Exxon Mobil Corporation XOM has decided to dump the plan of building a natural gas import terminal on the Victorian coast of Australia, per reports. The energy goliath fell short of finding enough long-term contracts for the project. The company intended to build the terminal to benefit from supply shortage, which is currently affecting domestic manufactures by pushing up costs.
Moreover, the import facility was expected to offset declining production from ExxonMobil’s hydrocarbon fields in the Bass Strait. The company’s scrapping of the import facility plans can lead to rising energy costs due to an impending dearth of natural gas supply in the southern states.
Notably, gas price has climbed to $12 a gigajoule in the market, nearly three times above the historic prices. This has crippled domestic manufacturers as a lot of them are disturbed with a price level of $10 and beyond, per Andrew Richards, the chief executive of Energy Users Association of Australia.
ExxonMobil had gone through an extensive study to gauge demand interests from the domestic market for the proposed LNG import facility, which revealed lesser-than-expected commitments. Amid supply shortage in the domestic market, demand for natural gas is expected to rise in the coming years in Australia. Yet, potential customers are not willing to make long-term contracts with ExxonMobil as they expect government intervention to bring down gas exports from Australia. This can lower gas prices in the domestic market in the short run. Notably, the Turnbull government’s Australian Domestic Gas Security Mechanism could reduce exports and divert supplies to the domestic market.
Price Performance
The company has lost 0.5% year to date compared with 4.2% decline of the industry it belongs to.
Zacks Rank & Stocks to Consider
Currently, ExxonMobil has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space include Antero Midstream Corporation AM, CNX Resources Corporation CNX and Phillips 66 PSX, each carrying the Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Antero Midstream’s earnings for the current quarter are expected to skyrocket 120% year over year.
CNX Resources’ Zacks Consensus Estimate for 2019 earnings per share has risen from 65 cents to 74 cents in the past 60 days.
Phillips 66’s 2019 earnings per share have witnessed nine upward estimate revisions and no downward movement in the past 60 days.
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