Exxon Mobil CorporationNYSE
Exxon Mobil: It's All About Free Cash Flow
Richard Zeits • 86 Comments
Richard Zeits • 86 Comments
Exxon Mobil: Slow But Steady, Value Erosion Is Underway
Richard Zeits • 111 Comments
Richard Zeits • 111 Comments
Nov. 9, 2015, 3:34 PM
- Apache (APA +14.3%) shares reach their highs of the day after a report that the company had rejected a takeover offer after a suitor was lured by APA's $1.6B in cash and low leverage to help strengthen its balance sheet and fund a dividend.
- One analyst thinks Hess (HES -0.8%) and Murphy Oil (MUR +0.5%) - with strong balance sheets and which have materially underperformed in 2015 as investors have focused on E&Ps with longer life onshore portfolios - also could be buyout targets.
- But shares of APA’s peers have enjoyed little benefit from the report, which Heard On The Street's Spencer Jakab says suggests that the bargains on offer among North American oil and gas producers are not compelling enough to kick off a round of consolidation and that the list of buyers is short.
- Analysts at Simmons thinks Exxon Mobil (XOM -2.1%) and BP (BP -0.5%) are the most likely prospective buyers for APA.
Oct. 29, 2015, 8:57 AM
- Statoil (NYSE:STO) agrees to acquire a 35% stake in the Tugela South exploration license offshore South Africa from Exxon Mobil (NYSE:XOM), in the Norwegian company's first venture in the country.
- Tugela South spans nearly 3,500 sq. miles off South Africa's east coast, with water depths at up to 5,905 ft.; the license is in an early exploration phase, with seismic data gathering occurring through 2017, followed by geology and geophysics studies, before any drilling starts.
- Tugela South is operated by XOM, which acquired a 75% stake in the license in 2012 and will retain 40% following the deal with STO.
Oct. 5, 2015, 7:45 PM
- Suncor Energy's (NYSE:SU) C$4.3B hostile takeover bid for Canadian Oil Sands (OTCQX:COSWF) is "not a low-ball offer, it’s a no-ball offer,” according to billionaire Seymour Schulich, who owns 25M shares, or 5%, of the company and says he is not selling at the offer price.
- Schulich says SU's proposal is worth less than half the replacement value of the Syncrude Canada joint venture, of which COSWF owns 37%, and that Imperial Oil (NYSEMKT:IMO) recently built the Kearl oil sands project at a cost of $13B, which produces lower-grade oil than the Syncrude project.
- Analysts are split on whether the deal was a good one for COSWF shareholders; National Bank Financial's Kyle Preston calls the bid “a positive deal" and raises the possibility that IMO, along with parent company Exxon Mobil (NYSE:XOM), could launch a competing bid, but Barclays’ Paul Cheng, among others, does not believe IMO will make a bid.
- Earlier: Reuters: Canadian Oil Sands to reject Suncor bid, unlikely to engage
Sep. 30, 2015, 4:45 PM
- PBF Energy (NYSE:PBF) +8% AH after agreeing to acquire the 155K bbl/day Torrance, Calif., refinery and related logistics assets from Exxon Mobil (NYSE:XOM) for $537M.
- The refinery has been shut down since an explosion in February injured four contractors and caused heavy damage, leading to a shortage of gasoline and higher prices at the pump for drivers in California.
- The Torrance refinery provides 10% of the state’s capacity and 20% of the capacity in Southern California, and the explosion forced XOM to cut production to less than 20%, causing the spike in gas prices.
- PBF says the refinery will be restored to full working order prior to close, and expects the deal to be immediately accretive to earnings.
- Coupled with its previously announced Chalmette acquisition, PBF says it will have increased its refining capacity by more than 60% to ~900K bbl/day and added meaningful Gulf coast and west coast assets to its refining system.
Sep. 14, 2015, 7:50 AM
- As anticipated, Oil Search (OTCPK:OISHF) has rejected Woodside Petroleum’s (OTCPK:WOPEF, OTCPK:WOPEY) $8.1B takeover bid, as anticipated, saying the proposal undervalues its liquefied natural gas expansion plans in Papua New Guinea.
- Woodside may make a higher bid and needs to offer ~A$8.50/share to succeed, according to Sanford C. Bernstein analysts, after offering the equivalent of A$7.65/share.
- Exxon Mobil (NYSE:XOM) have been speculated as potential counter-bidders.
Sep. 9, 2015, 9:53 AM
- Oil Search (OTCPK:OISHF) will reject a demand by suitor Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY) to hold exclusive talks as part of its A$11.6B takeover offer, potentially paving the way for Exxon Mobil (XOM +1.5%) to emerge as a rival bidder, Sydney Morning Herald reports.
- XOM is the operator and largest shareholder in Oil Search's Papua New Guinea liquefied natural gas project, and is said to have held an informal meeting with Oil Search CEO Peter Botten in the country yesterday.
- Macquarie analysts believe that XOM, as operator of PNG LNG, is unlikely to make any due diligence process easy for Woodside given sensitivities around early work it is performing on the P'nyang and Elk-Antelope gas fields; Bernstein's Neil Beveridge expects upward revisions to Woodside's offer for Oil Search and counter bids possibly from XOM, "who would be the most likely competitor."
Jul. 31, 2015, 7:46 PM
- Giants Exxon Mobil (XOM -4.5%) and Chevron (CVX -4.9%) finished significantly lower at the close after each attempted a midday rally, in the wake of earnings misses marked by the continuing crude supply glut and price pressure.
- Oil ETFs fared not much better today: USO -3.2%, OIL -3.7%.
- Producers have key differences that make for advantages and disadvantages, like Chevron's downstream cushion. Exxon's edge over Chevron, Liam Denning notes: M&A. Its stock is down just 19% over the past year while the sector has tumbled 47%.
- As oil's selling point -- big cash distribution -- gets squeezed, Exxon is in relatively good shape. It's still raising its dividend, and it's cut its projected Q3 buybacks to just $500M (vs. zero for Chevron, Shell and BP).
- Exxon says it shops worldwide, but the U.S. may be a more natural hunting ground. Possible targets? According to Wolfe Research's Paul Sankey, Pioneer Natural Resources (PXD -2.4%) and Hess (HES -2.2%).
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
- Previously: ConocoPhillips -3.3% as dividend gets scrutiny out of earnings (Jul. 31 2015)
- Previously: Chevron -1.8% as earnings tumble, paced by $2.2B upstream loss (Jul. 31 2015)
- Previously: Exxon Mobil off 1.8% premarket after lowest profit since 2009 (Jul. 31 2015)
Jun. 25, 2015, 12:17 PM
- Penn Virginia (PVA +7.8%) spikes higher after a report that BP (BP +0.3%) has offered $8/share in a takeover bid for the company, and that PVA has hired BofA to help it search for potential buyers.
- PVA is said to have rejected the offer because it believes the terms offered undervalue the company, and is holding out for at least $10/share, according to U.K. publication Proactive Investors.
- BP rivals such as Exxon Mobil (XOM -0.1%) and Chevron (CVX -0.1%) also may be interested in buying PVA, the report says.
Apr. 21, 2015, 10:15 AM
- BP execs reportedly are concerned the company is vulnerable to a takeover bid, and they are said to have stepped up internal reviews of takeover scenarios and war-gamed defense strategies with advisers from firms including Morgan Stanley.
- While a move for BP may seem unlikely because of still-unknown legal liabilities from the 2010 Gulf of Mexico oil spill, there’s at least one good reason for BP's paranoia: Before ruling it out by going for BG, Royal Dutch Shell was said to have taken a hard look at buying BP.
- Even a slimmed-down BP still has plenty to attract potential acquirers, including strong deepwater prospects in Angola and the Gulf of Mexico, a refining business that has outperformed peers, and an industry-leading trading outfit.
- BP views Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) as the only realistic predators remaining, according to the report.
Apr. 14, 2015, 12:58 PM
- Canadian Oil Sands (OTCQX:COSWF +5.5%), the company with the largest stake in oil sands miner Syncrude Canada, is a prime takeover target and its most likely suitor is Imperial Oil (IMO +1.9%), the company with the second-largest stake, says FirstEnergy Capital analyst Michael Dunn.
- The analyst says his report is partly based on recent investor meetings with senior IMO execs who believe now is a good time to consider making acquisitions.
- Dunn thinks IMO would not want to pay more than a price in the low teens for COSWF, so its stock would have to fall further to make a bid attractive, and he suggests the company would not want to take on excessive debt - which could mean an equity-based offer, help from its controlling shareholder, Exxon Mobil (NYSE:XOM), or enrolling a current Syncrude partner such as Suncor (NYSE:SU).
Apr. 8, 2015, 7:30 PM
- Analysts say Shell's (RDS.A, RDS.B) move to buy BG Group is telling potential acquirers that one of the biggest players is now confident enough to make a big play, and that the worst may be over in the big slide in oil and gas prices.
- The deal also may be the starting gun for a wave of M&A activity that oil industry observers have been predicting since crude prices started to slump in June.
- For starters, BG's U.S. shale assets likely will become candidates for divestiture after the Shell deal closes; in buying BG, Shell has made the choice to double-down on global liquefied natural gas and de-emphasize U.S. shale.
- Among the biggest players, Exxon (NYSE:XOM) and BP could contemplate deals - perhaps even with each other, as has been speculated, since BP ranks among the cheapest major producers relative to estimated profit.
- BG itself could whet the appetite of XOM's Rex Tillerson, who recently said there was "no limitation" to what he might buy - but he will be especially selective after getting burned by 2010's XTO purchase.
- Companies with prime acreage in oil-rich shale fields in Texas, North Dakota and Colorado have become a lot cheaper in recent months; Anadarko (NYSE:APC), Cabot Oil & Gas (NYSE:COG), Pioneer Natural Resources (NYSE:PXD), Occidental (NYSE:OXY), Continental Resources (NYSE:CLR), Concho Resources (NYSE:CXO) and Tullow Oil (OTCPK:TUWLF) are among those at topping analysts’ lists.
- Galp Energia (OTC:GLPEF) may draw interest from buyers because, like BG, it offers access to oil assets in Brazil.
Apr. 8, 2015, 3:21 PM
- Royal Dutch Shell (RDS.A, RDS.B) will become a dominant player in the liquefied natural gas market through its acquisition of BG Group, selling ~50M tons/year of LNG by the end of the decade vs. less than 25M tons/year by Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), Shell CFO Simon Henry says.
- The deal will increase Shell’s LNG sales by 32% immediately and 80% by 2018, accounting for ~15% of the world’s traded LNG, according to Henry.
- The deal gives Shell access to BG’s Australian project to produce 8.5M tons/year of LNG from coal-seam gas; the first unit at the site already is producing and a second will start later this year, BG Chairman Andrew Gould says.
- The acquisition also gives Shell assets in Tanzania, where some of the world’s biggest gas discoveries have been made; BG has a 60% interest in three offshore blocks and may help develop an LNG plant there to export gas to Asia and Europe.
- In the LNG market “size really matters and the size underlines delivery potential,” Shell CEO Ben Van Beurden says. "This is about scale.”
Apr. 8, 2015, 7:59 AM
- Analysts at Jefferies now expect Royal Dutch Shell (RDS.A, RDS.B) to surpass Exxon Mobil (NYSE:XOM) as the world's largest publicly traded oil and gas producer by 2018, with output of 4.2M boe/day, following Shell's $69.6B deal to buy BG Group.
- But XOM has long been rumored as a potential bidder for BG, and Financial Times points out that it now has both the motive and the opportunity, raising the possibility that it could try to outbid Shell for BG.
- Like Shell, XOM is struggling to grow and will find it easier to raise production by dealmaking than by drilling; XOM’s output was ~4.3M boe/day in 2001 and 4M last year.
- With its greater size, low debt and AAA credit rating, XOM could muster a larger cash component in any offer than Shell’s 28% of its total offer of ₤13.50/share; however, hostile deals are very rare in the oil and gas industry.
- Whether or not BG is the perfect fit for XOM, Paul Sankey of Wolfe Research has suggested other midsized E&P specialists could prove tempting, including Hess (NYSE:HES), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), Apache (NYSE:APA) and Anadarko Petroleum (NYSE:APC).
Mar. 13, 2015, 3:58 PM
- Whiting Petroleum (WLL +3.1%) spikes on a Bloomberg report suggesting Exxon Mobil (XOM -0.2%) could be interested in the company; trading is now halted for volatility.
- Continental Resources (CLR -4.8%), Hess (HES +0.4%) and Statoil (STO +1.4%) also are reportedly looking at WLL, according to the report, and WLL has set up a data room for potential buyers to evaluate the company’s financial information and asked them to submit bids next week.
- WLL is the largest producer in North Dakota’s Bakken Shale, and the four rumored suitors already are among the 10 largest holders of acreage in the play.
- WLL had been down all day on an earlier report that it was considering selling off pieces rather than the whole company.
Feb. 12, 2015, 2:14 PM
- If Exxon Mobil (XOM +1.6%) decides to go hunting for struggling energy peers with shrinking cash flow - as it did five years ago when it acquired XTO Resources for $25B, during an energy rout worse than today's - it would need to go big or not go at all in order to meaningfully boost its oil and gas reserves, WSJ writes as it discusses BP (BP +2.1%) as a potential takeover target.
- BP “is the obvious fit says Wolfe Research's Paul Sankey; buying BP, which is still dealing with the fallout of the 2010 Gulf of Mexico oil spill, “would close out a damaged brand at a terrific price” and bolster XOM’s capacity to find new sources of oil and gas, he says.
- Other potentially attractive targets singled out by analysts include a smaller tier of companies such as Anadarko (APC +1.9%) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY), which have discovered huge deposits of oil and gas but may lack the cash flow to develop them quickly.
Feb. 2, 2015, 6:24 PM
- Canadian Oil Sands (OTCQX:COSWF) jumped 20% today in Toronto on rumors it could be a takeover target by one of its partners in Syncrude Canada.
- Canadian Oil Sands is the largest shareholder in Syncrude, with a 37% stake, but larger companies such as Imperial Oil (NYSEMKT:IMO) also own major stakes in the venture; the rumors appeared to take flight as IMO parent company Exxon Mobil (NYSE:XOM) signaled today that it would be acquisitive in the current low oil price environment.
- FirstEnergy Capital analyst Michael Dunn says a Canadian Oil Sands “takeout by another Syncrude partner is a distinct possibility should the shares continue to languish."