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The largest trio of European integrated oil companies – BP (BP), shell (SHELL) and TotalEnergies (TTE) – currently trade at a more than 40% discount to their US peers, according to Citi analysts, who to suggest maybe the time is right for an American oil giant such as Exxon Mobil (NYSE:XOM) or Chevron (NYSE:CVX) make a move.
“The award to US IOC would appear significant, with value accretion through the ability to finance at lower (cost of capital) prices, as well as cost synergies that we estimate at (net present value) in the region of 15% – 30% of target market capitalization,” Citi said on Wednesday.
European politicians may have some objections, “but given that they have already put forward an anti-oil narrative, it is unlikely that they would intervene directly,” Citi said.
In American hands, European companies would not spend as much on low-carbon investments, “a part of the business that should be a money sink for European IOCs in the coming years,” the bank said.
Exxon Mobil (XOM), whose shares are trading around a dollar off their all-time high, is a “bull trap ahead of Q4 earnings,” writes The Asian Investor in analysis recently published on Seeking Alpha.