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Ebola outbreak disrupts Exxon’s oil drilling

From USA Today (source link)  :

The Ebola outbreak in West Africa is threatening Exxon Mobil’s (XOM) activities in the region, including plans to drill for oil there.

Exxon CEO Rex Tillerson said during an industry conference in Houston today the company is having second thoughts about plans to start offshore drilling in some areas in West Africa due to concerns. USA TODAY was not present at the meeting, but company spokesman Patrick McGinn confirmed the comments in an e-mail. “Safety, health and logistical issues related to Ebola will delay the planned late 2014 start of ExxonMobil’s first exploration well offshore Liberia,” McGinn wrote in the statement to USA TODAY. The company’s operations in Nigeria are not affected and the company does not have operations in other areas affected by the outbreak, McGinn says.

The company has also restricted “non-essential” business travel by employees to areas of the world affected by the disease. This decision was made weeks ago, McGinn says.

Shares of Exxon are down 7 cents, or 0.08%, to $92.80. Africa is home to 20% of Exxon’s crude oil developed proved reserves and 3% of natural gas. Meanwhile, 20% of Exxon’s undeveloped proved oil reserves are in Africa.

There are not many large U.S. companies with significant activity in the sub-Saharan Africa region, a portion of which is being affected by the outbreak. It’s important to note there are about 30 countries in the sub-Saharan region of Africa — and the outbreak is contained to just about five. Many of these companies with a presence in the sub-Saharan Africa region are centered in South Africa, which is not one of the African countries affected by the outbreak.

There are just seven companies in the Standard & Poor’s 500 that have disclosed an undefined but notable business presence in the sub-Saharan Africa region, including portions outside where the outbreak is most intense, says S&P Capital IQ:

Company Ticker
Accenture ACN
American Int’l AIG
Chevron CVX
Cisco Systems CSCO
Citigroup C
Morgan Stanley MS
Starwood Hotels HOT
Sources: S&P Capital IQ, USA TODAY research

* Accenture, a global consulting firm, lists South Africa as one of its priority emerging markets. Accenture’s revenue from emerging markets nations, which includes Asia as well as Africa, accounted for 40% of revenue in fiscal 2013.

* American International Group, an insurer, lists Johannesburg Insurance Holdings as a significant unit. Last year, AIG’s emerging markets business wrote $6.8 billion in property casualty policies, accounting for 20% of the total.

* Chevron, the energy company, not surprisingly competes with Exxon in Africa. The company in 2013 reported net production of 431 oil-equivalent barrels a day in Africa in 2013, which is 17% of its total.

* Cisco Systems the networking company also maintains a presence in South Africa. Revenue from Cisco’s African business is consolidated with its emerging markets including Asia. Total emerging markets revenue in the year ended July 26 was 26% of total revenue.

* Citigroup, the global financial firm, has been aggressive in the emerging world. Revenue from emerging markets, which includes Africa, accounted for 41% of Citi’s revenue in 2013. And trouble in emerging nations has caused the company to relocate staff before, the company says in its annual regulatory filing.

* Morgan Stanley, the global investment bank, operates a unit out of South Africa. Revenue from the region isn’t nearly as significant to Morgan Stanley as it is Citi. Revenue from Africa, combined with Europe and the Middle East was $4.5 billion in 2013, or 14% of total revenue.

* Starwood Hotels operates and franchises hotels all over the world, including 85 in Africa and the Middle East. The company combines its count of African hotels with those in the Middle East. Combined these properties account for 7% of the company’s 1,175 worldwide properties at the end of last fiscal year. Starwood’s stock was among the hardest hit of travel stocks Wednesday on the confirmation of an Ebola-infected patient in the U.S. Shares are down $79.24, or 1.2%, to $79.24 Thursday. That’s after falling 3.6% on Wednesday.

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