Yahoo Finance ExxonMobil (XOM) to Cut Spending in Europe for Windfall Tax
Exxon Mobil Corporation XOM is reassessing its role in Europe and raising investments in the United States due to windfall profits taxes.
ExxonMobil criticized Europe’s windfall profit tax imposed on oil and gas companies as it discourages investment and weakens energy transition efforts. Hence, the company is investing more money into its U.S. operations.
Windfall profit taxes have created undesirable outcomes as countries burnt more coal to meet consumers’ requirements when supplies fell short amid the Russia-Ukraine war. ExxonMobil believes that it is important to encourage the development of the latest energy technologies to support the energy transition without compromising the oil supply to meet the rising demand.
In 2022, ExxonMobil generated a record profit of $55.7 billion despite a fourth-quarter slowdown as commodity prices retreated from their peaks. The windfall tax can destroy years of profit from recent refining investments. Thus, ExxonMobil plans to reduce future investments in Europe in favor of the United States.
Last December, ExxonMobil filed a lawsuit against the European Union over the 33% windfall tax, as it could cost the company $2 billion in 2023. The company claimed that the tax would be a destructive force on investor confidence.
ExxonMobil is one of the leading oil and gas producers in Europe and a major refiner of crude oil. The windfall tax can destroy years of profit, as oil and producers are already suffering from inflationary pressure.
ExxonMobil’s foremost priority is investing in businesses to meet demand and be responsible players, claiming that the company’s total production increased last year when it was critically needed.
Price Performance
Shares of ExxonMobil have outperformed the industry in the past six months. The stock has gained 11.8% compared with the industry’s 9.6% rally.
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Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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