It will interest you to hear that Exxon Mobil (XOM) could be on target to rise in the coming quarter and beyond. Exxon's success is attributable to the rising price of oil. Investors are therefore set to get their cut of the cake as Exxon's board of directors declared a cash dividend of $0.57 per share of common stock. This accounts for a 21% increase from the $0.47 that was paid in the first quarter.
Barely a day after the announcement of the dividend increment, Exxon announced its first quarter 2012 results. Net income fell 11% from the same quarter last year. The company stated that the reduction in its oil production is accountable for the fall. This could also affect Exxon in the second quarter. However, considering the recent remarkable investment by Exxon in the production of natural gas, I see the company coming out stronger than ever from what seems to be a sloppy start to the year.
Meanwhile, the cleanup has been completed at the location of a crude oil spill in northern Louisiana. Exxon cleaned the mess up in good time - this is good for its public image, especially amidst reports that Exxon can sometimes neglect its corporate responsibilities. However, the Pipeline and Hazardous Materials Safety Administration (PHMSA) has ordered Exxon to get federal approval if it is to restart the damaged northern Louisiana pipeline. In a bid to counterbalance the reduction in production that this damaged pipeline would bring, Exxon has restarted its French refinery in Port Jerome.
Elsewhere, the Ukrainian government has announced its intention to increase the production of natural gas by 25% over the next three years. This is a move that is aimed at reducing the over dependence on Russia for energy. With respect to this project, the Ukrainian government has signed contracts with Royal Dutch Shell (RDS.A) and Chevron (CVX), which are both Exxon's strong competitors. However, Exxon could have its share from this third largest shale gas reserve in Europe with reports coming in that negotiations are about to commence between the two parties. A completed deal with the Ukrainian government would provide a huge boost to Exxon's second quarter performance, as it badly needs to increase its production to balance the negative trend in its first quarter results.
Exxon competitors Chevron, Royal Dutch Shell, ConocoPhillips (COP) and BP (BP) are all being affected by similar factors. And yet, while times seem to be difficult for Exxon, these competitors keep announcing the commencement of new businesses. I will also note that Exxon's competitors are seeking an proper escape route from the woes that are befalling the oil sector.
For instance, Chevron is standing tall given that it has signed a contract with the Japanese utilities company to supply about 1 million metric tons of liquefied natural gas. This is the second international contract that Chevron is signing within a short period, when reports on Exxon focus on pipeline leakage and its exclusion from the pre-qualified bidder for Iraq's project on the expansion of natural gas production. These tidbits may make an investor think twice about backing Exxon, and instead look toward Chevron, a company that seems to be in a better spotlight right now.
Royal Dutch Shell is likely to press forward with the recent announcement of its partnership with the likes of Korea Gas, Mitsubishi, and PetroChina to construct a 1.2 billion cubic foot liquefied natural gas facility in British Colombia, along with the contract with the Ukrainian government.
ConocoPhillips is on the edge of completing its repositioning into a new class of investments, according to the chairman and chief executive officer of ConocoPhillips. ConocoPhillips also stated that it is interested in furthering its Australian shale investment. Overall, these competitors are achieving big things as Exxon watches its own performance spiral downward.
BP is another company that is having a difficult time. It recently announced its first quarter earnings, which showed a decline of 18%. The fall was blamed on the sales of its assets to pay claims related to the 2010 Gulf of Mexico disaster. More falls would most likely be recorded, as it will continue to sell more assets until it achieves the $38 billion target due by the end of 2013. Consequent to the sales of its assets, it production of oil and gas fell by 6% in the first quarter. BP doesn't seem to be in good place right now, so at least Exxon doesn't have to watch it rise right now.
Exxon's strength at this time is that it has so much invested in natural gas. However, these present circumstances could give the company mixed results in the second quarter. In order for Exxon to match up to its competitors, it needs to ensure that the negotiation with the Ukrainian government bears good fruit, in addition to continuing a solid rate of production. Only then can one predict a modest second quarter.
Either way, the near future appears shaky at best for the largest company in the world. Investors should be encouraged by the company's future prospects. Keep a close eye on Exxon's new deals to make sure they go through and produce the expected results. The company has huge size advantage over its competitors. Yet, if they continue with acquisitions and expansions, Exxon may not have enough strength to keep its market share or position.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.