What You Need to Know about Exxon Mobil
Dr. Osman is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Incorporated in 1882, Exxon Mobil (NYSE: XOM) is best known as a manufacturer and marketer of petrochemical commodities such as aromatics, polyethylene, olefins and polypropylene--in other words, gas. Some of the company’s divisions include ExxonMobil, Esso, Exxon and Mobil.
Exxon Mobil is established in countries such as United States (with acreage holdings totaling 15.6 million, of which 1.9 million net acres were offshore), Canada and South America (5.2 million net acres, with 1.5 million offshore), Europe (4.8 million onshore acres, 7.3 million net offshore acres in Germany), Africa (0.6 million offshore acres in Angola, 5.2 million onshore acres), as well as Asia and Australia.
Recent Moves
Exxon recently shut down a pipeline carrying crude oil after finding oil sheen in the water near Barataria Bay, LA. It is thought operations are set to resume immediately after repairs, but there are no reports on what caused the oil sheen or when it was discovered. Earlier in April, Exxon had reported a 1,800-barrel oil spill from the North Line of the HLS pipeline system, together with a leak that resulted in the company receiving a corrective action order from regulator PHMSA. There is no indication of whether or not the pipeline shutdown resulted in changes in the commodities Exxon deals with.
In June 2011, Exxon acquired Philips Resources and its related company, TWP Inc. In October 2011, Cosan SA Industria e Commercio bought the distribution assets of Exxon Mobil in Bolivia, Uruguay and Paraguay. Exxon Mobil plans to quit its giant project in southern Iraq, which will most likely aggravate internal tensions within the country and hamper ambitious energy expansion plans in Baghdad. The exit would seriously infringe Exxon’s contract allowing the company to explore Iraq’s autonomous northern Kurdish region. Baghdad has now deemed the contract illegal and has promised to rip up the West Qurna-1 deal, which had reserved 8.7 billion barrels.
At the start of 2012, Apache (NYSE: APA) acquired Exxon Mobil’s Mobil North Sea limited assets, which included the Beryl field and related properties. Apache is one of the largest independent oil and gas companies in the U.S. Its move into oil-rich North Sea area could be a highly profitable one. Compared to Exxon, Apache did not perform well this year. However, it could be a good choice for those interested in independent oil and gas companies.
Future Prospects
The restructuring of Exxon’s downstream and chemical operations has given the company better future prospects, since according to analysts’ estimates, the company may grow by 8% by the end of 2013.
Exxon Mobil also has a huge project, Kearl, which will be fully operational by the end of 2012. This project will enhance the company’s capacity to an equivalent of 1 million barrels of oil by 2016. Exxon management also decided to invest $37 billion in capital and exploration spending each year for five consecutive years, which will tap into the energy demands of the world.
Exxon Mobil vs. The Rest
|
|
Exxon Mobil |
ConocoPhillips |
Chevron |
|
Market Cap |
$418 Billion |
$218 Billion |
$70 Billion |
|
Trailing P/E |
9.52 |
10.31 |
8.28 |
|
P/B Ratio |
2.57 |
1.51 |
1.68 |
|
Earnings Growth |
35.4% |
17.7% |
41.8% |
|
Debt/Equity |
0.1 |
- |
0.08 |
|
Return on Equity |
28.3% |
- |
21.7% |
Exxon Mobil is the absolute leader among its peers. The combined market cap of ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) are less than that of Exxon Mobil. Chevron is the cheapest oil company based on the trailing P/E ratio of 8.28. Chevron also experienced the highest earnings growth of 41.8% this year. ConocoPhillips has the lowest P/B ratio of 1.51. Chevron and Exxon Mobil have low debt ratios of 0.08 and 0.1, respectively. Exxon Mobil provides the highest return on equity of 28.3%. I think this is partially due to Exxon Mobil's gigantic stock repurchase program.
Foolish Summary
This year alone, Exxon has experienced volume declines that have brought down the company’s stock portfolio due to scandals such as the one surrounding the Baghdad West Qurna-1 project. However, with all the future prospects derived from current projects, Exxon Mobil is powerful enough to get back on its feet. The stock has returned almost 20% since its dip in June, and it still has bullish momentum behind.
ecofinstat has no positions in the stocks mentioned above. The Motley Fool owns shares of Apache and ExxonMobil. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
