Oil giant Exxon (NYSE:XOM) is silently accelerating its expansion into the lithium space amid heightened demand for the ultra-light metal for use in batteries for electric vehicles (EV), cellphones, and laptops, and other emerging technologies. As per Reuters, the company is collaborating with Tetra Technologies (NYSE:TTI) to develop over 6,100 lithium-rich acres in Arkansas.
Exxon will reportedly contribute about 2,000 acres to the partnership, while Tetra will dedicate around 4,100 acres. Both Exxon and Tetra did not comment on the deal.
Exxon Expanding into Lithium Space
Earlier this month, Tetra, an energy solutions and services company, announced that it signed a memorandum of understanding with Saltwerx to develop around 6,000 acres of salty brine deposits in Arkansas that are filled with lithium and bromine. In the press release, Tetra said that Saltwerx was an indirect wholly owned subsidiary of a Fortune 500 company.
Interestingly, sources told Reuters that Saltwerx is a subsidiary of Exxon that it acquired earlier this year while buying a neighboring Arkansas parcel of 100,000 acres from Galvanic Energy. The Wall Street Journal had earlier reported that Exxon bought drilling rights to 120,000 gross acres in the Smackover formation of Southern Arkansas from Galvanic Energy for $100 million. The report added that Exxon could commence drilling in the coming months and expand further if the venture proves profitable.
Exxon’s expansion into the lithium sector would help the energy behemoth diversify its portfolio beyond fossil fuels and gain exposure to a rapidly expanding market. Moreover, the Biden administration is giving tax credits to encourage the domestic production of critical metals and minerals, including lithium.
What is the Prediction for Exxon Stock?
Earlier this month, RBC Capital analyst Biraj Borkhataria downgraded Exxon Mobil stock from Buy to Hold but maintained a price target of $125, saying the risk-reward profile looks more balanced.
Wall Street’s Moderate Buy consensus rating on Exxon is based on 10 Buys and five Holds. The average price target of $129.03 implies 22.4% upside.
