Morningstar Rating

Stock Research and Analysis

by Allen Good, CFA

Bulls Say

Exxon's superior capital allocation and operational performance should continue to deliver high returns on capital.
NOCs do not have the expertise to effectively explore for and produce oil and gas in their countries and will need to partner with private firms. Exxon is one the most attractive options as its recent deal with Rosneft demonstrates.
With coordination between upstream and downstream operations, as well as integrated refining and chemical facilities, Exxon actually achieves a high level of integration that creates value as opposed to simply owning the assets like peers. Read more 

Bears Say

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 and free cash flow in recent years. Higher levels of investment place free cash flow and cash shareholder returns at risk if commodity prices slip. Low natural gas prices are weighing on profitability currently.
Exxon is very discriminating when evaluating investment opportunities. It is unlikely to sign less favorable contracts, which could slow growth. Read more 

Management

Rex Tillerson became chairman and CEO in 2006 and served previously as president. He has spent his career with Exxon, beginning in 1975 as a production engineer. The acquisition of XTO Energy raised concerns that he may be straying from the returns-focused   Read more 

Profile

Exxon is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2013, it produced 2.2 million barrels of oil and 11.9 billion   Read more 

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