The Most Profitable Oil Company in the World

forestsaintregisOil and Offshore

Nov 8, 2013 (4 years and 4 days ago)

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The Most Profitable Oil Company in the World






Or is it????

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



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

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

Current Factors affecting the
ExxonMobil and the Oil Industry


Volatility



Market uncertainty



Rising costs



Skill shortages


Current Factors affecting
ExxonMobil and the Oil Industry:


Volatility



Market uncertainty



Rising costs



Skill shortages


Current Factors affecting
ExxonMobil and the Oil Industry:


Biofuels



Energy allocation



Environmental issues



Global Energy Demand


Current factors affecting
ExxonMobil:

Offshore drilling



Current factors affecting
ExxonMobil:

Outrage associated with record profits

Current factors affecting
ExxonMobil:

Windfall Profit Tax


Hugo Chavez

I am going halt
crude oil
shipments to
ExxonMobil
refineries!

Current factors affecting

ExxonMobil:

Exxon Valdez Case

Current factors affecting


ExxonMobil:

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






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


Net Profit

*From the 2007 ExxonMobil Annual Report

Shareholder Return

*From the 2007 ExxonMobil Annual Report

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

Growth rate of earnings

All in $ millions:
6/30/2008
12/30/2008
12/30/2009
12/30/2010
12/30/2011
12/30/2012
NET INCOME
$ 29,774
$ 22,570
$ 44,942
48,537
$

52,420
$

56,614
$

EPS:
$ 8.40
$ 9.07
$ 9.79
$ 10.58
FV=
$56,614
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



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’

Forecast


Relaxed prices


Decreased Domestic Demand (20%)



Increased Global Demand (80%)


Energy Information Association

Washington


Windfall Profit Tax
-
Highly Unlikely


Conservative vs. Liberal


Off shore Drilling?



Energy Cycle

Capital

E&P

Extraction


Refinement

Shipment

Cracking Towers


Hold At Weight


Buy Vanguard VDE


Production Life Cycle


Cracking Spread


Market Weighted


Top Holdings

Exxon vs. Market







Diversified


Service Sector


Segmented




Stock Re
-
Purchase


Stakeholder Theory


Board of Directors


Myopic Management?


Best Option?


EPS Management