U.S. energy behemoth ExxonMobil Corporation (XOM) and Calgary, Alberta-based oil and gas company Talisman Energy Inc. (TLM) intend to offload their Polish shale gas exploration licenses.
The parties are in discussion with Poland's largest oil firm PKN Orlen SA for the planned divestiture. Earlier this year, ExxonMobil resolved to exit Poland and drilled only two wells there.
This move demonstrates the concern that foreign or domestic energy companies are facing over the planned levels of taxation. It also reflects opposition towards heavy government intervention as the industry progresses to the subsequent phase of commercial shale gas production in Poland.
ExxonMobil and Talisman’s exit come as a big blow for Poland as the country hopes to unearth substantial shale gas reserves that would help ease its dependence on Russian energy sources. The government has also backed the state-controlled firms, like gas firms PGNiG SA and PKN Orlen, for exploration drilling, mainly in the north and east of Poland.
Exxon’s strength is in its balanced operations, strong financial flexibility and continuous improvement on efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas aims at increasing production through increased exposure to large energy resources with long reserve life and low field declines.
Despite the collapse in natural gas prices, Exxon expects unconventional gas to play a dominant role in future supplies owing to the rapid decline in conventional production.
ExxonMobil carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.