U.S. energy behemoth Exxon Mobil Corp. (XOM) has agreed to pay $1.4 million to resolve U.S. government claims over a 2012 crude oil spill in Louisiana.
The compensation is for an alleged violation of the Clean Water Act stemming from the spill of at least 2,800 barrels from the North Line near Torbert, LA. The 22-inch diameter pipeline ruptured in late Apr 2012, about 20 miles west of Baton Rouge. Oil spilled into the surrounding area and flowed into an unnamed tributary connected to Bayou Cholpe. The $1.4 million penalty is in addition to the costs incurred by ExxonMobil to respond to the oil spill and replace the segment of ruptured pipeline.
Exxon Mobil is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately four-fifth of Exxon Mobil’s earnings come from its operations outside the U.S.
Exxon Mobil is one of the world’s best-run integrated oil companies given its track record of superior returns on capital employed. The energy giant has long been a core holding for investors seeking a defensive name with continued dividend growth. Exxon Mobil is fairly active in its investment program. The company plans to spend about $185 billion over the next five years, up 29% from the last five-year period.
The strength of Exxon Mobil lies in its balanced operations, strong financial flexibility, steady improvement in efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas are aimed at increasing production through a wider exposure to large energy resources with a long reserve life and low field declines. However, we are skeptical about the company’s near-term performance due to its muddled refining fortunes.
Exxon Mobil currently holds a Zacks Rank #3 (Hold). However, in the near term one can consider stocks like Sanchez Energy Corporation (SN), TransAtlantic Petroleum Ltd. (TAT) and Sunoco Logistics Partners L.P (SXL). All these stocks carry a Zacks Rank #1 (Strong Buy).
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