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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 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.
- Exxon Mobil's resource base is now higher than ever, at 90bn BOE.
- Disciplined investment is delivering higher margins and returns.
- Among its peers, XOM is the most resilient in the face of a falling crude oil price.
- 9% CAGR in free cash flow between 2014 and 2018 fully covers the dividend.
- Exxon Mobil and Chevron make for good long-term investments at current prices for a number of reasons.
- Energy demand is expected to rise in the future, and Exxon Mobil and Chevron are in excellent positions to accommodate this growing need with their vast reserves.
- Both companies have integrated business models, in which the downstream segment can provide a cushion for earnings in the face of lower oil prices.
- Both companies have a long history of earnings and dividend growth, strong balance sheets, and dividend yields that are currently at their highest levels in a long time.
Exxon Mobil: A Massive Buying Opportunity? Don't Drink The Kool-Aid
- There has been a tectonic shift in the oil patch as of late.
- The price of oil has sunk to multi-year lows on the back of news OPEC will not cut production and the incredible success of North American oil and gas production.
- Consequently, Exxon Mobil’s stock has taken a hit as of late. Several analysts have come out touting this is an excellent buying opportunity.
- I say not so fast. In the following article we will attempt to determine the truth regarding the opportunity Exxon Mobil offers dividend growth investors.
Time To Snap Up The Immense Opportunity In Exxon Mobil Corporation
- Unlike other U.S. oil companies, Exxon Mobil is uniquely positioned to weather low prices. The current share price slip is therefore a buy opportunity.
- Most U.S. producers have hedged at around $90 a barrel. When these arrangements expire, most producers will run out of business, considering that low crude prices are expected to persist.
- When this happens, a lot of investments will flee from shale producers to other more stable plays in the energy sector.
- Exxon Mobil’s profile makes it a prime candidate for the fleeing capital, suggesting strong demand for its shares in coming years.
- This is a multi-year opportunity that could see investors who get in now rewarded handsomely over the next half decade.
- As we have predicted in October 2013, oil prices have dropped substantially, along with the stock prices of most major oil companies.
- Exxon's current stock price decline is consistent with previous declines associated with crude oil sell-offs, while lower capital spending and improved margins will provide some cushion.
- At this juncture, additional major declines in crude oil prices are less likely, hence providing a buying opportunity in Exxon shares.
Exxon Mobil Valuation Analysis: Slightly Overvalued
- Going by a DCF analysis, a comparable company analysis, and a historical multiple analysis, Exxon appears to be overvalued based on its fundamentals.
- Given the recent drop in oil prices, the company still trades in line with its historical multiples and a turn above its comps' mean multiple.
- This analysis is meant to be illustrative for potential and current Exxon investors, as I derive a fair value for the company between $80-$84 per share.
- Exxon Mobil is a good long-term investment in a dividend growth stock.
- Exxon Mobil has shown considerable earnings per share surprise in each one of the last three quarters, and according to its historical valuation multiples, the stock is significantly undervalued.
- Exxon Mobil is generating strong cash flows and returns value to its shareholders by stock buyback and increasing dividend payments.
- Dividend Challenger Exxon Mobil yields 2.9% at a price of $95.11 and has a reasonable five-year CAGR of 9.7%. It trades at a discount of 5% to my fair value estimate.
- Along with other energy sector companies, XOM is challenged by a weaker commodity price environment.
- The company's aggressive share buybacks and its dividend commitments are not sufficiently covered by the free cash flow it is generating, which could inhibit future dividend growth.
- Exxon Mobil's shares are down 5% since the beginning of the year.
- Falling oil prices are the main reason why Exxon Mobil has performed poorly lately.
- With higher oil prices, I expect Exxon Mobil's shares to kick into gear.
- The energy company is still undervalued, and a purchase below $100 can make a lot of sense for long-term oriented investors.
Exxon Mobil Corporation, Currently Undervalued And A Strong Buy
- Exxon Mobil Corp., formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company.
- With a relentless pursuit of efficiency via technology and operational improvement, Exxon sets itself apart from other supermajors and has delivered higher returns on capital.
- On October 31, 2014, the company announced third-quarter 2014 earnings of $1.89 per share, up from $1.79 in the prior year's third quarter.
Dividend Zombies: Exxon - YDP Analysis & Fair Value Appraisal (Part 4)
- Dividend Zombies are income equities that have survived more than 100 years with unbroken and undiminished dividend distributions. These are the 8 income machines that can't be killed.
- This part 4 of an 8-part series, evaluates XOM fair value price, technical momentum trends, entry point, and a yield boost while lowering market risk using covered option writing.
- Exxon, at the November 7th close of $96.59 is 16.63% below fair value price for income investors. A soon expected dividend raise will increase the target to $117.55.
Thu, Nov. 20, 5:58 PM
- It’s time for the medium-term investor to start buying the biggest of big oil companies, HSBC says, as the market seems to have capitulated on the sector.
- HSBC views BP and Total (NYSE:TOT) as clearly the cheapest of the oil supermajors, with share price discounts to sum-of-the-parts valuation for BG Group (OTCPK:BRGXF, OTCQX:BRGYY), Statoil (NYSE:STO) and Repsol (OTCQX:REPYY, OTCPK:REPYF); Exxon Mobil (NYSE:XOM) still trades at small premium to the SoP valuation, and the firm likes Chevron (NYSE:CVX), which was penalized in its valuation by its ongoing capital intensity in 2017.
- The stocks also offer average prospective dividend yields of 5%-plus for 2015, and the dividends look robust as they are supported by strong balance sheets, more active asset disposal programs, and strong new project cash margins.
Thu, Nov. 13, 7:23 PM
- North Dakota regulators today proposed standards for requiring energy companies to treat the crude they pump from the Bakken Shale to make it less volatile before shipment by pipeline or train.
- "Our crude oil leaving North Dakota will behave like the gasoline you put in your car," says the head of the state's Department of Mineral Resources, which came up with the recommendations.
- The new rules would require every barrel of oil produced in the state to undergo some kind of treatment, with the goal that all oil-producing Bakken Shale wells ship crude with a vapor pressure below 13.7 psi, similar to 13.5 psi for most automobile gasoline.
- Top Bakken producers: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Thu, Nov. 13, 3:20 PM
- U.S. crude oil prices break below $75/bbl for the first time in more than three years, brushing aside an IEA report showing a surprise 1.735M barrel inventory drawdown as well as remarks by the Saudi oil minister dismissing talk of an oil price war among producers.
- West Texas crude settled today at $74.21/bbl, -3.9% and breaking below an important support level; during the past three years, futures have tested but not broken through that level three times.
- Brent crude recently was trading below $78, -3%.
- Global oil majors are all lower: COP -1.9%, BP -1.4%, CVX -1.4%, XOM -1.1%, TOT -0.9%, RDS.A -0.7%.
- Oil services companies and offshore drillers suffer even sharper drops: SDRL -4.4%, SLB -4.2%, HAL -3.9%, BHI -3.9%, RIG -3.8%, DO -3.5%, NBL -2.9%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, DIG, BNO, UGA, DTO, DBO, DUG, XES, IYE, IEO, CRUD, IXC, IEZ, PXE, USL, UWTI, IPW, FENY, PXJ, UHN, DWTI, DNO, RYE, FXN, SZO, GNAT, OLO, DDG, FILL, OLEM, TWTI
Thu, Nov. 13, 11:59 AM
- Regulators set to decide on rules for shipping crude oil via railroad are relying on testing methods that may understate the explosive risk of North Dakota crude, according to a WSJ report citing industry and Canadian officials.
- The testing controversy centers on how to determine vapor pressure, a measure of how quickly a liquid fuel evaporates and emits gases; the industry has long relied on a decades-old methodology that does not require sealed or pressurized containers to collect or test crude samples.
- The North Dakota Industrial Commission is set to rule on what steps, if any, producers must take to strip volatile gases out of crude oil before loading it into railroad tank cars.
- Top Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Mon, Nov. 3, 11:52 AM
- Exxon Mobil (NYSE:XOM), Shell (RDS.A, RDS.B), Chevron (NYSE:CVX) and BP have lower profit margins than a decade ago, according to an analysis in a page one WSJ story, as the big oil stalwarts are shelving expansion plans and shedding operations.
- Combined, the four companies averaged a 26% profit margin on their oil and gas sales in the past 12 months vs. 35% a decade ago, according to the analysis.
- Shell said last week that its oil and gas production was lower than it was a decade ago and is likely to keep falling for the next two years; Exxon's output sank to a five-year low after the company disposed of less-profitable barrels in the Middle East.
- The companies’ sheer size has meant that only huge, complex and expensive projects are big enough to make a difference to the companies’ reserves and revenues; with oil prices now heading lower, such problems only look as though they’re going to get worse.
Fri, Oct. 31, 5:56 PM
- United Steelworkers leaders, representing employees at two-thirds of U.S. refineries, are "looking for a fight" as they prepare to negotiate the next three-year contract with refiners, says the USW international VP who manages the union’s oil sector.
- The USW is seeking a substantial increase in wages, stronger rules to prevent fatigue and measures to preserve the share of union workers rather than contract employees.
- During the last round in 2012, USW and Shell (RDS.A, RDS.B), which represented refiners, spent about a month in negotiations before agreeing to a national contract which was used as the foundation for forging refinery-by-refinery contracts with union locals.
- An S&P index of refiners - including Exxon (NYSE:XOM), Chevron (NYSE:CVX), Marathon Petroleum (NYSE:MPC) and Tesoro (NYSE:TSO) - has more than doubled since the beginning of 2012, and the unions want a piece of the pie.
Fri, Oct. 31, 5:37 PM
- The cheapest crude oil in more than two years has the world’s two top oil producers, Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), glad they held onto their refineries when rivals were shunning the business.
- Both companies reported better than expected Q3 earnings today (I, II), with executives touting the importance of owning massive refineries alongside oil and gas wells, "demonstrat(ing) the strength of our integrated business model," as XOM CEO Rex Tillerson says.
- XOM’s Q3 profit from refining jumped, helping drive a 2.5% Y/Y increase in its total profit, while CVX’s refinery earnings more than tripled, propelling a 13% jump in overall profit; XOM said it sold U.S. oil for $89.60/bbl on average, down 12% Y/Y, while international barrels fetched $96.76, or 9.3% less, and CVX said its U.S. price fell $10/bbl to $87 as international prices fell $93 from $104.
- But sustaining profits could be more of a challenge if demand for fuels continues to weaken around the world, which could limit output and profit gains at refining operations; also, refining profit margins already are shrinking as gasoline and diesel prices are dragged lower by the crude from which they’re derived.
Fri, Oct. 31, 8:58 AM
- Exxon Mobil (NYSE:XOM) +0.9% premarket after reporting better than expected Q3 earnings as strong refining performance offset falling oil prices and production.
- Earnings in XOM’s E&P business fell 4.4% Y/Y to $6.42B, hurt by lower production, but refining and marketing earnings jumped 73% to $1.02B, helped by higher refining margins and volume; the chemicals unit posted a $1.2B profit, up 17%.
- Oil and gas production fell 4.7% Y/Y - excluding the impact of the expiry of the Abu Dhabi onshore concession, production fell 1% - but XOM says it remains on track for full-year output of 4M boe/day.
- Q3 capex fell 6.8% to $9.84B, while share repurchases totaled $3B.
Fri, Oct. 31, 8:39 AM
- Canadian Oil Sands (OTCQX:COSWF) reports Q3 net profit fell 65% Y/Y to C$0.18/share, citing lower revenue and foreign exchange-related losses.
- Q3 sales volume rose to 87,787 bbl/day, up4% Y/Y, but average crude prices fell to C$102.58/bbl from C$112.55 a year earlier, and operating expenses rose to to C$47.73/bbl, up from $46.15.
- Cuts its annual maximum output target to 100M barrels of oil, down from a previous 104M barrels and an initial forecast of up to 110M barrels.
- Canadian Oil Sands owns a 37% stake in its main operating asset, Syncrude, with six other companies owning the remainder, including lead operator Exxon Mobil (NYSE:XOM) unit Imperial Oil (NYSEMKT:IMO) and Suncor Energy (NYSE:SU).
Fri, Oct. 31, 8:30 AM
Thu, Oct. 30, 6:27 PM
- YPF rose 2.5% today as Argentina lawmakers voted to approve a law revamping regulations on energy investment, which could help the country boost its oil and gas production over the next two decades.
- The package of new laws cuts the minimum investment needed for companies to be exempt from import controls to $250M from $1B.
- Argentina offers considerable energy potential, ranking no. 3 in the world in shale gas reserves and no. 4 in shale oil, yet its refining capacity is limited and it imports energy products.
- Oil majors Total (NYSE:TOT) and Chevron (NYSE:CVX) have invested in Argentina, and Exxon (NYSE:XOM) has talked with YPF about energy exploration opportunities in the country.
Thu, Oct. 30, 5:30 PM
Wed, Oct. 29, 1:55 PM
Mon, Oct. 27, 5:11 PM
- The World Bank's international arbitration panel temporarily suspends enforcement of an order that Venezuela pay Exxon Mobil (NYSE:XOM) $1.6B in compensation for oil projects the country nationalized in 2007.
- The International Centre for Settlement of Investment Disputes says it was responding to a request from Venezuela's government for a revision of the award, which was announced Oct. 9.
- Venezuela appears to be seeking to buy time, as its economy is in decline and billions of dollars in bond payments are coming due.
Mon, Oct. 27, 8:33 AM
- Exxon Mobil (NYSE:XOM) and Romania's OMV Petrom say they are drilling an exploration well on a new prospect ~155 km offshore in the Romanian sector of the Black Sea.
- The well will test a new geological structure on the Neptun Block after the Ocean Endeavour rig completed drilling of the Domino-2 well earlier this month; data from the well is being evaluated.
- XOM's Romanian unit and OMV Petrom each hold 50% of the deepwater sector of the Neptun Block.
Tue, Oct. 21, 6:58 AM
- Statoil (NYSE:STO) says it has found up to 80M barrels of recoverable oil in a prospect first drilled more than two decades ago and abandoned because the initial discovery was too small.
- The find is located near the company's operating Grane field in the North Sea, and is well above the 6M barrels estimated when the prospect was explored by Norsk Hydro in 1992.
- Statoil owns 57% of the production license for the new discovery. State holding firm Petoro has 30% and ExxonMobil (NYSE:XOM) has 13%.
- STO +2.2% premarket
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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