- 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.
Fri, Jan. 23, 9:45 AM
- Exxon Mobil (XOM -1.3%) opens lower after Credit Suisse downgrades shares to Underperform from Neutral and cuts its stock price target to $82 from $90, writing that major oil companies are entering a period of "less production, more debt and lower upstream cash margins than they were projected to earn six months ago."
- The firm lowers its 2015 EPS estimates for XOM to $2.82 from $5.04, and its 2016 EPS estimates to $5.42 from $6.27.
- Credit Suisse also downgrades several other major oil names, including Chevron (CVX -1.2%), Hess (HES -1.3%), Noble Energy (NBL -1.2%) and Murphy Oil (MUR -1%).
Wed, Jan. 21, 3:42 PM
- Exxon Mobil (XOM +0.8%) is rising after Wells Fargo upgrades shares to Outperform from Market Perform and lifts its valuation range to $96-$100 from a prior $88-$96.
- However, Wells cuts its 2015 and 2016 earnings estimates on XOM: For 2015, the firm sees EPS of $3.77 from its earlier outlook for $6.26, and it cuts its 2016 EPS estimate to $5.63 from $7.66.
- At the same time, the firm downgrades Chevron (CVX +1.5%) and Murphy Oil (MUR +1.2%) to Market Perform from Outperform with respective stock price targets of $108-$116 from $121-$132 and $46-$50 from $59-$63.
- Wells cuts its EPS estimates for CVX to $4.54 from $9.20 for 2015 and to $7.75 from $11.04 for 2016.
Tue, Jan. 20, 10:59 AM
- Despite the plunge in oil prices, a top Mexican energy official says global oil majors are showing interest in the initial phase of Mexico's bidding round for exploratory oil and gas blocks in the shallow waters of the Gulf of Mexico that will be assigned by the government mid-year.
- The official says the shallow water round is in an area of the Gulf where there is already significant oil production and where costs are less than $20/bbl, making them attractive even in the current environment of depressed prices; a later phase involving more costly production in shale-rock formations will be cut back to offer only the most attractive of the unconventional resources.
- Among the seven companies that have been authorized into the data rooms are Exxon (NYSE:XOM), Shell (RDS.A, RDS.B), Chevron (NYSE:CVX), Ecopetrol (NYSE:EC) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
Fri, Jan. 16, 12:26 PM
- Caterpillar (CAT -1.3%) is weak as Jefferies predicts it is among the machinery-related stocks most likely to disappoint investors with Q4 results, and that the company may may cut its 2015 revenue forecast from "flat to slightly up" to "flat to slightly down."
- Jim Chanos, who is short the stock, reiterated his negative view on CNBC this morning, citing increasing challenges in CAT's energy and mining businesses.
- He also sees trouble ahead for big multinational energy companies, mentioning in particular Exxon (XOM +1.7%) and Chevron (CVX +1.3%) and expecting substantial cuts to their outlooks.
Fri, Jan. 16, 8:41 AM
- Exxon Mobil (NYSE:XOM) signs a memorandum of understanding to supply natural gas to power plants in Papua New Guinea in a deal that would give it licenses to develop a new gas field that may help expand the company's PNG liquefied natural gas plant.
- XOM now says it will begin preparations this year to drill an appraisal well at the P'nyang gas field, co-owned by Oil Search Ltd. (OTCPK:OISHF)
- Reserves from P'nyang could enable development of another train at PNG LNG, which began exporting last year from its first two units.
Thu, Jan. 15, 10:25 AM
- North Dakota oil production rose to a new record even as energy companies drilled fewer wells and the rig count dropped to a near five-year low.
- The state's oil output hit a record 1.19M bbl/day in November, the most recent month available, according to data released yesterday by North Dakota’s Department of Mineral Resources.
- Despite the new record, the head of the department warned the state’s crude production will peak and decline later this year if oil prices don’t rebound; the current price of North Dakota sweet crude is ~$29.25/bbl, the lowest since Dec. 2008.
- The latest drilling rig count is 158, the lowest in nearly five years and down from a high of 218 rigs in 2012, but the department says production may not start to drop until the rig count falls to 130 or lower.
- Gregor McDonald argues that the North Dakota data confirming that Bakken drilling activity has slowed meaningfully has sparked the snapback rally in crude oil prices.
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Wed, Jan. 14, 11:13 AM
- The energy sector (XLE -1.5%) heads lower and is now underperforming the broader market after the EIA reported a bigger-than-expected build in WTI stockpiles; the news initially sent crude lower, although it is now +0.1% at $45.94/bbl; natural gas +5.7%.
- Crude inventories are now at their highest level for this time of year in at least the past 80 years.
- Among oil majors: XOM -1.5%, CVX -1.4%, RDS.A -2.5%, BP -2.3%, COP -1.5%, TOT -0.3%.
- ETFs: UNG, USO, OIL, DGAZ, UGAZ, UCO, BOIL, SCO, GAZ, BNO, UGA, DTO, DBO, KOLD, UNL, UWTI, USL, DWTI, DBE, DNO, DCNG, RJN, SZO, OLO, JJE, ONG, RGRE, TWTI, OLEM, UBN
Tue, Jan. 13, 3:23 PM
- J.P. Morgan's Joseph Allman is “mildly bullish” on oil and gas E&P companies in 2015, as short-term nervousness about the oil market’s oversupply is outweighed by the benefits of low oil prices, declining service costs and a more balanced oil market.
- Allman’s favorite picks among big-cap names are EOG, APC and NBL, among mid-caps are XEC and PXD, plus PDCE in the small-cap space; his least favorite stocks are APA, AREX, GDP and JONE.
- Among majors, JPM analysts Phil Gresh and John Royall initiate SunCor (NYSE:SU) at Overweight, citing "top tier sustainable dividend coverage and leverage, with some underlying growth potential"; the pair also downgrade Cenovus (NYSE:CVE) to Neutral, tags ConocoPhillips with an Underweight rating, and are neutral on Exxon (NYSE:XOM) and Chevron (NYSE:CVX).
- Earlier: Valero Energy upgraded, Marathon Petroleum downgraded at J.P. Morgan
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, DIG, DUG, IYE, IEO, PXE, FENY, PXJ, RYE, FXN, DDG
Mon, Jan. 12, 7:22 PM
- The number of drilling rigs operating in North Dakota's oil fields has dropped to 159, the lowest level since November 2010.
- The state lost eight rigs overnight, according to state data, a steep one-day drop not seen for years in the second-ranked U.S. oil producer.
- The drop comes after Continental Resources (NYSE:CLR), Oasis Petroleum (NYSE:OAS) and other companies announced capital spending cuts for 2015, admitting they planned to use fewer rigs this year.
- Other major North Dakota producers include EOG, WLL, HES, XOM, NOG, EOX and MRO.
Mon, Jan. 12, 7:57 AM
- Exxon Mobil (NYSE:XOM) plans to spend up to $25B on the West Coast Canada LNG terminal in British Columbia to export liquefied natural gas, according to a report it filed along with its Imperial Oil (NYSEMKT:IMO) subsidiary to provincial environmental regulators.
- XOM is positioning itself to make up ground on Malaysia’s Petronas, which is widely viewed as the front-runner among 18 entrants in the race to export LNG from Canada's Pacific coast.
- XOM hopes to secure a provincial environmental assessment certificate by the end of 2016, which would clear the way for a final investment decision in 2017 on constructing an export terminal at Tuck Inlet, near Prince Rupert in northwest B.C.
Fri, Jan. 9, 6:56 PM
- Wall Street is bracing for a 20% decline in energy companies’ Q4 earnings, with deeper losses expected later when companies report Q1 and Q2 earnings.
- Schlumberger (NYSE:SLB) on Thursday will be the first among oilfield services companies to report, while other companies, such as Caterpillar (NYSE:CAT), which reports on Jan. 27, also may report pain from falling oil prices.
- Among the giant oil companies, ConocoPhillips (NYSE:COP) is expected report its Q4 on Jan. 29 with analyst consensus EPS of $0.89 vs. $1.40 a year earlier, Chevron (NYSE:CVX) reports on Jan. 30 and analysts foresee EPS of $1.78 vs. $2.57 a year ago, and Exxon (NYSE:XOM) reports on Feb. 2 and is seen reporting $1.41 vs. $1.91 last year.
- Perhaps more than earnings numbers, investors will want to hear about belt-tightening measures at energy companies; more than 40 so far have announced their 2015 capex plans, with the average budget calling for a reduction in spending of more than 30%.
- Expect to hear the term “ex-energy” to describe overall earnings outside energy companies, the same way “ex-financials” was handy a few years back.
Fri, Jan. 9, 5:49 PM
- Petrobras (NYSE:PBR) says it produced more crude oil during Q3 than Exxon Mobil (NYSE:XOM), making it the world's largest publicly traded oil producer for the first time.
- PBR reports it produced 2.209M bbl/day of oil and other liquids, a 7% Q/Q gain; when natural gas is included, however, XOM produced 3.83M boe/day vs. 2.74M boe/day for PBR.
- In terms of market value, XOM remains the world's most valuable oil company with a market cap of $384; PBR has seen its value plummet from nearly $300B in 2008 to ~$40B today.
Fri, Jan. 9, 10:56 AM
- North Dakota needs an oil price of $55/bbl and a fleet of at least 140 rigs to sustain production at the current level of 1.2M bbl/day, according to a presentation from the state's chief mineral resources regulator.
- Breakeven rates for new wells range from $29 in Dunn county and $30 in McKenzie to $36 in Williams and $41 in Mountrail; these four counties account for 90% of drilling in the state.
- The number of rigs operating in the state already has fallen to 165, down from 191 in October.
- The projections confirm North Dakota's oil output will start to fall by year's end unless prices rise from current depressed levels.
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
Thu, Jan. 8, 3:29 PM
- News reports about crude oil futures prices plunging through $50/bbl have been plentiful but many U.S. physical crude producers are receiving far less and would be thrilled if they could get $50, Reuters' John Kemp writes.
- Case in point: Prices received by oil producers in North Dakota's Williston Basin have averaged less than $34/bbl so far this month, according to Plains Marketing, falling by almost two-thirds since June when Plains posted an average price of nearly $92/bbl for Williston Sweet.
- The recent decline has been almost as rapid and brutal as 2008-09 when Williston prices crashed from $116 to less than $17.
- Kemp says past experience suggests extreme prices tend be relatively short-lived phenomena and followed by at least a partial correction, and thinks some sort of rebound is likely this time around in the next 2-3 months.
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Thu, Jan. 8, 12:06 PM
- Big oil companies including Exxon (NYSE:XOM), Shell (RDS.A, RDS.B) and BP soon must decide whether to risk upsetting investors by cutting dividends, risk earnings by cutting projects, or take on more debt in the hope that oil prices will soon recover, according to a WSJ report.
- A Citi analysis shows spending on dividends and capital investment was 24% higher than cash flow in 2013; Shell, for example, had $40B in net cash flow in 2013 but its capital spending and dividend payments outstripped cash flow by 36%, while XOM's shareholder payouts and investment are seen exceeding cash flow by 22% in 2015.
- Estimated capex and dividends also are expected to exceed cash flow by 20% or more this year at ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX), Eni (NYSE:E), Total (NYSE:TOT) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
Mon, Jan. 5, 2:44 PM
- Chevron (CVX -3.8%) is downgraded to Neutral from Buy at Citigroup after outperforming big oil peers in the past three months in a reflection of the resilience of CVX's balance sheet.
- Citi revises its earnings forecasts to reflect lower oil prices, and says the stock now offers little upside in absolute and relative terms, "certainly when balanced against a portfolio that still carries uncertainties around both execution and reinvestment."
- The firm also downgrades Eni (E -8.6%) and Repsol (OTCQX:REPYY -5.8%), whose business models and valuations will look more challenged in a lower oil environment, but prefers companies it says boast strong growth credentials, such as BG (OTCPK:BRGXF), Total (NYSE:TOT) and ConocoPhillips (NYSE:COP); it keeps Exxon (XOM -2.6%) at Neutral, thinking share buybacks likely will be dialed down to preserve the balance sheet for a prolonged period of lower prices or eventual acquisitions.
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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