$XOM energizes portfolio. Read to know !
Then & Now !
On 01 Mar 2024,
I have a post on $Exxon Mobil(XOM)$, titled “Exxon Mobil: undisputed Dividend King. Buy !“ (click on title to read !)
At end day, stock price closed at $105.84 per share.
At end day, WTI crude oil price was $79.97.
On 28 Mar 2024, (last trading day of Q1 2024)
Exxon Mobil closed at $116.24 per share.
WTI crude oil price closed at $83.77, rising +4.75%.
Overview.
Do you agree that Exxon Mobil’s +11.21%. returns are pretty decent, for slightly less than 30 days of investment.
It is better than putting your hard-earned money in Singapore’s 6 months T-bill; where latest yield was an attractive 3.8%.
In terms of risks, it is also “riskier”, given nothing is guaranteed when investing in equities.
Exxon Mobil - more upside?
Addressing the elephant in the room - are there further upsides to Exxon?
According to The Motley Fool’s Matt DiLallo, there are.
His argument:
ExxonMobil has rallied >10% so far in 2024.
This was fueled largely by a double-digit surge in crude oil prices.
Higher oil prices will enable Exxon to generate even more earnings and free cash flow (FCF).
However, Exxon does not need higher oil prices to boost its profitability.
The company's current corporate plan has it on track to increase its annual earnings by $14 Billion through 2027, assuming oil averages $60 a barrel.
With WTI crude oil currently in the $80s; it is added bonus.
Exxon is investing heavily in high-return capital projects, primarily in its four growth pillars of:
The Permian Basin.
LNG.
Guyana.
Brazil.
All the while delivering meaningful structural cost savings.
What Else?
Exxon is working to enhance its already strong growth plan by a “merger / acquisition” of $Pioneer Natural Resources(PXD)$.
The merger is an all-stock transaction valued at $59.5 Billion, or $253 per share, based on ExxonMobil’s closing price on 05 Oct 2023.
This “agreed in principal” deal inked last Fall is expected to close by 2024.
Acquiring Pioneer will significantly enhance Exxon's operations in the Permian Basin. (see below)
Upon closing the acquisition of Pioneer, Exxon will more than double its production rate in the Permian Basin to 1.3 million barrels of oil equivalent per day (BOE/d).
The company expects the deal will enable it to grow its output in the region to 2 million BOE/d by 2027.
That growing high-margin production will drive increased earnings and free cash flow for Exxon.
Frenemy Benefits.
On top of that, Exxon is looking into potentially capitalizing on rival $Chevron(CVX)$ ‘s proposed acquisition of $Hess(HES)$ , one of its partners in Guyana.
Exxon believes the transaction triggered a clause in the joint operating agreement that could give it the right to acquire Hess' assets in the oil-rich region.
While Exxon does not want to buy Hess, it would be interested in buying Hess’s stake in Guyana.
A deal for those assets would be a real coup, further enhancing its long-term earnings growth profile.
My viewpoints : (mine & mine only)
Since 13 Mar 2024, WTI crude oil price has been trading above $80. (see above)
No doubt driven up by (a) Russia’s latest decision to cut oil output and (b) extended unrest in the Red Sea area caused by Yemen’s Houthi rebels.
Memory has faded with regards to President Biden’s 23 Nov 2021 - executive order to draw on US Strategic Petroleum Reserves (SPR) in a bid to artificially suppress oil price in the face of escalating inflation.
Looking at the latest SPR crude oil supply stock (see above), it is still -40% short in the original stockpile of 604,505,000 barrels.
The US government will still have to replenish the supply withdrawn and, in the process, may drive up oil price inadvertently.
Reported with OPEC members - Iraq, Gabon and Nigeria effectively reducing their output production and contributing towards the 50,000 bpd reduction since February 2024.
Based on the Economics of Supply versus Demand, this has shifted Supply curve upwards, raising oil price in the process.
With an impending OPEC+ members slated to meet on Wed, 03 Apr 2024 to review the market and members' production, in preparation for the group's next full meeting set for 01 Jun 2024.
Taking all above “plus” points into consideration, need more convincing?
Must Read: Click on below titles to access. Give a like & help to Repost ok. Thanks.
Do you think Energy sector will continue to be the top performer in April?
Do you think there is no better time to buy Exxon Mobil than now?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
In fact, most of the US energy sector is doing well (the refiners are all ripping higher setting new 52 week highs... again). I wonder if Warren has reversed course and is trimming CVX again?
XOM is going to surprise again with the new energy trading division....
Pls help to "Re-post". Tks! Rating is important (to me).
Would you consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!