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ExxonMobil (XOM) to Increase Export From PNG LNG Plant

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3.2% was well ahead of the consensus 2.3% estimated, which itself had been cranked up from the sub-1% expectations many analysts had been expecting prior to Q1 earnings season.

Exxon Mobil Corporation XOM and TOTAL SA TOT have reached an agreement related to increased gas exports from Papua New Guinea (PNG).

Per the plan, the capacity of ExxonMobil-operated PNG liquefied natural gas (LNG) plant will be increased to around 16 million tons per annum (mtpa) from its current capacity of 6.9 mtpa. According to analysts, the move will enable the company to compete with Australia’s biggest LNG projects.

The cost of the expansion is valued at about $13 billion, lower than the initial cost projection of $19.5 billion. The cost per ton is less than 50% from Chevron Corp’s CVX Gorgon LNG plant in Australia. The Gorgon LNG plant is slightly smaller than the expected PNG LNG facility post expansion. Another major LNG plant in Australia is the Woodside-operated North West Shelf, which has annual production of about 16 mtpa.

The expansion will include addition of three new LNG trains with a capacity of 2.7 mtpa each on the existing PNG LNG plant site.Two of these trains will be supported by gas from the Elk-Antelope fields, which is managed by TOTAL. The other train will be underpinned by existing fields and the new P’nyang field, operated by ExxonMobil. The partners intend to commence production from the new trains by around 2023 or 2024, when the LNG market is anticipated to need new supply due to growing demand in Asia and a lack of other projects.

The partners expect to reach a final investment decision in 2019. The parties intend to begin engineering and design work in the second half of 2019. Prior to these, the partners are required to agree on terms with the PNG government. The terms include domestic gas supply requirements, local content and landowner agreements. It is mandatory for the companies to agree on cost sharing and phasing the timing of their gas field developments.

ExxonMobil holds a stake of 33.2% in the LNG project. Other partners include Oil Search,Santos, National Petroleum Company of PNG, JX Nippon Oil and Gas Exploration Company and Mineral Resources Development holding 29%, 13.5%, 16.8%, 4.7% and 2.8%, respectively.

Zacks Rank & Key Picks

Currently, ExxonMobil carries a Zacks Rank #3 (Hold).

Another better-ranked player in the energy space is Antero Resources Corporation AR, sporting a Zacks Rank #1 (Strong Buy), You can see the complete list of today’s Zacks #1 Rank stocks here .

Antero Resources is an independent explorer, primarily engaged in the acquisition and development of natural gas, natural gas liquids and oil resources in the Appalachian Basin. The company earnings beat the Zacks Consensus Estimate in two of the last four quarters.

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