ExxonMobil's (NYSE:XOM) current projected 2006 earnings reflect oil at $51 per barrel. We should start seeing the effects of $65 - $75 pricing contributing to Q3 earnings. Once it is apparent that oil is not returning to the $45 range (at least not in 2006), XOM stock will appreciate by as much as 20% from current levels.
Like all companies, XOM works on a profit margin. A 10% margin on $40 is $4. A 10% margin on $65 is still 10% but is $6.50! In theory, XOM could turn in an astronomical record-breaking performance for 2006 and post a $44 billion profit. We all need to adjust our thinking regarding $35+ billion per year profits as a present and future normality.
For more on this, see this article written by MarketWatch several months back.
As per the last conference call, XOM has put most of its refinery maintenance work behind it in Q1. This should add another 5-6% in Q2 & Q3.
XOM 1-yr chart:
Disclosure: This is a personal comment written by a CrossProfit analyst. This does reflect the opinion of CrossProfit.com.