Drill, baby, drill…that’s the common refrain from folks sick of paying $4 or more per gallon of gasoline. For some, that tolerance is as low as $3 a gallon. But regardless of where that pain point starts, it ultimately calls for more production to bring prices down. And ExxonMobil’s (XOM) plan to pursue more outside of Guyana met with investor approval as shares increased modestly in Wednesday afternoon’s trading.
The new plans call for up to 30 wells to be drilled at its seventh oil and gas project, located off the coast of Guyana. Known as the Hammerhead Project, the new drilling will take place in the Stabroek Block and looks to come online in 2029. While it’s smaller than the other fields currently under development, it’s poised to produce somewhere around 120,000 to 180,000 barrels per day. The other three in development are around 250,000 barrels per day.
Additionally, ExxonMobil plans to put in a “floating production unit,” which will store between 1.4 million and two million barrels outright. Once active, Guyana will produce around 1.56 million barrels per day, making it a substantial player in the market.
Weather Hits the Refineries
However, even once that oil is found, it doesn’t become gasoline all on its own. That takes refining, and recently, Illinois took a hit in the refinery side of things following recent disastrous weather. A tornado struck not far from Chicago and nearly hit an ExxonMobil refinery.
Furthermore, it took out electricity in the area, which needed to be reconnected. The ExxonMobil refinery, known as the Joliet plant, processes around 275,000 barrels per day. That accounts for just under a third of the area’s processing capability, which some believe will send gas prices in the Chicagoland area surging until the refining can get back up and running.
Is ExxonMobil a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on XOM stock based on 11 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 20.42% rally in its share price over the past year, the average XOM price target of $135.13 per share implies 15.1% upside potential.
