ExxonMobil’s (NYSE:XOM) push to commercialize its new petroleum coke-based proppant has drawn fresh scrutiny after BofA Securities hosted an expert call with Wood Mackenzie’s Robert Clarke, who examined early field data.
The company first unveiled the lightweight proppant technology at its 2024 analyst day, highlighting potential to lift estimated ultimate recoveries by about 15% using low-value petroleum coke from its North American refineries.
The announcement was tied to a jump in projected synergies from its Pioneer Natural Resources acquisition, raised to $3 billion from $2 billion.
Since then, Exxon has expanded deployment and raised expectations, suggesting a 20% uplift in recovery, with plans to use the proppant in about a quarter of its 2025 wells and hinting at material contribution to its goal of 2.3 million barrels of oil equivalent per day in the Permian by 2030.
Skepticism in the market has remained high, with most third-party analyses finding little clear upside when comparing wells with and without the proppant.
Wood Mackenzie’s study, however, used proprietary Novilabs data and confirmation from Exxon on well designs. Its review of three petcoke wells against 22 sand wells suggested a normalized 15% recovery uplift, improved early performance, and unchanged costs compared to sand.
The study implied net present value per barrel of oil equivalent gains above 20%, payback periods shortened by about seven months, and breakeven prices falling to around $45 a barrel from $50.
Exotic lightweight proppants have long been used in the industry, offering better fracture durability than natural sand, but their high cost, up to $1 million per well, has limited adoption.
Exxon’s advantage lies in its integrated model. By sourcing petroleum coke at roughly $20 per ton from its refining system, the company appears able to achieve the same performance benefits for under $150,000 per well, far below the industry norm of $500–$1,000 per ton.
The durability of Exxon’s edge is tied partly to patent protection, though analysts at BofA noted the company’s scale in securing feedstock and reducing logistics costs may be more critical.
Smaller producers would need to pay about four times as much to obtain similar material. Wood Mackenzie estimated the proppant alone accounts for about a third, roughly $1 billion, of Exxon’s $3 billion in expected Pioneer-related synergies.
Even with those findings, BofA Securities reiterated its “neutral” rating on Exxon shares, pointing to broader oil market uncertainties in 2025 and 2026, including the pace of new OPEC supply.
The brokerage maintained its $120 price objective, against Exxon’s trading level of $115.59 as of Sept. 25.
Source :
https://www.investing.com/news/stock-market-news/is-exxons-new-petcoke-proppant-the-real-deal-4257634
