Under normal circumstances, a government deciding to nationalize everything of yours in their country would be a disaster. But for Exxon Mobil (NYSE:XOM), a move on the part of Chad’s government to do just that doesn’t seem to have impacted investors much at all. Exxon Mobil stock is actually fractionally up in the wake of Chad’s property grab.
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The government announced that it was seizing all of Exxon Mobil’s hydrocarbon and exploration authorizations, including a 40% stake in the Doba oil project. Doba includes seven separate oilfields producing a combined total of 28,000 barrels of oil per day. It also includes a chunk of the oil pipeline running between Chad and Cameroon. Reports note that Chad reached this decision following a “long dispute” between Exxon and itself. Particularly after Exxon planned a sale of its operations in Chad just last year.
That may sound like a disaster, but perhaps more so for Chad than for Exxon Mobil. While Chad has painted a giant target on its back as someone to not do business with, Exxon Mobile still has a lot left to work with. From Guyana to Suriname and well beyond, Exxon Mobil has projects running throughout the world. Losing Chad will hurt. But while Doba produces 28,000 barrels per day, Exxon Mobil plans to run around 10 times that amount through an expansion at its Beaumont, Texas, refinery.
Overall, analyst consensus calls XOM stock a Moderate Buy, with Buys outpacing Hold and Sell recommendations by nearly two to one. In addition, it also comes with 23.85% upside potential thanks to its average price target of $128.17.
