Exxon Mobil (XOM) resembles an ever-expanding giant octopus with its arms reaching out in various directions, turning whatever it touches into gold. The company recently announced the multi-billion-dollar expansion of its Baytown petrochemical complex. The project calls for an ethane cracker at its Baytown complex and two high performance polyethylene lines at its Mont Belvieu plastics plant.
Exxon Mobil and Rosneft Oil (RNFTF.PK) recently announced the signing of agreements to jointly explore and develop oil and natural gas in Russia. In Romania, an affiliate of Exxon Mobil drilled a successful deepwater new play test on the Neptun block in the Black Sea, and the company participated in a successful exploration well offshore Tanzania, discovering approximately 5 trillion cubic feet of recoverable gas. These are just a few examples of what the Midas Touch of this company can produce.
While still ahead of the pack of such rivals as ConocoPhillips (COP), Chevron (CVX), Shell (RDS.A), and BP (BP), Exxon Mobil does not sit on its laurels, basking in the glory. This company is a limber giant, able to move with grace and speed to where the money can be found. With its steady growth and power to not only survive, but to thrive is why I see this company as one to buy and keep forever.
Exxon Mobil North America's largest natural gas producer is looking for new avenues for unloading the gas. The company is studying plans to export LNG from the United States, with the U.S. approving just one export project, but the company has 14 more filed awaiting approvals. The company has concerns though about the impact of government regulations on the exporting of natural gas, including the impact on the environment from controversial drilling and the fear that U.S. gas prices might increase on exports.
At the World Gas Conference in the Malaysian capital, CEO Rex Tillerson said, "Regulations should provide a clear, efficient roadmap for how to get things done, not a complex tangle of rules that are used to stop things from getting done. If government puts the development of these new sources of energy at a standstill, they will find their economies walking backwards. The recent North American experience in unconventional development has reminded the world of the value of competitive and free markets for improving the lives of consumers. Technological breakthroughs that allow for unconventional gas recovery emanate from investments and industry in private markets, they are not the result of government policies that pick winners and losers."
The Baytown project is an example of the company stretching itself in new directions with plans for this new multi-million dollar chemical plant. The plant, to be built in Texas and expected to be completed in 2016, will allow Exxon Mobil to more effectively compete with rival and the largest chemical maker, Dow Chemical (DOW). The plans were in the works for Exxon Mobil, but the company didn't want to jump in this quickly. Pressure from low natural gas prices and the fact that Dow Chemical, LyondellBasell (LYB), and Shell, all decided to expand their own U.S. chemical production helped to speed up the decision-making process. The ultimate outcome of the chemical plant is the production of polyethylene which is commonly used to make packaging and upholstery. The plant is estimated to provide more than $10 million in tax revenue and 3,700 more jobs for the local community.
Creating opportunities has become a habit for Exxon Mobil. Where there is not an open door, the company invents one. Recently, the company has been exploring ways to make energy from garbage. In East Baton Rouge Parish in Louisiana, the company is using a landfill to help power operations at its polyolefins plant. The waste that is decomposing in the landfill releases gases composed of methane and carbon dioxide. It took two years of research and $1.8 million to upgrade the facilities there, but the company is now treating and transporting the landfill gas about four miles to its plant where the gas helps to fuel boilers that power operations there. This project helps to get rid of the flaring of landfill gas, while at the same time generating a source of revenue for the city of Baton Rouge and East Baton Rouge Parish
Exxon Mobil is as solid financially as ever. The company has a strong cash flow from asset sales and operations of $66.5 billion. It has proved oil and gas reserve additions of 2 billion oil-equivalent barrels, replacing 116% of production, excluding asset sales; provides a total shareholder return of 19%, and total shareholder distributions of $29 billion; and an annual dividend per share growth of 6%, the 29th consecutive year of dividend per share increases.
The company had first quarter 2012 revenues of $124.05 billion, 2.01% above the prior year's first quarter results. Yes, Exxon Mobil has reach and depth so there is no good reason to not own the stock. Additionally, the company was just named "Top 25 Dividend Giant" by the ETF Channel. The company pays an annualized dividend of $2.28 per share in quarterly installments. In 2011, the company reported a dividend of $1.85, representing a 6.32% increase over the previous year.
Exxon Mobil is successful because it plans for success. The company does not look just five or ten years down the road, but actually has a 30-year plan, looking at all possibilities including demand, supply, financial outlook, political issues, and more. For a company with such strong upstream, downstream, and chemical holdings, it still reaches for more productive and profitable plays. That is why this company is, and will remain, a winner.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.