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Denning: Exxon provides a port in Washington's storm

  • Should the worst happen - either next week or in six weeks - investors likely would rush for safety, and WSJ’s Liam Denning says it's "better to be on a supertanker than a speedboat" if a storm hits, suggesting hunkering down with unloved Exxon Mobil (XOM).
  • If a debt limit debacle rears up, what will matter most is that XOM retains a AAA rating, and net debt at the end of June was equivalent to ~20% of forecast 2013 EBITDA; the E&P sector is carrying an average net debt load of 2.2x 2013 EBITDA and looks set to outspend cash flow by 28% this year.
  • In the last government-inspired crisis, in 2011, XOM far outperformed E&P peers, Denning adds.
Comments (3)
  • Michael Fitzsimmons
    , contributor
    Comments (7931) | Send Message
     
    The real question is: when will XOM replace T. Rex?
    11 Oct 2013, 01:00 PM Reply Like
  • Bob Carl
    , contributor
    Comments (181) | Send Message
     
    Michael,

     

    I think blaming the CEO is facile. XOM is making huge investments downstream that will make or break Tillerson's legacy, not this quarter's or this year's results. I am sure many XOM shareholders would like to see a steady progression of consecutive earnings increases, but that's not the way this company works. In fact, long experience teaches me that such performance is often accounting artifact.

     

    Perhaps Tillerson overpaid for XTO. But that's ex post facto reasoning. The gas play is long term investment and you don't buy a company like XTO unless you are willing to pay a significant premium.

     

    As a CEO, I was dammed by shareholders for somewhat inconsistent quarterly results. And yes, I could have grown slower in any given year and produced better results for that particular year and its quarters. Yet when I sold my company, the overall performance was strong and we returned a 22% IRR to our shareholders.

     

    My investment in XOM is predicated on XOM having excellence in management at all levels. Tillerson may not be Lee Raymond, but I say the jury is still out.

     

    Best,

     

    Bob
    11 Oct 2013, 01:31 PM Reply Like
  • dostoevsky228
    , contributor
    Comments (108) | Send Message
     
    Jury still out on XTO...are you kidding me? IF T-Rex had even waited just a few months to buy XTO he would have saved BILLIONS of dollars. LOOK at CVX vs. XOM! THey both were in the mid 60's in 2008..now $30.00+ premium for each share plus a better divident. 9 straight quarters of declining volumes....every earnings session is always about the future projects..when the here and now has been atrocious quarter after quarter..XOM just had the worse 50 day average in over 30 years....28th out of 30 YTD on the dow..XTO is an outright disaster and T-REX is and should be extinct. Vast underperformance. ANY CEO can say we are in this for the long term..XTO was December of 2009
    11 Oct 2013, 04:12 PM Reply Like
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