U.S.-based oil and gas company ExxonMobil (XOM) is reportedly exploring the sale of its chemical plants in the UK and Belgium. According to the Financial Times, the assets could sell for up to $1 billion, and ExxonMobil has already started early talks with advisers in the past few weeks. The company has not issued any formal statement following the reports.
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The sale is largely driven by tough economics, as the sector faces U.S. tariffs, weak demand, and rising competition from Chinese producers. For investors, the move doesn’t necessarily indicate trouble for the company and could even free up resources for more profitable projects elsewhere. Nonetheless, sources cautioned that there is no guarantee a deal will go through, and ExxonMobil could decide to retain the assets.
Why Europe’s Chemical Industry Is Struggling
Europe’s chemical sector is facing a long slump due to excess capacity, weaker-than-expected demand, and tough competition from low-cost Chinese producers. Meanwhile, the sector has also struggled in recent years with high production costs as gas and electricity prices surged following Russia’s invasion of Ukraine.
Exxon’s Shake-Up in Europe
Consequently, Exxon has been scaling back its European operations in recent years. The company has previously highlighted its clashes with Brussels over regulations that it says have raised energy costs and pushed some investors away.
In May, the company said it was in exclusive talks to sell its controlling stake in French fuel subsidiary Esso SAF (FR:ES), along with its fully owned chemical business in France, to North Atlantic France SAS.
Apart from ExxonMobil, other chemical companies also look to exit their European operations, with the continent taking the hardest hit from the downturn. Earlier this year, LyondellBasell (LYB) sold four European plants.
Is Exxon a Buy, Sell, or Hold?
According to TipRanks, Wall Street has a Moderate Buy consensus rating on ExxonMobil stock based on 13 Buys and seven Holds assigned over the last three months. The average XOM stock price target of $125.55 indicates 12.2% upside potential from current levels.
