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Exxon Mobile Corporation

Exxon Mobile Corporation. By Matt Miller. Business Summary.

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Exxon Mobile Corporation

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  1. Exxon Mobile Corporation By Matt Miller

  2. Business Summary • Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. The company manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and other specialty products. As of December 31, 2010, it operated 35,691 gross and 30,494 net operated wells. The company has operations in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. Exxon Mobil Corporation was founded in 1870 and is based in Irving, Texas.

  3. Company Fundamentals

  4. Company Fundamentals (cont.)

  5. Company Fundamentals (cont.)

  6. Company Fundamentals (cont.)

  7. Investment Criteria

  8. SWOT [Strengths] • Exxon's superior capital allocation and operational performance should drive high returns on capital. • With high-performing operations and global integration, Exxon is one of the best-positioned firms to weather a drop in commodity prices. The diversity of its operations and a vast geographic footprint offer protection against regional economic weakness. • Shareholder return is a focus of management. Over the past five years, Exxon paid almost $40 billion in dividends and repurchased $130 billion worth of stock.

  9. SWOT [Weaknesses] • Exxon is very discriminating when evaluating investment opportunities. It is unlikely to sign less-favorable contracts, which could slow growth. • Production growth comes from partnerships with NOCs, politically unstable countries, and difficult environments, which means unfavorable production sharing agreements, increased geopolitical risks, and increased production costs.

  10. SWOT [Opportunities] • By combining XTO's expertise with ExxonMobil's operations management skills and financial resources, the company has a decided advantage in the development of unconventional resources. • NOCs do not have the resources or expertise to effectively explore for and produce oil and gas in their countries. They will need to partner with private firms, and Exxon is the most attractive option.

  11. SWOT [Threats] • As nations become more protective of their natural resources, the company will find it increasingly difficult to increase production and book reserves. • Record-high commodity prices helped produce record profits. If commodity prices slip, so will profits. • Heavy exposure to the U.S. and European refining markets could limit future downstream profitability with both markets facing long-term challenges

  12. YTD Chart

  13. Fair Value Estimate • Current Price: $80.45 • 52 Week Range: $67.03-$88.23 • # of Shares: 28 • Amount: $2252.60 • YTD Return: 10.00% • Holding Return: -8.91% • Portfolio Weight: 2.9% • Fair Value: $99.00 • Consider Buying: $79.20 • Consider Selling: $123.80 • My FV Estimate: $101.52

  14. Analyst Opinion

  15. Recommendation • HOLD • Superior financials, efficiency, and global footprint • Management is focused on shareholder return • Solid Dividend (2.3%) • Making the transition from oil to natural gas • Has economies of scale and expertise that few companies can replicate • Reported a solid third quarter

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