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Exxon is searching for alternatives

As the world moves faster to being carbon neutral and many companies are shifting their focus to electricity, oil companies need to look for alternatives. Exxon is no exception. The latest news is reporting that in search for alternative they joined lithium hunt, as the demand for EVs grows. We have decided to create an analysis on this topic, since it is one of the most popular things on the market.

About Exxon

ExxonMobil Corporation, commonly referred to as Exxon, is an American multinational oil and gas corporation. It is the largest direct descendant of Standard Oil, the company founded by John D. Rockefeller. ExxonMobil was formed in 1999 through the merger of Exxon and Mobil. The company operates across the entire oil and gas industry and has a chemicals division that produces various chemical products, including plastics and synthetic rubber. While headquartered in the Houston suburb of Spring, ExxonMobil is officially incorporated in New Jersey. Its origins can be traced back to the Vacuum Oil Company, which was acquired by Standard Oil in 1879. ExxonMobil evolved from the Standard Oil Company of New Jersey, which controlled most of Standard Oil's operations. It merged with the Standard Oil Company of New York (Socony) and went through rebranding before the 1999 merger. It is also one of the biggest publicly traded oil company.

Exxon on lithium hunt

Exxon Mobil has recently acquired drilling rights to a significant portion of land in Arkansas with the intention of extracting lithium, a crucial component in batteries for electric vehicles, cell phones, and laptops. The company has purchased approximately 120,000 acres in southern Arkansas from Galvanic Energy, an exploration company, as sources familiar with the matter reveal. This move allows Exxon to establish a foothold in an area believed to have substantial lithium deposits and explore the feasibility of extraction technologies while engaging in mineral production. If the drilling proves profitable, Exxon may expand its operations in the future. While Exxon has not publicly expressed its intention to produce lithium, this venture would diversify its portfolio and position the company to cater to the growing electric vehicle market. In its efforts to reduce carbon emissions and develop low-carbon technologies, Exxon plans to invest 17 billion USD through 2027. However, the company intends to focus its clean-energy investments on technologies that align with its core oil-and-gas business, such as hydrogen and carbon capture.

Stock development

Exxon’s stocks are listed on New York Stock Exchange. When they came to the market in 1983, the price was only 4,81 USD. Through their history on stock exchange, they have showed an enormous growth. Since their start, stocks grew for more than 2000%.  There was one major correction, when Covid started and cause the prices of oil to fall below zero. At the time, stocks of Exxon fell for more than 45%.  Since then, however, they have performed well, as they grew for 218%, to the actual price of 104,97 USD. *

Snímek obrazovky 2023-05-25 v 23.20.09

Movement of Exxon stocks in the last five years. (Source: Google Finance) *

Chevron is also looking at possibilities

One of Exxon’s biggest rivals, Chevron, is also not leaving anything to coincidence. In fact, they have just secured a 7,6 billion USD deal to acquire PDC Energy. The transaction will be an all-stock deal, with PDC shareholders receiving 0.4638 shares of Chevron for each PDC share, equating to 72 USD per share. The total enterprise value, including debt, is 7.6 billion USD. Following the news, PDC shares surged over 8% in premarket trading, currently priced at 70.63 USD.  Chevron's Chairman and CEO, Mike Wirth, stated that the acquisition of PDC's assets will strengthen Chevron's position in important U.S. production basins and contribute to the company's objective of delivering higher returns and lower carbon emissions. The deal is expected to be finalized by the end of 2023, while Chevron shares have experienced a 0.8% decline in premarket trading. [1]

Conclusion

Despite the world moving faster and faster to the environment friendly resources, oil companies are not planning to give up. Both Exxon and Chevron are therefore looking for alternatives, or how to be in line with the new world that’s coming. It will be interesting to see, how many companies will be able to adapt to the new regime.

Adam Austera, chief analyst at Ozios

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

Disclaimer:

The material herein is considered as marketing communication under the relevant laws and regulations, and as such is not a subject to any prohibition on dealing ahead of the dissemination of investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and should not be construed as containing investment advice, or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. The published content is intended for educational/informational purposes only. It does not take into account readers’ financial situation, personal experience or investment objectives. APME FX Trading Europe Ltd makes no representation that the information provided is accurate, current or complete; and therefore, assumes no liability for any losses arising from investments based on the supplied content. The past performance is not a guarantee of future results.

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