World's largest publicly traded oil company, ExxonMobil Corporation's (NYSE:XOM) subsidiary in Singapore recently acquired the Jurong aromatics complex in Singapore, among the world’s largest. Notably, ExxonMobil Asia Pacific first announced the acquisition plan in May 2017. The integrated major, which is operating in Singapore for more than 120 years, has rehired most of the employees of the aromatics facility.
Jurong Aromatics Corporation was the previous owner of the facility, which is located adjacent to ExxonMobil’s integrated refining and petrochemicals complex. The supermajor’s integrated complex can churn out up to 1.9 million tonnes of ethylene, apart from processing 592,000 barrels of crude oil annually.
Later this year, the unit – already capable of processing a broad spectrum of feedstocks – will bring online a new 230,000 tonne-per-year specialty polymer facility in a phased manner. This start-up will help produce halobutyl rubber and performance resins used in adhesives.
Deal Rationale
Investors should know that the acquired facility has the production capacity of 800,000 tonnes of fibre intermediate feedstock paraxylene per year along with 438,000 tonnes of benzene and 200,000 tonnes of orthoxylene. The buyout will increase the company's aromatics production capacity in Singapore over 3.5 million tonnes per year. It will include paraxylene production of 1.8 million tonnes and increase transportation fuels capacity by 65,000 barrels per day.
ExxonMobil expects the deal to aid the company catering growing demand for petrochemical in the Asia Pacific region. Over the next decade, the company expects the global demand for chemical products to rise by 45%, of which 75% will be in the Asia Pacific region, driven by the thriving middle class.
The financial details of the deal are yet to be disclosed.
About the Company
Irving, TX-based ExxonMobil is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of ExxonMobil’s earnings come from operations outside the United States. The company divides its operations mainly into three segments: Upstream, Downstream and Chemicals.
ExxonMobil is the world’s best run integrated oil company, given its track record of high return on capital. It has collaborated with Russia for exploring potential commercial reserves in the country. However, tensions between the United States and Russia might affect its efforts to generate shareholders value by exploiting Russian oil and gas reserves.
Price Performance
ExxonMobil has lost 15% of value year to date compared with the 6% fall witnessed by its industry.
Zacks Rank and Stocks to Consider
ExxonMobil carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the oil and energy sector include Range Resources Corporation (NYSE:RRC) , Subsea 7 SA (OTC:SUBCY) and Braskem S.A. (NYSE:BAK) . While Range Resources and Subsea sport a Zacks Rank #1, Braskem carries a Zacks Rank #2 (Buy).
Range Resources’ sales for 2017 are expected to increase 122.8% year over year. The company delivered a four-quarter average positive earnings surprise of 51.8%.
Subsea’s sales for 2017 are expected to increase 11.6% year over year. The company delivered a positive average earnings surprise of 83.8% in the last four quarters.
Braskem’s sales for the third quarter of 2017 are expected to increase 2.6% year over year. The company delivered a positive earnings surprise of 68.5% in the second quarter of 2017.
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