Exxon Mobil Corporation (NYSE:XOM) is a world leader in the Oil and Natural Gas industry and has been quietly making huge moves under the radar that is setting the stage for the profitable Natural Gas boom. We see XOM building the income as a mega-company from $9.5 billion of revenue a quarter in 2013 to over $15 billion in 2020 as all the natural gas production facilities come on line. As the profit for 2012 was near $47.6 billion, we anticipate a growth north of $60 billion per year in 2020, and profit margins improving after all the initial expenses are paid in the natural gas expansion boom.
Exxon Mobil has an extensive global position in liquefied natural gas (NYSEMKT:LNG) with interests in liquefaction capacity of approximately 65 million tons per year through ventures in Qatar, and Indonesia. This capacity has recently increased significantly with the start-up in Qatar of the four largest producing trains in the world. Each of these trains is 7.8 million tons per year in size. Deliveries of Q-Flex and Q-Max ships were completed in 2009, and more than doubled fleet capacity for the Qatar joint ventures. XOM has also added 2.8 billion cubic feet per day of LNG regasification capacity with the opening of the South Hook Terminal in Wales and the Adriatic LNG Terminal offshore Italy, increasing access to attractive European markets.
In 2010, the company acquired natural gas giant XTO Energy for $41 billion. XOM also positioned itself by gaining several lucrative natural gas fields in the U.S. In its latest Outlook for Energy: A View to 2040, Exxon Mobil forecasts that natural gas will be growing "faster than any other major fuel source, with demand up 65% by 2040." Exxon's strength will not be the production within the U.S., but in the rich gas fields around the world.
Exxon Mobil is currently in a joint venture with Qatar Petroleum in the Qatar's North Field - the world's largest non-associated gas field.
XOM just inked another agreement with Qatar Petroleum to market natural gas resources from the U.S. to international markets, as well as other global opportunities in natural gas operations.
In April 2013, XOM entered into a 50/50 partnership with BHP Billiton (NYSE:BHP) and submitted paperwork with the Australian Government for the rights to establish a floating liquefied natural gas (FLNG) barge in the Scarborough gas field off the western Australian coast. The initial estimated costs for total construction are between $18 and $24 billion dollars with a cost overrun up to $30 billion. XOM and BHP have agreed to pay Australian taxes and the initial assessment from the Australian Government is an approval of this plan. The plan outline is to drill an initial 7 wells in 2018/19 with additional wells as needed to support a 10 trillion cubic feet (tcf) of production.
The benefit of this production is the short distance to move the product to market, as China, Korea and Japan are key buyers that are driving the current prices up with a growing demand for energy. By increasing the supply it will balance the demand and stabilize the price near an estimated $8 U.S. dollars per million British thermal units (BTU). This is a very profitable number going forward after initial costs are recovered.
Production from the U.S. gas fields will be significant; however, there is the possibility that the U.S. federal government will create a hefty tax on any exported natural gas that will limit the profitability and create a cash cow for the federal government. This measure would also serve as a protective measure for politicians to stand for the protection of the natural gas reserves for U.S. consumption.
Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. The company also transports and sells crude oil, natural gas, and petroleum products. It has approximately 37,228 gross and 31,264 net operated wells. Exxon Mobil has a market cap of $393.7 billion and is part of the basic materials sector and energy industry.
Exxon Mobil establishes partnerships with many companies, and always seems to find the profitable margin in the operations. XOM also has the leadership and management able to work with all governments and many organizations.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.