This should benefit Statoil ASA (ADR) (NYSE:STO) greatly, as the company is having some trouble with replacing the oil it extracts in its homeland country of Norway. This is not the first time the two companies are partnering, either. For example, the two companies have an ongoing partnership in Tanzania where they drill for oil and natural gas.
Exxon Mobil Corporation (NYSE:XOM) also aims at finding and developing oil north of Russia as it partnered with Russian oil giant Rosneft. If this partnership works out, ExxonMobil will be able to prove why it’s the most successful oil company in the world by extracting oil in a region from which it is incredibly difficult to extract oil. ExxonMobil is one of the few companies in the world that has the necessary expertise and the technology to accomplish this task; that’s why the Russian government had no choice but give ExxonMobil a chance.
Loads of trouble
Earlier, BP plc (ADR) (NYSE:BP) was given a shot by the Russian government, which ended up almost kicking the company out because BP had certain disagreements with the country. As a result of these problems, BP ended up selling its stakes in Russia to Rosneft. It looks as though companies like BP are having loads of trouble with local governments around the world, while ExxonMobil knows how to manage its relationships.
Another example is the oil spill in the Gulf of Mexico. Despite the fact that BP spent a large portion of its cash reserves to clean up the Gulf and repay the victims, the US government still doesn’t trust the company. Meanwhile, BP still has more than 2,000 ongoing lawsuits tied to the accident in the Gulf.
Recently, some of BP’s projects in Alaska came to a halt because the company couldn’t secure tax breaks that were crucial for its cost structure. If BP had better relations with the government, it could possibly secure tax breaks easier.
I like ExxonMobil and believe that the company is a sound investment with a proven past. More conservative investors will find a lot of value in this company whereas those looking for strong returns may look at smaller companies with more growth potential. If I was retired and looking for income, ExxonMobil would be one of the first places I’d be looking.
The article ExxonMobil Continues to Offer Value originally appeared on Fool.com and is written by Jacob Steinberg.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.