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The Most Profitable Oil Company in the World PowerPoint Presentation
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The Most Profitable Oil Company in the World

The Most Profitable Oil Company in the World

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The Most Profitable Oil Company in the World

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  1. The Most Profitable Oil Company in the World

  2. Or is it????

  3. Who is ExxonMobil? • World’s largest publicly traded petroleum and natural gas company • Industry leader in almost all aspects of energy and petrochemical business • Involved in exploration, production, and transportation of its products: • Crude Oil • Natural Gas • Petroleum • Operate on six continents under the brand names Exxon, Esso and Mobil

  4. What does ExxonMobil do? • Upstream • Exploration and Production • Holdings in 36 countries • Downstream • Manufacturing, transportation and distribution • 38 refineries in 21 countries • In 2007, refinery throughput averaged 5.6 million barrels per day, and petroleum product sales were 7.1 million barrels per day

  5. What does ExxonMobil do? • Chemical • Petrochemicals • More than 90 % of chemical capacity is employed in businesses where we ExxonMobil ranks first or second in worldwide market position. • Technology • Innovation • $3.5 billion spent over last 5 years on research • Focus on maximizing performance in remote areas/difficult operating environments

  6. Current Factors affecting the ExxonMobil and the Oil Industry • Volatility • Market uncertainty • Rising costs • Skill shortages

  7. Current Factors affecting ExxonMobil and the Oil Industry: • Volatility • Market uncertainty • Rising costs • Skill shortages

  8. Current Factors affecting ExxonMobil and the Oil Industry: • Biofuels • Energy allocation • Environmental issues • Global Energy Demand

  9. Current factors affecting ExxonMobil: Offshore drilling

  10. Current factors affecting ExxonMobil: Outrage associated with record profits

  11. Current factors affecting ExxonMobil: Windfall Profit Tax

  12. Current factors affecting ExxonMobil: Hugo Chavez I am going halt crude oil shipments to ExxonMobil refineries!

  13. Current factors affecting ExxonMobil: Exxon Valdez Case

  14. 2007 Financial Performance • Sales: $390.3 billion • 94.28% increase from 2002 • Gross Margin: 42.8% (Industry: 46.2%) • 55.5% in 2002 • Operating Margin: 17.42% (Industry: 5.1%) • 8.71% in 2002 • Net Profit: $40.6 billion • 254% increase since 2002

  15. FYE 2007 Financial Ratios • Dividend Yield: 1.60% • Industry Avg. of 1.60% • Price / Earnings: 12.73 • Industry Avg. of 13.5 • ROE: 33.35% • Industry Avg. of 28.7% • Beta*: .95

  16. Net Profit *From the 2007 ExxonMobil Annual Report

  17. Shareholder Return *From the 2007 ExxonMobil Annual Report

  18. Future Financial Health • Analysts expect the company to grow at a steady rate of 11% over the next five years • Hoovers, Goldman-Sachs, Merrill Lynch • The earnings are expected to grow at 8% • This will put the earnings per share over $9 a share in 2010

  19. Growth rate of earnings Assumptions: Growth rate of 8% Lower growth rate than in the past due to uncertanties in the market Production is down compared to past – there is some cash flow uncertainty since recent cash flows have been bolstered by commodities trading

  20. Analysis • This is a respectable growth • However, not the immense growth that the company has recently had • Future forces such as shareholder’s concern with the environment, political turmoil, and oil commodity pricing will effect Exxon • This combined with forecast of the company will support investing at ‘weight’

  21. Forecast • Relaxed prices • Decreased Domestic Demand (20%) • Increased Global Demand (80%) • Energy Information Association

  22. Washington • Windfall Profit Tax-Highly Unlikely • Conservative vs. Liberal • Off shore Drilling?

  23. Energy Cycle

  24. Cracking Towers

  25. Hold At Weight • Buy Vanguard VDE • Production Life Cycle • Cracking Spread • Market Weighted

  26. Top Holdings

  27. Exxon vs. Market • Diversified • Service Sector • Segmented

  28. Stock Re-Purchase • Stakeholder Theory • Board of Directors • Myopic Management? • Best Option? • EPS Management