per day. Read the details of the deal in Market Realist’s article Must-know: An overview of LINN Energy’s asset swap deal with Exxon.
Key exchange-traded funds (or ETFs)
New oil discovery or acquisition of assets in the liquids-rich basin will also benefit other upstream producers such as EOG Resources (EOG), Chesapeake Energy (CHK), and Chevron Corporation (CVX). All these are components of the Energy Select Sector of Standard and Poors depositary receipt (or SPDR) (XLE), a component of SPDR MSCI World Quality Mix ETF (QWLD).