Benzinga - by Lekha Gupta, Benzinga Editor.
Exxon Mobil Corporation (NYSE:XOM) and Qatar Energy‘s lead contractor for their Texas liquefied natural gas (LNG) plant reportedly filed for Chapter 11 bankruptcy protection, citing challenges at the project.
Zachry Holdings, which held the lion’s share of the $10 billion construction project called Golden Pass LNG, said it was pursuing a “structured exit,” according to Reuters.
Golden Pass LNG is one of two large U.S. LNG terminals whose startup will significantly expand exports in the next 12 months.
Zachry Holdings, whose share of the project was valued at $5.8 billion, stated that it faced cost challenges over a change order and billings schedule and is engaged in negotiations with Golden Pass LNG for additional funding without success.
According to court filings, on May 8, Golden Pass notified Zachry of default of its engineering, procurement and construction contract, citing, its inability to pay subcontractors and vendors promptly.
“We, along with the other stakeholders, are considering all available options to implement a smooth transition and minimize any impacts. We plan to continue to fully support Golden Pass LNG through completion.” an Exxon spokesperson said.
Earlier this year, Exxon, which owns a 30% stake in the project, said it expected the first LNG production to be in the first half of 2025.
“Because we have been unable to find a path forward, we have been forced to take action to protect our business,” said John Zachry, CEO of the San Antonio, Texas-based company.
Investors can gain exposure to the XOM stock via Energy Select Sector SPDR Fund (NYSE:XLE) and IShares U.S. Energy ETF (NYSE:IYE).
Price Action: XOM shares are down 1.81% at $116.15 at the last check Wednesday.
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