Exxon (XOM) Stock Slumps Amid Expansion to Kazakhstan Project

Exxon (XOM) stock is retreating in pre-market trading on Tuesday after committing to an oil expansion project with Chevron (CVX) and their partners.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of Exxon Mobil  (XOM) - Get Report are sliding 0.84% to $93.05 in pre-market trading on Tuesday after agreeing with Chevron (CVX) and their partners to a $36.8 billion oil expansion project at the Tengiz field in Kazakhstan.

Under the terms of the deal, Tengiz will boost output to 39 million tons a year by 2022 from 27 million tons currently, Reuters reports.

The total project budget includes $27.1 billion for facilities, $3.5 billion for wells and $6.2 billion for contingency and escalation, according to a statement by Chevron.

Chevron owns a 50% stake in the project, Exxon owns 25%, Kazakhstan owns 20% and  Lukarco, controlled by Russia's LUKOIL, owns the remaining 5%, according to Reuters.

The agreement is "an inflection point," Jefferies senior oil analyst Jason Gammel told the Wall Street Journal, pointing out that it is the first investment of more than $10 billion in 2016. "It's a very large project and it's a reflection of the companies having got their cash cycles under control."

Chevron stock is flat in pre-market trading.

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.

Exxon Mobil's strengths such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, poor profit margins and weak operating cash flow.

You can view the full analysis from the report here: XOM

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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