Talk Of A Huge XOM Deal Starting To Make The Rounds -- March 28, 2016

Reuters is reporting:

Exxon Mobil is in talks to buy a stake of around 15 percent in Italian oil major Eni's giant Area 4 gas field in Mozambique, two sources familiar with the matter said.

Exxon is seen as a front-runner to buy into Eni's gas development and this would be the U.S. firm's first big acquisition since the oil price collapse.

Area 4, in which Eni holds a 50 percent operating stake, is located in Mozambique's Rovuma Basin, where gas in place amounts to some 85 trillion cubic feet -- one of the richest gas discoveries of recent times.

There is a question how much XOM plans to buy, anywhere from 15% to all of it:

Two sources said Exxon was in talks to buy a stake of that size (15%), one of whom said Eni was also negotiating with other firms.  

A banking source familiar with the matter said Exxon was interested in buying Eni's whole 50 percent stake, while a fourth source said Exxon was looking at unspecified stakes in all Eni holdings up for sale, also including assets in Egypt and elsewhere in Africa.

It will be interesting to see what XOM pays for whatever the buy.

The huge productive capacity of Eni's Mozambique acreage attracted peak valuations two years ago, when Eni sold 20 percent to China's CNPC for $4.2 billion, amid strong competition for reserves. 

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Natural Gas Global Reserves

Regular readers know I can't keep natural gas reserves straight, so to help me put the Mozambique Rovuma Basin in perspective, from an earlier post:

Disclaimer: I often make simple arithmetic errors. Numbers rounded. Natural gas reserves according to BP/wiki, 2013 - 2014 (US estimate as of December 2013). Top five countries:

• Russia: 6,000 trillion cubic feet
• Iran: 1,000 trillion cubic feet
• Qatar: 900 trillion cubic feet
• Turkmenistan: 600 trillion cubic feet
• US: 350 trillion cubic feet
• #11: Australia: 152 trillion cubic feet (as of January, 2014). (See this post.) 
• Pakistan: 10,000 trillion cubic feet (highly unlikely, something tells me we are mixing apples and oranges, reserves vs technically recoverable

Now, let's go back and re-run the numbers that were posted earlier:

• that recent huge Mediterranean natural gas find: 30 trillion cubic feet
• Barnett, revised USGS figures: 53 trillion cubic feet
• Utica, newly revised figures: 782 trillion cubic feet
• Marcellus, EIA revised estimates: 65 trillion cubic feet, "proved" reserves
• Bakken/Three Forks, USGS estimate: 7 trillion cubic feet
• Qatar: 800 trillion cubic feet, wiki, conversion
• Mozambique, from the story above: 85 trillion cubic feet

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Spinning Out Of Control

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, or relationship decisions based on anything you read here or think you may have read here. I simply find the Tesla story fascinating.

Investopedia is reporting that in the past few weeks, just prior to debut of the new Tesla Model 3:

• the departure of two key individuals
• filing an incorrect 10-K with the SEC
• admitted the 10-K mistake via an 8-K filing

The story:

The revolving door at Tesla Motors, Inc. spun again last week after another key executive abruptly departed just when the electric car company is gearing up to unveil its Model 3 vehicle. Analysts' reactions are mixed about the impact of the recent executive departure, which comes a week after Tesla lost its VP of Communications. 

In the most recent departure, Tesla announced that Michael Zanoni, Executive VP of Finance and Worldwide Controller, had left the company to go back to Amazon.com, Inc., where he worked until 2014. Prior to Amazon, Zanoni also worked at The Boeing Company.

Investopedia speculates that Zanoni's departure was due to a mistake in its recent 10-K filing:

But we (Investopedia) can only speculate whether the company's mistake in its recent 10-K filing with the Securities and Exchange Commission was a catalyst.

Earlier this month, Tesla admitted the mistake via an 8-K filing.