ExxonMobil launches asset sale to repay debt

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Exxon Mobil Corp. (XOM) is looking for buyers for its American shale fields. According to Reuters, XOM plans to get rid of nonperforming assets, raise funds and pay off its massive debt. Shares of U.S. oil and natural gas explorers closed at $ 64.37 on November 15.

Barnett Shale Holdings

The proposed sale includes the Exxon Barnett Shale properties, which cover 2,700 wells on approximately 182,000 acres in North Texas. The properties are worth between $ 400 million and $ 500 million. Offers are expected until December 2021 and Exxon expects to close the sale in January 2022.

According to Reuters, gas production from Barnett’s shale assets has declined by 50% since 2016, to around 227 million cubic feet per day (mcfd) in the first half of this year.

As of August 2021, Exxon had put up for sale approximately 5,000 natural gas wells in the Fayetteville shale in Arkansas. These included 844 operated wells and 4,104 non-operated wells. According to Exxon, these assets have reduced market value and declining production capacity.

Exxon excluded several properties in Asia, Africa, the United States and Europe from its development plan last year. Instead, the company will now focus on production plans in Guyana, off Brazil and in the Permian Basin.

Debt reduction

About three years ago, Exxon set a goal of raising $ 15 billion through the sale of assets by December 2021. The company received $ 557 million of the proceeds from the sale through June 2021 and has $ 2.15 billion in outstanding deals.

In 2020, Exxon recorded a whopping $ 22.4 billion loss and its total debt rose to $ 70 billion. In 2021, XOM managed to repay more than $ 7 billion in debt, reducing the total to around $ 60.60 billion.

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Target price

The Wall Street community has a Hold consensus rating on XOM stock with 5 buys, 4 takes and 3 sells. Exxon Mobil’s average price target of $ 69.73 implies upside potential of 8.33% from current levels. Stocks have gained 68.7% in the past year.

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