Exxon Ties Up with Turkish Petroleum for Gas Exploration - Analyst Blog

U.S. oil firm, ExxonMobil Corporation's XOM share price fell by 1.6% following the news of the company's intention to team up with state-run Turkish Petroleum Corporation for the possible exploration of shale gas in the country's southeast and northwest regions. The news was reported in Reuters.

The two parties had held talks in 2012 but there was no successful outcome. However, later, the negotiation progressed and now, it is likely to result into an agreement. ExxonMobil has shown interest to explore the onshore prospects in the southeast and in Thrace, which is in northwestern Turkey.

Turkey, which is paying about $60 billion as its annual energy bill, is working toward developing its domestic resources comprising nuclear, coal, solar and wind energy. Given the growing domestic gas demand and Turkey's geographical advantage to supply international markets, this finder of the largely unexplored reserves is expected to benefit greatly.

Notably, Turkish shale oil and gas has attracted several investors from the United States, Europe and Canada. Royal Dutch Shell plc (RDS.A) is exploring shale gas in the region around the southeastern city of Diyarbakir, while Canadian firm TransAtlantic Petroleum is also operating in the region.

However, estimates relating to the shale gas reserves in Turkey differ widely. Per some international bodies, Turkey is projected to hold a total reserve of about 20 trillion cubic meters (cbm), while another industry expert has suggested that the proven reserves stand at about 6–7 billion cbm. This compares to the U.S. Energy Intelligence Administration's evaluation of 7.299 trillion cubic feet of estimated shale gas reserves in the United States. The U.S is among the world's top producers of the commodity.

Currently, ExxonMobil carries a Zacks Rank #3 (Hold). Other stocks worth considering in the same sector include Encana Corp ECA and Ultra Petroleum Corp. UPL, both of which sport a Zacks Rank #1 (Strong Buy).