ExxonMobil CorporationXOM

Morningstar Rating

Stock Research and Analysis

by Allen Good

ExxonMobil sets itself apart among the other supermajors as a superior capital allocator and operator. Through a relentless pursuit of efficiency, technology, development, and operational improvement, it consistently delivers higher returns on capital Read more

Bulls Say

Exxon's superior capital allocation and operational performance should drive high returns on capital.

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.

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 $39 billion in dividends and repurchased $135 billion worth of stock, reducing shares outstanding by 23%.

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. Read more

Bears Say

The company will find it increasingly difficult to increase production and book reserves as nations become more protective of their natural resources.

Record-high commodity prices helped produce record profits. If commodity prices slip, so will profits.

Exxon is very discriminating when evaluating investment opportunities. It is unlikely to sign less favorable contracts, which could slow growth.

Production growth will come from partnerships with NOCs, politically unstable countries, and difficult environments, which means unfavorable production sharing agreements, increased geopolitical risks, and increased production costs.

Heavy exposure to the U.S. and European refining markets could limit future downstream profitability with both markets facing long-term challenges. Read more

Strategy

Exxon can attribute much of its returns to selective capital allocation and project execution. Management evaluates projects on a global basis to determine how they can be integrated with current operations Read more

Management

Rex Tillerson is chairman and CEO of Exxon, a role he assumed in 2006. Previously, he served as president after spending his career with Exxon, beginning in 1975 as a production engineer. Tillerson is likely to continue a disciplined capital-allocation Read more

Profile

Exxon is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2008, it produced 2.4 million barrels of oil and 9.1 billion Read more

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