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ExxonMobil’s Upstream Portfolio: How Is Growth Trajectory Shaping Up?

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Nov. 20 2020, Updated 3:37 p.m. ET

ExxonMobil’s upstream production

ExxonMobil (XOM) expects five of its major upstream projects to start production in 2017 and 2018. These projects are expected to add 0.34 million boepd (barrels of oil equivalent per day) of working interest capacity. These projects are Kaombo in Angola, Hebron in Canada, Upper Zakum in the United Arab Emirates, Odoptu 2 in Russia, and Barzan in Qatar.

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Latest updates in XOM’s upstream segment

In 4Q17, the Hebron project started production. The field is expected to see 150,000 barrels of oil per day of peak production. XOM is the operator for the field and holds 35.5% stake in it via its affiliate. Suncor Energy (SU), Chevron (CVX), and Statoil (STO) hold stakes of 21.0%, 29.6%, and 9.0% in the Hebron project through affiliates or subsidiaries.

In 4Q17, ExxonMobil acquired exploration acreage in three deep-water offshore blocks in Mauritania. During the same quarter, XOM completed its acquisition of a 25% indirect stake in Mozambique’s Area 4, a gas-rich region, from ENI (E).

Capex on other long-term projects

The company is also expected to incur capex on other long-term projects like Tengiz in Kazakhstan and Liza in Guyana. Liza Phase 1 is expected to begin production in 2020. In fact, the Stabroek block, offshore Guyana, also contains other promising fields like Liza Deep, Snoek, and Payara.

In 2H17, XOM announced its fifth discovery in the block. This was at the Turbot well, located 30 miles southeast of Liza Phase 1. Recently, XOM announced its sixth oil discovery at the Stabroek block in Ranger-1 well, located 60 miles northwest of Liza Phase 1.

ExxonMobil is also expanding its Permian basin activities. The company has 20 rigs in operation in the region, and this number is expected to be ramped up to 30 rigs by the end of 2018.

If oil prices improve, given its expanding upstream portfolio, XOM could witness a surge in its upstream earnings going forward.

Peer upstream portfolios

Royal Dutch Shell’s (RDS.A) and BP’s (BP) upstream revenues will also rise if oil prices move up. BP has just announced two discoveries in the North Sea, which are expected to provide production growth beyond 2020. For more on BP’s upstream portfolio, please refer to Market Realist’s “BP’s Mega Upstream Projects Start Production: What’s the Outlook?”

Meanwhile, Shell has been restructuring its upstream portfolio to retain only the most competitive assets. For more on this, please refer to Market Realist’s “Why Shell Is Transforming Its Upstream Portfolio?”

In the next and final part of this series, we’ll look at the analyst ratings for ExxonMobil.

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