Exxon Mobil's share price soared to a new high on June 8 as the US energy sector continues to outperform the market due to higher prices of oil and gas. After years of coping with the impact of its handling of climate issues and investors' fears about what an energy transition will mean for the corporation, things have taken a turn for the better for Exxon with a change of fortune. Exxon shares rose more than 66% since the start of 2022, boosted by the post-pandemic increase in demand, followed by the Russia-Ukraine conflict, and accompanying Western sanctions, which shook global energy markets.
North Field Expansion: Qatar Selects Exxon
Qatar chose ExxonMobil Corp as a partner in the expansion of the world's largest liquefied natural gas (LNG) project, alongside TotalEnergies, Shell, and ConocoPhillips. Exxon is a participant in Qatar's Golden Pass LNG project in Louisiana, a $10 billion project in which Qatar Energy has 70% ownership and Exxon has a 30% stake. Six LNG trains are part of the North Field Expansion (NFE) plan, which will increase Qatar's liquefaction capacity from 77 million tonnes per annum (mtpa) to 126 mtpa by 2027.
Oil and Gas Price Surge
Oil prices soared to an almost 14-year high of $139 per barrel when the Russia-Ukraine conflict started in March. While oil prices decreased subsequently, they remained above $100 per barrel in recent months, with market expectations of a more prolonged increase in the second half of 2022 as inflation continues to weigh in on consumers, leading to higher prices. Owing to increasing volatility in 2022, the S&P 500 energy sector was by far the best-performing sector, jumping about 60% this year.
Exxon – Top Performer?
Energy is by far the best-performing sector in the US stock market in 2022, with a 65% gain vs a 13% drop in the S&P 500 Index. Exxon is one of the top 10 performers in the broad equities benchmark index, and its meteoric increase surpassed the expectations of investors. Since plunging to a two-decade low in October 2020, the stock soared 222%. With its huge gasoline and diesel refining plants, the company profited from a broader increase in fuel costs in addition to higher prices of oil. Exxon is following in the footsteps of rivals Chevron Corp. and ConocoPhillips, which recently set new highs.
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