Yahoo Finance ExxonMobil to Postpone Beaumont Expansion on Low Fuel Demand
Exxon Mobil Corporation XOM is expected to postpone expansion works at the Beaumont refinery in Texas, per reports. The expansion work is now expected to be completed by 2023, reflecting a delay of one year.
Expansion
The expansion was designed to accommodate ExxonMobil’s rising production from the Permian Basin. A 250,000 barrels per day (bpd) unit is expected to be installed at the refinery to process sweet crude from the prolific basin. Although the process is delayed, the company is building the supporting slabs for the new unit.
Following the completion of the expansion project, which was announced in January 2019, the refinery will likely become the largest in the United States and have a daily processing capacity of 619,000 bpd. Located in the Texas Gulf Coast, the expanded Beaumont facility is expected to surpass the capacity of the Port Arthur refinery of Saudi Aramco.
Reason for the Delay
Low energy demand in the current market uncertainty played a major role in this decision. This move can save the company some cash amid the pandemic. Travel bans and lockdowns around the world have currently reduced the demand for gasoline and jet fuel, prompting the Beaumont facility to run at reduced rates. Per Forbes, ExxonMobil is expected to lose $70 billion in revenues this year due to weak commodity prices.
To counter the situation, the company decided to reduce capital expenditures by 30% and operating expenses by 15% for 2020. This will likely boost the bottom line and cash balance amid the pandemic. Also, to strengthen its liquidity position, the company generated $12 billion in debt.
Price Performance
The company’s stock has gained 25.7% since the beginning of the second quarter compared with 10.9% rise of the industry it belongs to.
Zacks Rank & Other Stocks to Consider
Currently, ExxonMobil has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Chaparral Energy, Inc. CHAP, CNX Resources Corporation CNX and Concho Resources Inc. CXO, each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.
CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.
Concho Resources delivered a positive earnings surprise of 4.9% in the last four quarters.
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