ExxonMobil ($XOM) Good Price & Good Oil Company
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on different company types (see below for details); time to try it on Energy stock; that I have always been bullish.
Putting $Exxon Mobil(XOM)$ to the test & see if it still fits the bill.
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An American multinational oil and gas corporation
Founded in 1860s as Vacuum Oil company (original name)
In between 1860 & 1999, Vacuum Oil changed its name to “Mobil”
On 30 Nov 1999, Mobil successfully merged with Exxon (orig name Standard Oil Company of New York); where both were retail brands for petrol stations & downstream products.
It is the largest non-government-owned company in the Energy industry
It produces approx. 3% of the world's oil and about 2% of the world's energy
Its 3 core businesses are (a) Upstream (oil exploration, extraction, shipping & wholesale operations), (b) Product Solutions (downstream , chemical) and (c) Low Carbon Solutions.
It is one of the component stocks in S&P 500 Index.
In 2022, a year where US market had been hammered by extreme volatility and ease of covid pandemic restrictions - how did Energy stock - ExxonMobil fare ?
ExxonMobil - Summary
Revenue came in at $95.43 Billion vs $84.97 Billion (Q4 2021); that’s a +12.31% gain.
Net Income (GAAP) came in at $12.8 Billion vs $8.87 Billion (Q4 2021); that’s a +44.30% gain
Earnings per share (GAAP) was $3.09 vs $2.08 (Q4 2021); that’s a +48.56% gain.
Earnings per share (non GAAP) was $3.40 vs $2.05 (Q4 2021); that’s a +65.85% gain.
ExxonMobil - Segment earnings
ExxonMobil’s earnings’ breakdown are as follows :
Upstream - $8.20 Billion vs $6.06 Billion (Q4 2021); that’s a +35.31% gain.
Energy Products - $4.10 Billion vs $901 Million (Q4 2021); that’s a +351.72% gain.
Chemical Products - $250 Million vs $1.37 Billion (Q4 2021); that’s a -81.77% decline.
Specialty Products - $760 Million vs $1.12 Billion (Q4 2021); that’s a -31.90% decline.
ExxonMobil - Capital & Exploration expenditures
On 9 Dec 2022, ExxonMobil said its 5 years’ corporate plan (thru to 2027) maintains annual capital expenditures (CAPEX) between $20 billion & $25 billion.
Of which $17 billion (68% to 85% of budget) have been planned for lower-emission initiatives.
This is expected to double earnings & cash flow potential by 2027 vs. 2019 and supports the company’s strategic priorities.
Above were money spent in Q4 2022 for the respective core business segments.
ExxonMobil - Other Highlights
ExxonMobil’s management will have to see how to better control its expenses and other deductions that have grown +5% overall.
In terms of its long-term debt, ExxonMobil is doing a credible job at keeping it under control.
Refer to ExxonMobil’s 5 years debt plan below as proof of company’s due diligence.
ExxonMobil - Long term debt
ExxonMobil's CEO on Q4 2022 Results
Our plan for 2023 calls for further progress on our strategic objectives, which include leading the industry in safety, operating, and financial performance. We will continue to invest in our advantaged projects to deliver profitable growth, help meet society's growing needs and reduce emissions in our operations.. ExxonMobil, CEO, Darren Woods....
Is ExxonMobil's A Good Price Or A Good Company ?
In 2022 with the 3 indexes decline on the average -20.43%, ExxonMobil performed much better overall - agree ?
With the Biden administration’s executive order to draw from the Strategic Petroleum Reserves (SPR) officially ended on 31 Dec 2022; the artificially maintained oil price will once again be determined by Law of Demand & Supply instead
ExxonMobil - 2023 outlook
Looking at its 2023 Outlook, apart from segment “Upstream” that is forecasted to marginally underperform for Q1 2023, the other 3 segments are looking to better its Q4 2022 performance.
ExxonMobil - Growth projects in 2023
It is also embarking on “value projects” (refer to above diagram for details) across its business segments to grow shareholder’s value.
Do you think Oil price will slowly but surely bubble up to the $100 price tag again ?
Do you think ExxonMobil will make a good investment in your portfolio ?
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