ExxonMobil Resolves Tax Dispute With Chad To Evade $74B Fine

Integrated energy giant ExxonMobil Corporation (NYSE:XOM) recently reached an agreement with the government of Chad regarding tax payments. The agreement will help the company to avoid a fine of $74 billion imposed by the African country.

The agreement will help ExxonMobil to retain its exploration permit in Chad through 2050. We would like to remind investors that in 2001 ExxonMobil started crude exploration activities in Chad. Since 2003, the company has been procuring oil from the region.

The government alleged a consortium led by ExxonMobil of evading taxes, which triggered a dispute. The consortium included Chevron Corp. (NYSE:CVX) and Malaysia’s state-owned Petroliam Nasional Bhd. In 2014, Chevron left Chad.

The country’s High Court asked ExxonMobil to pay $819 million in overdue royalties. Last year, the company was asked to pay 2% in royalties on crude exports by the government of Chad when ExxonMobil argued that it made a deal with the government in 2009 to set the royalties at 0.2%.

The amount of the fine is much greater than the $61.6 billion retribution paid by BP plc (NYSE:BP) in 2010 due to the Deepwater Horizon disaster. It is also almost five times of the GDP of Chad in 2015.

The fine demanded by Chad is in compliance with the customs code of the Economic and Monetary Community of Central African States.

About the Company

Irving, TX-based ExxonMobil is one of the world’s largest publicly traded oil companies, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon’s earnings come from its operations outside the U.S. The company divides its operations mainly into three segments: Upstream, Downstream and Chemicals.

Price Performance

In the last one month, ExxonMobil’s shares increased 0.2%, while the Zacks categorized Oil and Gas – International - Integrated industry declined 1.8%.

Zacks Rank and Stock to Consider

ExxonMobil presently has a Zacks Rank #3 (Hold). A better-ranked stock in the oil and energy sector is Delek US Holdings, Inc. (NYSE:DK) . It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings’ sales for 2017 are expected to increase 71.35% year over year. The company has a four-quarter average positive earnings surprise of 60.68%.

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