| ExxonMobil's Balanced Operations Likely to Fuel Growth | |
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On Oct 1, 2015, we issued an updated research report on ExxonMobil Corporation XOM.
ExxonMobil is in excellent financial health and has an AAA credit profile. The company’s free cash flow generation remains strong, and it keeps returning value to its shareholders. ExxonMobil has steadily raised its dividend, which currently stands at an annualized $2.76 per share. The company also engages in regular share buybacks. The company has diversified operations across the world and several of its new projects are expected to come online through 2015. Though ExxonMobil boasts a global presence, the main areas of its focus for new volumes over the coming years are the U.S., Canada, Kazakhstan, West Africa, Australia, Russia, Angola and Iraq. On the exploration front, it concentrates on unconventional natural gas across North America as well as offshore regions, including the Gulf of Mexico. Notably, Exxon achieved success in the exploration of a well in offshore Tanzania, where it came across huge amounts of recoverable gas of high quality. Exxon’s strength lies in its balanced operations, strong financial flexibility and continuous improvement on efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas should increase production through wider exposure to large energy resources with long reserve life and low field declines.
However, given its large asset base, achieving growth in oil and natural gas production has been a challenge for ExxonMobil over the past several years. With the established oil-producing regions of Europe and North America well beyond their prime, the search for growth has pushed the company into riskier regions. As a result, the share of production coming from Qatar and West Africa is on the rise.
Moreover, ExxonMobil continues to lower capital spending to tackle the weak pricing environment. Despite such measures, however, the company’s free cash flow position is likely to come under pressure, which may affect dividend and share repurchases going forward. The company already cancelled its share repurchase program twice this year.
Access to new energy resources is becoming increasingly difficult. Therefore, ExxonMobil, like most of its peers, will likely face headwinds to replace its reserve.
Other threats include government regulations and weather conditions, as well as renewable fuel prices. These can result in increased costs, reduced growth and fines or other sanctions.
Zacks Rank and Stocks to Consider
ExxonMobil carries a Zacks Rank #3 (Hold). Some better-ranked players from the same space are Cobalt International Energy, Inc. CIE, Matrix Service Company MTRX and ReneSola Ltd SOL. All these stocks sport a Zacks Rank #1 (Strong Buy).
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Exxon Mobil is a and oil producing company based in United states of america. Exxon Mobil is listed in Germany, in United Kingdom and in United States of America. Its market capitalisation is US$ 477.3 billions as of today (€ 429.4 billions). Its stock quote reached its lowest recent point on March 14, 1997 at US$ 100.12, and its highest recent level on September 06, 2024 at US$ 112.64. Exxon Mobil has 4 237 270 016 shares outstanding. |