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ExxonMobil's (XOM) Nigerian Asset Sale Nears Completion

Exxon Mobil Corporation's XOM divestment of its oil and gas assets to Seplat Energy plc in Nigeria has faced significant hurdles but recent developments signal progress toward the deal's conclusion, per a report by Bloomberg.

Nigeria's state oil company, the Nigerian National Petroleum Company (“NNPC”), has withdrawn its legal challenge to the transaction, removing a major obstacle that had stalled the $1.3-billion deal.

The NNPC applied to a high court in Nigeria's capital, Abuja, to drop the case, a move confirmed by its legal firm, Afe Babalola. The decision follows an undisclosed agreement reached between the NNPC and ExxonMobil last month, paving the way for the deal's completion. However, court documents indicate that the NNPC reserves the right to resume its case if the terms of the settlement are not met.

The divestment, which was signed between ExxonMobil and Seplat Energy in February 2022, has been awaiting regulatory approval since then. Key approvals from the Nigerian Upstream Petroleum Regulatory Commission, with an indicated August deadline, and Nigerian president Bola Tinubu are still pending.

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Once finalized, the deal will see Seplat Energy acquiring ExxonMobil's assets for $1.28 billion, significantly bolstering its position in Nigeria’s oil and gas sector. Seplat Energy is poised to expand its natural gas fields, becoming one of the largest suppliers of domestic gas to Nigerian power plants. The acquisition will nearly quadruple Seplat Energy's production to more than 130,000 barrels per day, potentially injecting much-needed capital into Nigeria's oil industry and boosting oil production.

In addition to ExxonMobil's deal with Seplat Energy, another significant divestment transaction is underway in Nigeria's oil sector. Shell Plc SHEL announced in January its agreement to sell its Nigerian onshore oil business to a consortium of local companies for more than $1.3 billion. Like the ExxonMobil-Seplat Energy deal, Shell's divestment is awaiting regulatory approval, with expectations for further developments in the near future.

These divestment deals reflect ongoing efforts by multi-national oil companies to streamline their operations and focus on core assets while providing opportunities for local companies to expand their presence in Nigeria's lucrative oil and gas sector. As regulatory approvals progress, these transactions are poised to reshape the landscape of Nigeria's oil industry, potentially leading to increased investment and improved oil production in the country.

Zacks Ranks & Stocks to Consider

ExxonMobil currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. The three companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ProPetro Holding Corporation PUMP is an oilfield services provider operating primarily in the Permian Basin spread over West Texas and New Mexico. ProPetro’s strategic transition to next-generation equipment, including FORCE electric fleets, underscores its market leadership and cutting-edge technology.

The Zacks Consensus Estimate for PUMP’s 2024 and 2025 EPS is pegged at 67 cents and 83 cents, respectively. The company has a Zacks Style Score of A for Value and B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

USA Compression Partners, LP USAC is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USA Compression Partners earns its revenues from the overall horsepower use of natural gas transported rather than the price. As such, the partnership is largely insulated from fluctuations in commodity prices.

The Zacks Consensus Estimate for USAC’s 2024 and 2025 EPS is pegged at 77 cents and 98 cents, respectively. The company has a Zacks Style Score of B for Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

USA Compression Partners, LP (USAC) : Free Stock Analysis Report

ProPetro Holding Corp. (PUMP) : Free Stock Analysis Report

Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report

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