Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), two major players in the energy industry, are expected to finalize deals with Algeria by the end of 2023, according to The Wall Street Journal. Sonatrach, the state-owned oil and gas company of Algeria, is currently in discussions with Exxon and Chevron to establish the terms of the deals.
These deals would grant the companies the opportunity to tap into the vast natural gas reserves of the country. If successful, this would mark the first instance of both companies engaging in the extraction of both conventional and shale gas in Algeria.
Key Reasons Behind This Move
Exxon and Chevron were drawn to Algeria, one of the world’s top producers of natural gas, because of the rising demand for natural gas as countries seek to reduce their greenhouse gas emissions.
Another important factor is the conflict between Russia and Ukraine, which caused Europe to reduce its gas imports from Russia. It’s interesting to note that Algeria already has three pipeline links to Europe, making it a better supplier than nations like the United States and Qatar.
Furthermore, the companies see this as an opportunity to increase output levels and use their huge cash balances that were accumulated in 2022 during the energy price boom.
While these expansion moves are encouraging, let’s take a look at what the Street recommends for these two stocks.
Is XOM Stock a Buy or Sell?
Analysts are cautiously optimistic about XOM stock. It has received nine Buy and five Hold recommendations for a Moderate Buy consensus rating. Moreover, these analysts’ average price target of $129.54 implies 22.48% upside potential.
Is CVX Stock a Buy?
CVX stock has a Moderate Buy consensus rating on TipRanks. It has received 10 Buy and nine Hold recommendations. Meanwhile, analysts’ average price target of $188.58 implies 20.68% upside potential from current levels.
