- Despite $100 oil and much higher capital spending, Exxon's oil production has continued to decline at a high rate.
- When measured on a free cash flow basis, after adjusting for production declines, financial returns over the past five years were poor and the outlook remains bleak.
- Even assuming the company will stabilize its liquids volumes, the stock appears dependent on $100+ oil to yield minimally acceptable free cash flow returns.
- In a weaker price environment, Exxon may have to borrow to sustain dividends and share buybacks at the current level.
- Exxon needs a radical Upstream strategy re-evaluation and deep cost reductions to restore competitiveness.
Exxon Mobil: My Take On Dividend Security And Valuation
- XOM's free cash flows in the next few years is insufficient to fund its capital spending and dividend plans.
- The company's under-leveraged balance sheet should be able to provide ample liquidity to secure the dividend and its growth prospect even in a worsened oil scenario.
- My dividend discount model suggests a fair value of $99.
Is ExxonMobil The Best Way To Play A Rebound In Oil Prices?
- ExxonMobil has been touted by many as a way to profit off the rebound in oil prices.
- ExxonMobil currently trades at a premium valuation to its peers and has a smaller dividend.
- ExxonMobil's stock has outperformed its peer group throughout the current decline, meaning it could have lower upside potential.
- ExxonMobil's production has declined over the past few years but its strong balance sheet offers the opportunity to turn that around.
- ExxonMobil is a viable choice to profit from an oil price rebound but some other candidates may be better.
The Crash In Oil Prices Offers The Opportunity Of A Lifetime - I Beg To Differ
- Exxon Mobil’s stock has held up quite well in the face of falling oil prices. Nonetheless, something has got to give.
- Due to velocity of the drop, I submit the aftershocks are yet to be realized by Exxon Mobil.
- Further, after performing firsthand due diligence in the Texas oil patch, many operators are not so sanguine on the prospects for the price of oil going forward.
ExxonMobil And Chevron: Comparing The Yields Of These 2 Energy Dividend Aristocrats
- A recent Forbes article suggests that both ExxonMobil and Chevron will increase their dividends in the second quarter of 2015.
- This would mark the 32nd year of consecutive dividend increases for Exxon and the 26th for Chevron.
- ExxonMobil's dividend yield is the highest it has been in more than a decade in both absolute terms and compared to the S&P 500.
- While Chevron has achieved more dividend growth over the past decade, Exxon's recent dividend growth has been superior and its payout ratio is lower than its largest competitor.
- According to my calculations, Exxon Mobil will post, in Q4, net income of about $5,300 million or $1.24 per share, a 34% decline from $1.89 net income in Q3.
- Despite lower profit for the fourth quarter, in my opinion, XOM's stock is still attractive.
- In my view, XOM's stock should be included in every diversified large cap dividend stocks portfolio.
Exxon Mobil: Is This Stock The Best Way To Play A Rise In Oil Prices?
- Since June 2014, Exxon stock has dropped by about 14%.
- In the same time frame, crude benchmarks have slid by more than 50%.
- I was fortunate enough to sell my oil producers before the decline and, at this point, I am not buying any back.
- In my opinion, a better oil opportunity will be the USO ETF at some point.
As Oil Slips, Exxon Mobil Seems To Keep Its Footing
- As the price of oil slides, falls, tumbles and plummets, we thought we'd take another look at the biggest of big oil companies - Exxon Mobil Corp.
- How will it fare in a significantly lower oil price environment?
- With oil down, Exxon may benefit from this environment.
The Crash In Oil Prices Raises Questions And Opportunities For A Lifetime
- The price of oil has dropped nearly 60% in the last 4 months or so.
- Conflicting information makes this perhaps the most intriguing topic of the decade.
- Along with questions come opportunities.
Exxon Mobil: The Bullish And Bearish Case For 2015
- An expected improvement in oil pricing and demand will act as a tailwind for Exxon Mobil, which is improving its production capability.
- However, if Saudi Arabia does not budge from its aggressive stance, oil prices might continue falling.
- As a result, Exxon's balance sheet will be under pressure and the company might start seeing a drop in cash generation.
XOM Hedges Against Environmental Backlash Of Shale Oil Mining
- XOM is increasing its oil production capability despite low oil prices as CVX walks away from deals.
- This shows that XOM is proactively taking steps to protect its oil production capability as the environmental backlash against shale oil mining gains momentum while others are oblivious to it.
- When oil prices normalize, XOM will be a key beneficiary with its enhanced production capability regardless of the regulatory conditions of shale oil mining in the United States.
- The relentless drop in oil prices continued Thursday after a brief respite.
- For an untold number of reasons I believe we are nowhere near the bottom in oil presently. Yet, there is light at the end of the tunnel.
- A flight to safety of oil and gas dividend growth investment dollars may begin to occur as the price of oil continues to plummet.
- Exxon Mobil should be the beneficiary of this potentially massive shift.
- XOM is a terrific, well-diversified energy name with strong fundamentals.
- But with oil crashing continuously, earnings will be negatively affected.
- The dividend is solid, and is a separate reason to potentially own the stock.
- I think earnings estimates are too high and that XOM is worth around $80 right now.
The 'Immense Opportunity' Is Not In Exxon, It's In Small-Cap Oil Stocks
- Oil prices may not go as low as some expect and, even if they do, they probably will quickly rebound.
- The global economy appears poised for long-term growth, and the recent drop in oil prices is only likely to increase oil consumption and economic activity.
- Many investors are buying Exxon shares due to a slight pullback in that stock, but the really immense opportunity appears to be in small-cap oil stocks.
- The relative strength in Exxon could be a sign that oil is not going to see a significant additional decline.
- Small-cap stocks that have strong balance sheets, significant hedges, and even multi-year contract backlogs are worth buying now.
ExxonMobil: The Safest Way To Play The Oil Rebound?
- ExxonMobil has outperformed its U.S. peers Chevron and ConocoPhillips during the latest oil price crash.
- ExxonMobil's size and free cash flow strength make the company extraordinarily attractive for investors.
- The company is an excellent bet on normalizing oil prices in the long run.
- Shares of ExxonMobil now yield more than 3%.
Retirement Strategy: Selling Exxon Mobil Goes Against The Grain Of A Dividend Growth Investor
- Dividend growth investors can create wealth just by virtue of the increasing dividends from dividend aristocrat stocks.
- Not to buy a dividend aristocrat is perhaps the worst advice a dividend growth investor can get.
- There are 54 stocks that are dividend aristocrats. Owning them over the long term would have made you wealthy and I believe will continue to do so.
- While Exxon has outperformed over the past six months, now is the time to take profits and rotate out of its stock.
- Exxon has been unable to generate production growth despite a large capex budget, and free cash flow does not cover shareholder returns.
- At 14.9x earnings, Exxon's stock does not reflect the company's weak operating performance, and I would sell shares.
Apr. 3, 2014, 3:45 PM
- Exxon Mobil (XOM +0.1%) agrees to publicly disclose more details on the risks of fracking, reversing a long-held resistance after negotiations with environmental groups and investors.
- XOM's report, expected in September, will cover how the company manages risks from fracking in shale rock formations, including impacts to air quality, water and chemical usage as well as damage to roads; the report will not include data on methane that leaks from its operations into the atmosphere.
- After publishing earlier this week a report on how it would be affected by regulations limiting carbon emissions, the new disclosures clearly mark a change in tone for XOM.
Apr. 3, 2014, 2:57 PM
- Production at the giant Kashagan oil field in Kazakhstan is unlikely to restart this summer, as the companies involved in the consortium running the project are still awaiting a report on a gas leak that closed the field last October, WSJ reports.
- Resuming output is important, so the companies - which include Exxon (XOM), Shell (RDS.A, RDS.B), Total (TOT) and Eni (E) - can start generating revenue to recoup some of the $50B they have spent on Kashagan over the last 17 years.
- It may be even more critical for the Kazakh government, which had based its economic forecasts on revenue from Kashagan, where output was expected to ramp up to 370K bbl/day from 180K bbl/day initially.
Apr. 2, 2014, 7:17 PM
- Canada's National Energy Board says it will hold public hearings into Kinder Morgan Partners' (KMP) planned $5.4B expansion of the Trans Mountain pipeline that carries crude from the Alberta oil sands to the Pacific coast, first hearing evidence from aboriginal groups in August.
- The regulator, which plans to issue a recommendation on the project's future no later than July 2015, says its review will focus on 12 issues, including impact on the environment, effects on marine shipping, aboriginal interests, and contingency planning for spills and accidents.
- Energy producers such as Exxon (XOM) affiliate Imperial Oil (IMO), BP and Suncor (SU) are looking to the Trans Mountain expansion and other proposed pipelines - most notably Keystone XL (TRP) - to help ease the bottlenecks that have led to steep discounts for Alberta oil on global markets.
Apr. 2, 2014, 7:02 PM
- Imperial Oil (IMO, XOM) has spent more than expected in ramping up production at its Kearl oil sands mining operation in Alberta, but CEO Rich Kruger believes the company has learned enough from the problems to ensure a smoother start when it opens the C$8.9B second phase later this year or early next.
- Production at Kearl averaged 70K bbl/day in Q1, up from 52K bbl/day during last year's Q4 but still well below the 110K capacity.
- Operating costs of $30/bbl for the initial phase for exceeded some analyst expectations of $20/bbl, and RBC now expects operating costs of $29-$32 falling to $24-$28 once the second phase starts up; by contrast, Suncor (SU) expects operating costs for its Fort Mills mine at $20-$24/bbl.
- Despite the start-up problems, Kruger says the heavy oil produced at Kearl is gaining wide acceptance from refiners; ~21 North American refineries have bought the oil, while a refinery in Malaysia also acquired some cargoes by tanker from the Port of Vancouver.
Apr. 2, 2014, 2:44 PM
- ExxonMobil (XOM -0.2%) says it will blend oil liquids from its PNG LNG gas export project in Papua New Guinea into the country's only crude blend, nearly doubling crude exports by the middle of the year.
- The quality changes are not likely to be significant, but the rise in number of monthly cargoes could make the blend more attractive to regional refiners seeking steady supply of light sweet crude.
- The $19B project is due to begin exports in mid-2014 of 6.9M metric tons/year of liquefied natural gas and produce 25K bbl/day of condensate that will be blended into the country's existing export stream.
Apr. 1, 2014, 3:19 PM
- Rosneft (RNFTF) says it is on track to start production at its first liquefied natural gas plant in Russia's far east in 2018-19, and signals that its partnership with Exxon Mobil (XOM -0.3%) for building the plant will not be affected, despite tension over Ukraine.
- Rosneft says current LNG prices in Asia, at more than $15/MBtu, would enable it to successfully carry out its LNG project, which will have an initial annual capacity of 5M metric tons.
- Rosneft also says it expects its gas output this year to rise to ~55B cubic meters and to more than 63B next year.
Mar. 31, 2014, 5:55 PM
- Exxon Mobil (XOM) dismisses any notion that it would retreat from oil sands and deepwater reservoirs amid potentially stringent carbon regulations in the future, saying fossil fuel production will continue to be key to meeting global energy demand for decades.
- XOM's report on the risks that climate change policies could pose to the company's assets and future profitability - the first detailed response to these concerns by a major oil company - acknowledges the need to adopt policies to address climate change, but it concludes that governments are highly unlikely to adopt policies that cut emissions so sharply that oil and gas consumption would be severely restricted.
- Some investors have argued that XOM's shareholder value could be put at risk if oil producers were unprepared for a future of constrained fossil fuel production under tougher climate rules.
Mar. 31, 2014, 2:27 PM
- The Pipeline and Hazardous Materials Safety Administration approves Exxon Mobil's (XOM) plan to restart operations for the 210-mile Texas leg of its Pegasus pipeline that a year ago spilled ~5K barrels of oil into a residential area in Arkansas.
- The federal regulator had accused XOM of failure to account for risks in the 70-year old pipeline and said the company could face ~$2.7M in fines.
- Last year, Sunoco Logistics (SXL) delayed a West Texas to Nederland pipeline project linked to Pegasus because of the shutdown; it is not clear what impact the restart will have on that project.
Mar. 31, 2014, 11:59 AM
- Four global energy majors, 10 man-made islands and nearly $50B have added up to zero barrels of current oil production, as WSJ profiles the landmark Kashagan "elephant” project gone awry.
- It’s a story of sky-high investment at a time of record-high oil prices that is generating very little in return, as well as the sort of uncapped spending that has characterized the push into new frontiers is now being reined in.
- The project - co-developed by Eni (E), Total (TOT), Exxon (XOM) and Shell (RDS.A, RDS.B) - has been plagued by budget blowouts, engineering missteps and management disputes, and miles of leaky pipeline make up what is arguably the world's most expensive plumbing problem.
- If the era of big spending is to continue - if the push into the Arctic or deep-offshore Brazil or uncharted territories like Mozambique and Myanmar is going to succeed - then the price of crude may have to move higher.
Mar. 28, 2014, 3:32 PM
- Exxon Mobil (XOM +1.3%) is up again today, capping a 3% surge since BofA yesterday upgraded shares to Buy with a $110 price target, citing potential for improved cash flow in the coming years.
- The firm says recent risks to production have played out, and that improving unit margins can lift operating cash flow by $15B over the next five years.
- XOM sees capital spending declining again in the near future despite its opening of numerous new projects, which should help increase production.
Mar. 28, 2014, 12:44 PM
- Oil Search (OISHF) is contesting Total’s (TOT) agreement earlier this week to acquire a 40% stake in InterOil’s (IOC) natural gas discoveries in Papua New Guinea, a dispute which could require international arbitration to be resolved.
- The dispute surrounds stakes in the Elk and Antelope fields, coveted because the gas could be used either for a possible expansion of a $19B liquefied natural gas project that ExxonMobil (XOM) is building with Oil Search, or for a rival project.
- Analysts say the outcome of the dispute is unclear, but some speculate Oil Search's aim may be to keep the door open to XOM to enter the Elk-Antelope joint venture.
- Meanwhile, IOC has spudded its third well in as many weeks in Papua New Guinea with up to five more planned over the next year or so.
Mar. 27, 2014, 11:55 AM
- Investors are pouring money into energy companies, putting 7x as much into energy sector ETFs as they did last quarter and betting that profits of energy producers rise along with crude oil and natural gas prices.
- Energy collecting new money reflects optimism for a turnaround in companies like Exxon Mobil (XOM), XLE's biggest holding, but the bet may not pay off, as analysts generally foresee lower global oil prices in 2014 and gains in gas.
- ETFs focusing on oil and gas companies have captured 20% of the $10B in net inflows into ETFs this year, after hauling in only 2.5% of fresh money last quarter and 7.7% in all of 2013.
- ETFs: ERX, OIH, VDE, ERY, FCG, XOP, DIG, DUG, GASL, XES, IYE, IEO, IEZ, GASX, PXE, PXJ, PXI, PSCE, FENY, FXN, RYE, DDG
Mar. 26, 2014, 4:59 PM
- The Canadian government approves four long-term licenses to export liquefied natural gas from proposed projects on the country's west coast which potentially could allow for the export of up to 73.3M metric tons/year of LNG.
- The licenses, which already had received approval from the National Energy Board, are for LNG exports from proposed Pacific coast terminals backed by Exxon Mobil (XOM), BG Group (BRGYY, BRGXF) and Malaysia's state-owned Petronas.
- None of the proposed projects have been built or even formally approved by their sponsors.
Mar. 26, 2014, 12:29 PM
- The Houston Ship Channel has reopened all lanes of traffic; five vessels reportedly are entering the channel and 15 are on their way outbound, with another 15-20 expected to enter the channel before dark.
- Exxon Mobil (XOM +0.2%) says its Baytown, Tex., refinery is receiving crude shipments again and will adjust rates for refined fuels after reducing rates due to the closure of the Channel since a March 22 oil spill.
- Valero Energy (VLO -0.6%), Marathon Petroleum (MPC -0.1%) and Royal Dutch Shell (RDS.A, RDS.B), which own all or part of refineries on the 52-mile shipping lane, have declined to discuss operations at those plants.
Mar. 26, 2014, 8:31 AM
- Exxon Mobil (XOM) reportedly is negotiating to bring Rosneft (RNFTF) into oil and gas licenses in Iraq’s Kurdistan region, as the largest U.S. and Russian oil companies forge ahead with a global alliance even amid strained relations between the two governments.
- An XOM-operated venture with Rosneft at Sakhalin Island plans to begin pumping oil off Russia’s Pacific coast this year, and the two companies are working on ventures to explore the Arctic Ocean, test the potential of shale oil in Russia and pump crude in Texas.
Mar. 24, 2014, 4:59 PM
- Exxon Mobil (XOM) says the shutdown of the Houston Ship Channel is affecting production rates at its huge Baytown refining complex, but the company does not disclose how large a drop it expects, only that it expects to meet its contractual obligations.
- Tudor Pickering analysts say they don't think the spill will create a major energy event but a multi-day channel shutdown would have some effects on imports and inventories.
- Companies aren't ready to detail potential problems: Valero (VLO), which has a refinery in Texas City, says it doesn't discuss refinery production rates, and Shell (RDS.A, RDS.B), which owns a refining and petrochemical complex in Deer Park near the Houston Ship Channel, says it has contingency plans in place to deal with a prolonged shutdown.
- Phillips 66's (PSX) nearest refinery complex is in Sweeny, ~60 miles away from Houston, and gets most of its oil through waterways in Freeport; it doesn't foresee the spill affecting that plant's production.
- The Coast Guard says there is no timetable on when the ship channel may reopen.
XOM vs. ETF Alternatives
Exxon Mobil Corporation is engaged in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
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