Exxon Mobil Corporation (XOM)

I had to sign up to post. Have been in oil and gas/chemicals for 14 years already. I run a chemical plant that makes $1.5 million revenue per day. In the industry we know talk at great extension of crude to chemicals pathway. It is not simply taking crude putting it through atmospheric distillation tower, FCC, Alkyl and isomer unit make couple different cuts and be happy with it. Runnin a refinery is not very profitable. However if you refine crude and take a chemical pathway such as cracking liquids to make ethylene, methanol, LDPE LLDPE you have a syngerized business that does not put product into pipeline where your profit floats onspec prices. Here in southern texas we have got crackers, polymer units popping like there is no tomorrow, CP Chem cracker off Houston, SASOL new Mega Complex in Lake Charles La, new Mega Olefin plant to build in Corpus Christi wiht Exxon and SABIC which will be printing money in 3 years. What I am getting to is that base chemicals business is stronger than ever and in part is supplmented due to oil and crude feedstocks. Tesla's are run on batteries but are manufactured out of polymers from those base chemicals. Exxon is cutting jobs midstream in oil, refineries that sit bythemselves witout internal feedstock and product cricle. Shell is mothballing Norco Refinery which sells on spot prices. So yeaht tighter integration will make an break this business. Exxon with its assists is positioned to boom chemicals surge in the middle class in the develping nations is born. Middle class in those nations will drive demand for ethyl, methanol, plastics and oil derivatives.

All I need to know is there is no alternative to established energy sources, and this
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 68

Morgan Stanley analyst Devin McDermott recently kept an Overweight rating on Exxon Mobil Corporation (NYSE:XOM) stock with a price target of $149, noting that oil giants like Exxon looked set for “catch up” trade in the coming months amid oil price hikes. The firm recently beat market predictions on earnings per share and revenue and has also been exploring the deployment of low carbon technologies in Indonesia as part of an energy transition plan.

Hope you read this one Minnie.

Exxon Mobil (XOM) expects to double its earnings over the next six years from 2019 levels even as it shifts more spending to low-carbon businesses, the company said in a long-term plan that it released on Wednesday.

Three new board members joined the company after a proxy battle earlier this year, and their fingerprints appear to be on the new plan -- particularly in the company's low-carbon initiatives.

I'm genuinely amazed... the market is severely discounting the dividend here... maybe reassurances during the earnings call will do it. I also get the broader market was down today, but the outlook is very bullish for XOM presuming oil stays in the 'expected' range (per their last earnings call)... Guyana looks (based on recent article) to be productive at only $25 p/b for production costs. Assuming they bring the full 800k bpd production online by 2024 as projected... that's additional upstream revenue from just Guyana of $9B a year. I feel like I'm missing something, but my gut tells me it is emotional ESG dislike of the 'bad' oil industry... oh well, I'll just hold for 10-20 years... at which point my 10% dividend will have paid me back twice. GL All.

I have never felt better about having a big long position in a stock. I bought 3400 shares at $34.43 average, and will always have at least a 10% annual dividend yield, even if they never raise it again. I have close to 5000 shares now, and my brother has 3300. Added 500 more early this morning. This stock is trading at or below tangible book value, and the share price has not nearly reflected the nice rise in oil prices the past month. (Check where spot crude was back on June 1, 2020, when XOM rose up over $53.00/share. Couple all of this with mass vaccinations, pent up consumer demand, resumption of full scale industrial production, travel demand, etc. etc. etc., and you have the makings of at least at 50% gain short term. It's amazing how cheap this stock is relative to a highly inflated small cap and tech market. I have been watching the price/volume ratios very closely during the up days and the down days, plus large level buys/sells, and have concluded that the buy days greatly outweighed the lower volume sell days - meaning institutional accumulation. I'm turning 50 in February, and I have a few positions like this that I call me nest eggs. High dividends and cheap valuations with lots of room for growth. Not going to let any big players shake me off of this tree! Good luck, and stay safe everyone.

Zerohedge:
"Industry data shows that the service life of lithium batteries used in electric vehicles is generally 5 to 8 years, and the service life under warranty is 4 to 6 years. That means, tens of thousands of electric car batteries will soon need to be discarded or recycled, and millions more down the road.

According to the latest data from China Automotive Technology and Research Center, the cumulative decommissioning of China’s electric car batteries reached 200,000 tons in 2020 and the figure is estimated to climb to 780,000 tons by 2025.

Presently, most end-of-life batteries are traded in the unregulated black market, raising serious environmental concerns. If such batteries are not handled properly, they could cause soil, air, and water pollution.

“A 20-gram cell phone battery can pollute a water body equivalent to three standard swimming pools. If it is buried in the ground, it can pollute 1 square kilometer (247 acres) of land for about 50 years,” Wu Feng, a professor at Beijing Institute of Technology, once publicly stated.

Electric car batteries are many times larger than cell phone batteries.

According to Li Yongwang, a chemical engineering expert in China, pollution caused by NEV batteries is very likely far worse than the exhaust pollution from gasoline-run vehicles."

BP (BP) – 13.5% yield

BP is currently holding $26.8 billion in cash & equivalents combined with a $10 billion line of credit, which gives the firm roughly $37 billion in liquidity. BP is the most liquid of its competitors, with its liquidity more than covering its debts through 2022.

“BP’s cash flow sensitivity to oil price is $340m for $1/bbl,” according to Jefferies Equity Research. BP is the most hedged of its competitors, with crude price changes impacting its cash-flows the least.

Chevron (CVX) – 9.5% yield

Chevron has a $5.75 billion in cash & equivalents combined with a $9.75 billion line of credit, giving the company $15.5 billion in liquidity. CVX’s liquidity covers 80% of its debts through 2022.

“Chevron’s cash flow sensitivity to oil price is $500m for $1/bbl,” according to Jefferies Equity Research.

ExxonMobil (XOM) – 11% yield

Exxon has $3.1 billion in cash & equivalents but issued $8.5 billion in bonds last week, bringing its cash levels up to $11.6 billion. XOM’s liquidity covers roughly 75% of its debts through 2022.

“Exxon’s cash flow sensitivity to oil price is $600m for $1/bbl,” according to Jefferies Equity Research.

Take Away

I would not be rushing to get into oil stocks at this time as a further downslide to oil prices may be on the horizon. The concept of negative oil prices is sending fear down the spine of energy executives around the world.

This oil supply glut will not last forever and suspect that once demand resumes (hopefully later this year), the fear of dividend cuts will be alleviated, and energy stocks will rebound.

Goldman Sees Brent Oil at $75 as Supply Response Trails Demand
By Sharon Cho
February 21, 2021, 9:08 PM EST
Updated on February 21, 2021, 9:56 PM EST
Bank raises Brent forecast to $70 a barrel in 2Q and $75 in 3Q
Major producers to stay “highly inelastic” to rising prices
Oil prices will rally sooner and higher than previously thought as the global energy demand recovery outpaces the supply response from the OPEC+ alliance, shale and Iran, according to Goldman Sachs Group Inc.

Consumption will get back to pre-virus levels by late July, while output from major producers is likely to remain “highly inelastic” to the rising prices, the bank said in a note. Goldman raised its Brent forecasts by $10 a barrel, to $70 next quarter and $75 in the following three months.

“This faster re-balancing during what was expected to be the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast,” bank analysts including Damien Courvalin said in

Exxon Mobil Corp. late Thursday said that higher prices for crude and natural gas will boost its bottom line in the third quarter.

Profit margins for its chemicals products, however, which have been a bright spot for the integrated energy giant and others, are likely to get slimmer, Exxon XOM, -1.77% said in a filing.

Exxon said it expects a favorable effect between $200 million and $600 million on its third-quarter results from changes in oil prices, and between $500 million and $900 million due to changes in natural gas prices.

Let me see if I understand this correctly:
1) Oil is a finite resource.
2) According the the expert, demand > supply in the future.
3) Oil peak maybe 20-25 years away if that even happens.
4) Green/Renewable energy is really a supplement and not a threat to OIL.
5) XOM is cheap relative to other stocks.
6) XOM has excellent. & us actually a div aristocrat.
7) Oil price has been high this year & according to Gerhard over the last 10
years the average price of Brent has been over $74!

Shouldn't XOM be over 90 - 100 by now?

The way Bank of America sees it: "We don’t see any significant change from a symbolic vote
A lot is being made over the proxy battle with Engine No. 1, which won two of
ExxonMobil (XOM)’s 12 board seats. The question is: what this changes as the activist
criticism did not offer specific demands other than protect the dividend and pay greater
attention to risks of an energy transition. Headlines paint the result as a ‘stinging
setback’ or ‘landmark climate vote’. But we see the practical implications as largely
inconsequential: that Engine No. 1 added two ‘old energy’ practitioners to XOM’s board
is largely symbolic: while we acknowledge management could be more conciliatory
amidst an increasingly fractious climate debate, It has no impact on our view of XOM’s
investment case, strategy or leadership team which we view as pragmatic advocates for
responsible oil and gas investment."

XOM was trashed by the "Green" media and analysts more than CVX, TOT, RDS, and BP. It's almost as if the more they trashed it the better buy it was. I have been in the industry for 35 years...XOM has always been one of the best run companies (though cutthroat for professional employees). I also noticed the media trashing them further when they had layoffs. Anyone in the industry or who follows it knows this is a cyclical industry and layoffs are part of the cost cutting along with reduction of capex. EVERY SINGLE DOWNTURN. Hundreds of thousands lost their jobs in the industry this year. XOM was bashed more than most. They are not towing the line for the "renewables" agenda. But many institutions and investors see beyond this and bought while it was down. I cheer for the industry and all the best players, among them XOM and CVX. It will be a choppy ride but definitely the products are essential for decades.

So I was driving past some gas stations in town today and noticed their prices are back to peak levels. Maybe this is just the pre Labor Day price hike but it makes it pretty clear that the new pricing power from inflation is going to make it much less likely that once prices go up they will come back down again. This means that XOM will likely have much better refining margins and the half of their profits that come from end product sales for every $1 increase in Brent are likely to remain from the higher earlier prices.

Because Q3 oil sales were likely already in the bag by the end of July odds are very strong Q3 will be a barn burner. How strong Q4 will be remains to be seen but the recent $10 drop in Brent from peak levels might not all come from the bottom line, so people may well be under estimating XOM's profitability in Q4, especially if they hedged well. Remember hedging doesn't always cost you profits, sometimes it maintains them, which is the purpose after all.

- XOM -
Strong earnings lead to exceptional profits, convincing balance sheets, while stimulating cash flow as capital spending.

Oil Refinery capital spending can be used for, but not limited to the following…
1.) Pay down company debt.
2.) Company stock buy backs.
3.) Research and development, improving existing fuels, such as adjoining additives to improve ignition and cleaning (government mandated) substances, and creating new additives and renewable fuels.
4.) Re-engineering (up date, adding newer technologies) existing, large and small, oil refining processes. These oil refining projects, can make the operation of the plant run in a more efficient manner while manufacturing more product in less time, which in turn saves money.
These items can help lead to growth, profits, cash flow and prosperity moving forward.

From strong earnings to capital spending, the cycle continues again and again, it has nothing to do with perpetual motion.
Holding XOM, Long!