U.S. energy behemoth ExxonMobil Corporation (XOM) and Rosneft – Russia’s biggest oil producer – have entered into a Strategic Cooperation Agreement. The deal underlines the companies’ aim to jointly explore and develop hydrocarbon resources in Russia, the U.S and other countries throughout the world. Both companies also plan to start technology and expertise sharing activities.
The deal, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin, comprises approximately $3.2 billion for funding exploration work at East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea. Both regions are counted among the most promising and least explored offshore areas worldwide, with soaring prospects for liquids and gas.
Rosneft will hold a 66.7% stake in both joint ventures while the remaining 33.3% will be held by ExxonMobil. According to a Rosneft official, the company is likely to outline the details of the joint international projects by early next year.
The agreement offers Rosneft with a chance to build up equity interest in a number of ExxonMobil’s exploration opportunities as well as gain experience in deepwater and tight oil deposits in North America, including the deepwater Gulf of Mexico and oil fields in Texas.
On the other hand, ExxonMobil will have access to Russia’s Arctic resources. The companies have also embarked upon a joint study for developing tight oil resources in Western Siberia. With regard to this, ExxonMobil and Rosneft intend to form and mutually manage an Arctic Research and Design Center for Offshore Developments in St. Petersburg. The center will promote the latest technology to carry out the joint Arctic projects, including drilling, production and ice-class drilling platforms, in addition to other Rosneft projects in the Russian Federation and internationally.
ExxonMobil has a Zacks Rank #3, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the company. BP Plc (BP) and ConocoPhillips (COP) are major competitors of the company.
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