Tags: Exxon | Mobil | oil | XOM

Exxon Mobil Bent On Rapidly Increasing World Oil Supply

Thursday, 24 May 2012 03:13 PM

By Greg Brown

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Exxon Mobil (XOM) is widely known in the United States, for better or worse, as the face of Big Oil. Its CEO, Rex Tillerson, is often called upon to testify in Congress when gas prices rise. Beyond the purely political story, however, XOM is a company bent on rapidly increasing world supply to meet what will almost surely be skyrocketing global demand for oil.

Exxon Mobil is an energy company that explores for and produces crude oil and natural gas, manufactures petroleum products, and transports and sells of crude oil, natural gas and petroleum products.

In additional, Exxon Mobil is a major manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. The company also has interests in electric power generation facilities.

Proved oil and gas reserves grew 0.5 percent in 2011, to 24.9 billion barrels of oil equivalent, according to analysts. Oil and gas production rose 1 percent, to 4.53 million boe/d. Rising production and reserves primarily reflected the completion of the XTO Energy acquisition, according to analysts.

At year-end 2011, the company had an ownership interest in 36 refineries with 6.22 million barrels per day (b/d) of atmospheric distillation capacity and distributed across the United States, Europe, Asia Pacific, Canada, the Middle East and Latin America.

The company’s Exxon, Esso and Mobil brands serve customers at more than 25,000 retail service stations. At year-end 2011, XOM had a chemicals complex capacity of 22.1 million metric tons per year.

“Based on a blend of oil and gas assets and production volumes, we estimate that XOM is the largest publicly traded integrated oil company in the world, serving customers in over 200 countries,” reports Standard & Poor’s analysts.

In addition, S&P noted, XOM will invest about $185 billion over the next five years, or $37 billion per year. A total of 21 major oil and gas projects will begin production between 2012 and 2014. In 2012 and 2013, XOM expects to start up nine major projects and anticipates adding over 1 million boe/d by 2016.

Exxon Mobil has a market cap of $383.63 billion in a sector, oil, gas and consumable fuels, where the average company size is $44.9 billion. Its trailing 12-month P/E ratio is 9.91 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.07, compared to 0.89 for the sector.

Its projected earnings per share growth for the coming year is 6.64 percent, compared to a sector average of 14.11 percent.

Strong pipeline


Analysts are bullish on XOM, with buy or outperform ratings in from Citigroup, Raymond James, Deutsche Bank, UBS, and Standard & Poor’s. JP Morgan has the share rated underperform.

Exxon Mobil not only is growing earnings but has managed to keep up stable dividend growth, point out the analysts at S&P.

“We believe it will benefit from ‘big-pocket’ upstream growth opportunities in the deepwater, LNG, onshore unconventional, and ventures with state-owned companies. We think XOM's advanced technology permits project development in a timely and cost-efficient manner,” they wrote in mid-March.

“In addition, we see its upstream business benefiting from a strong pipeline of long-lived assets with an improving decline rate of 3 percent, and the downstream unit should benefit over the long term from its complex large refineries, which offer feedstock and product flexibility. We see further expansion of activities in global LNG and frontier regions and targeted divestments across businesses.”

Exxon Mobil next reports on July 26.

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