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XOM Slips Despite Plans for New Refinery
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XOM Slips Despite Plans for New Refinery

While oil prices have been volatile over the last six months, gas prices have been perhaps even more so, owing to the lag between oil pumping and oil refinement into gasoline. That may get some help soon thanks to a new move from Exxon Mobil (NYSE:XOM). Investors weren’t particularly enthused by the move, however, as Exxon Mobil closed slightly lower in Friday’s trading.

Exxon Mobil plans to put a hefty investment into its refinery at Beaumont, Texas. The plan calls for Exxon Mobil to complete an expansion that the company planned almost a decade ago, sinking $1.2 billion into the operation. Once complete, the Beaumont plant—which refines 369,000 barrels per day—will land a new 250,000 barrel per day distillation unit. That will bump Beaumont up to the second-largest plant in the United States, reports note. It’s also the first major expansion effort for an oil processing operation in almost 10 years.

The expansion comes at an excellent time for Exxon Mobil. Diesel and gasoline stockpiles in the United States currently hover around five-year lows. Additionally, profit margins on motor fuel production are near record highs, meaning the market is ready and the profit potential is there. In addition, reports suggest that Exxon is also targeting India for some future expansion work. Specifically, Exxon wants a piece of India’s oil and gas exploration and production markets. Given that India is the third-biggest importer on Earth, that may be a particularly lucrative field ahead.

Overall, analyst consensus calls Exxon Mobil stock a Moderate Buy. Moreover, thanks to its average price target of $121.25, Exxon stock has 7.16% upside potential.

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