Exxon Mobil Corporation is set to face strike action at its Port Jerome refinery. Oil workers, who are members of the CGT & FO unions voted in favor of strike action. Port Jerome, began operating in 1993 churns out around 240,000 barrels of crude oil per day.
Proposed Labor Law Results in Strike Action
The employees at Port Jerome will join the nationwide protest that began in March 2016.
The unions stated that the strike and blockade of the refinery will try to prevent crude oil and other products from leaving or entering the refinery. The strike & blockade will begin at 4AM GMT (11PM EST.)
On Monday, a spokesperson for Exxon Mobil Corporation told Reuters that the strike which has proven to affect output of their rival’s refineries has had no impact on Exxon Mobil Corporation’s output.
The energy giant has been operating in France for more than 100 years. Their employees are going on strike over a proposed labor law.
Exxon Mobil Corporation May Acquire ConocoPhillips
In other related news, Jonathan Weber at Seeking Alpha published an article suggesting that the firm may acquire ConocoPhillips . ConocoPhillips is an American firm that is based in Houston, Texas. It is a Fortune 500 company, and had total assets worth in excess of $110 billion (as of 2012.) As of 2016, the firm has nearly 16,000 employees.
Exxon Mobil Corporation has the required funding & finance available (in order to make a large acquisition.) Acquiring ConocoPhillips now would be good timing, as low oil prices have caused their shares to slump in value, from around $64 in May 2015, to $43.59 (as the market closed on Monday 23rd May.) This decrease in value (of around 40%) gives ConocoPhillips a market capitalisation of $54.26 billion. French oil giant Exxon Mobil may see this as a potentially lucrative investment opportunity.
Potentially Risky Acquisition
However, Exxon Mobil has also suffered as result of falling world oil prices, and there is no guarantee that oil prices will rise. This could see ConocoPhillips’ share price continue to fall, and generate a negative return on investment (ROI.)
Exxon Mobil itself was formed as a result of a merger. In 1999 Exxon & Mobil merged together, with Mobil being valued at $74 billion. Several large mergers took place in the US oil industry in the 90s, with BP & Amoco also merging together.
Although oil prices have bounced back from the lows that we saw at the start of 2016 (the price of the Brent Crude fell below $30 a barrel), they are still relatively cheap & many investors remain bearish on crude oil & on firms operating in the oil & energy market. Lower oil prices squeeze profit margins for firms that extract & refine the oil, often resulting in losses.
The oil market continues to present several investment opportunities, with potential mergers & fluctuations in world oil prices offering traders volatility, & potentially large swings in prices (allowing for large profits, and losses to be made.) Some oil firms saw their stock increase in value (several weeks ago), as an increase in oil prices led to greater confidence.