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ExxonMobil Gushing with Cash and Confidence

Bill DiBenedetto | Tuesday March 16th, 2010 | 8 Comments

Here’s a news flash of sorts: ExxonMobil (XOM), the world’s largest publicly traded oil and gas company, has barrels of money and plans $28 billion in capital spending this year and about $25-$30 billion each year thereafter through 2014.

The company made more than $19 billion last year and generated cash flow of $28.4 billion. Flush with money and confidence, XOM says it is “well positioned for future growth” despite a volatile industry environment across a “range of market conditions.”

“Each of our three business segments, Upstream, Downstream and Chemical, outpaced our competitors,” Rex W. Tillerson, chairman and chief executive officer, said last week during the company’s annual presentation to investment analysts at the New York Stock Exchange.

That’s what a mountain of cash does: It provides “financial flexibility” to pursue a host of mostly oil-related and “geographically diverse” opportunities. But there’s not much to be found in terms of renewable energy or biofuel opportunities. Tillerson warned that the Irving, Texas, company “will not be distracted from our focus on maximizing long-term shareholder value.”

He added that XOM’s capital spending plan is “largely unaffected” by the global recession. The company’s return on capital employed, which it calls a key indicator of “disciplined decision making and financial performance,” was 16.3 percent, or more than 50 percent higher than its nearest competitor.

ExxonMobil has a large inventory of projects in the hopper, and during the presentation it highlighted last year’s achievements and future plans, including:

- It replaced more than 133 percent of its 2009 production with proved reserves additions totaling 2 billion oil equivalent barrels, based on long-term pricing used by the company to make investment decisions. It was the 16th consecutive year the company replaced more than 100 percent of its production.

- The company added the equivalent of 3.9 billion barrels of oil to its resource base through by-the-bit additions, resource acquisitions and revisions to existing fields. Of the 3.9 billion barrels of oil equivalent increase to the resource base, 2.1 billion barrels were through by-the-bit additions resulting from exploration drilling that discovered new resources.

- Exploration plans for 2010 and 2011 will evaluate offshore plays in Southeast Asia, the Black Sea, Canada’s East Coast, the U.S. Gulf of Mexico, Libya, Brazil and Australia, and also onshore unconventional gas potential in North America, Europe and Indonesia.

- During 2009, eight major projects started operations and are projected to add the equivalent of 400,000 net barrels per day to ExxonMobil’s production in 2010. An additional 12 major projects are expected to start production between 2010 and 2012. Combined with other projects, the company expects its share of production from new projects to increase by 1.5 million oil-equivalent barrels per day by 2015.

- The company’s major projects portfolio contains more than 130 oil and gas projects that span all resource types and regions of the world. The net share of the resources represented by those projects is the equivalent of 24 billion barrels of oil.

- In 2010, ExxonMobil said it “will continue to progress its biofuels program and alliance with a leading biotech company, Synthetic Genomics Inc., to research and develop next-generation biofuels from photosynthetic algae.

The latter point was the lone mention of renewable energy or biofuel programs, and no specifics or capital spending amounts were outlined, which only underscores XOM’s present and future focus and imperatives. But we knew that.

Crudely put, it’s all about the crude for ExxonMobil.


▼▼▼      8 Comments     ▼▼▼

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  • Matthew

    In the last 90 years oilmen from Texas taught the world about petroleum engineering and have been a true national asset. The mindless bashing of oil/gas firms by American politicians fosters enmity toward these firms and their employees.

    Support what they do, invest in them, and tell your lawmakers to back off and start thinking before they speak.

    • Aaron Skyes

      Matthew, I think your sentiments are right that oil has been very literally what's built the modern economy and that much good has come of it. Many people bash oil companies because it's trendy to do so.

      Unfortunately, many oil companies, especially ExxonMobil have been aggressively disingenuous toward any environmental regulations, and have even funded fake non-profits, and dis-information campaigns to mess with people's heads when it comes to climate science and more. It's seriously not cool and flies in the face of any concept of corporate responsibility. We just can't go on burning fossil fuels, and I really don't think Exxon cares. They're going to continue to fight dirty for the status quo even though the writing's been on the wall for decades that the fossil fuel age needs to end. Those are the real legitimate reasons why people attack the oil industry.

  • Michael

    “We just can't go on burning fossil fuels, and I really don't think Exxon cares.” – Aaron Skyes

    Nobody is holding a gun to peoples' head when they buy traditional fuels supplied by companies like Exxonmobil. And nobody is holding a gun to industry's head when it fails to provide cheaper, cleaner, marketable energy.

    Exxonmobil is 100% Americana – a privately owned company. Why so much distain towards free enterprise? How about companies owned by the likes of Hugo Chavez and other foreign governments? Exxonmobil is not the largest oil company in the world by far, yet it is American and privately owned, and receives 95% of the flack from environmentalists that fancy themselves as “citizens of the world”.

    • Tori Hay

      “Nobody is holding a gun to peoples' head when they buy traditional fuels supplied by companies like Exxonmobil. And nobody is holding a gun to industry's head when it fails to provide cheaper, cleaner, marketable energy.”

      Actually, that's not true. In most of the United States it is simply not possible to live without a car, and right now, alternatives are not affordable to the majority of people. So, though it's not being directly forced by Exxon, yes indeed, people do have a gun to their head to keep buying gasoline.

      The reasons for this are mainly that we've had such cheap gasoline for so long. I'm not saying that's a bad thing, just that now we're in a pickle because we've built 99% of our infrastructure to be totally dependent on cars.

      Secondly, I'm all for free enterprise! Exxon lobbies the heck out of the US government to keep gasoline subsidized (what do you think most of our military spending is for? it's to keep the oil supplies flowing cheaply).

      That's NOT free enterprise – True free enterprise would mean the government and military get out of it and let new technologies compete. If we didn't have an Iraq war, gas would be $6 a gallon right now and you can be darn sure new entrepreneurs would have emerged to bring us alternatives to gasoline, and alternatives to living in suburbs that require cars.

    • Dave Shires

      Exxon is a publicly traded company – XON – Here's a list of the major shareholders – http://finance.yahoo.com/q/mh?s=XOM

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  • Karen Matusic

    As an Exxon Mobil employee, I can assure you that Exxon Mobil is hard at work meeting today's and tomorrow's energy demand. While the energy provided by renewable sources will grow in coming years, oil and natural gas will remain the world's primary energy source for decades. Most projections indicated that oil and natural gas will continue to meet more than 60 percent of global energy demand two decades from now. We are doing our part by investing in the most abundant, available and affordable energy sources to meet demand. At the same time, we are carefully considering next-generation energy sources. Two examples are ExxonMobil's project with Synthetic Genomics, Inc. to research and develop algae-based biofuels (www.exxonmobil.com/algae) and our support for research into energy breakthroughs at Stanford University through the Global Climate and Energy Project (gcep.stanford.edu).

  • nickaster

    So it goes. At least ExxonMobil is being honest about their motives and priorities. The reality is that whether we like it or not, fossil fuels (specifically gasoline) are going to be a primary source of our energy for a long time to come. Exxon knows this and is just being honest about their mission to make enormous profits for their shareholders by taking advantage of this fact. That's basic business and basic reality!

    I think Exxon brings a lot more negative attention to themselves by failing to acknowledge the negative externalities that the fossil fuel economy produces, and as mentioned above, sometimes actively muddying the waters, especially regarding climate change.

    It looks like Exxon will keep being Exxon, so if folks want to accelerate the transition from fossil fuels, it's time to start new companies working on alternative fuels, efficiency, alternative ways to generate electricity, as well as alternatives to driving all together – and most importantly, to reward those companies with our dollars. That's the only thing that will really drive change.

  • nickaster

    So it goes. At least ExxonMobil is being honest about their motives and priorities. The reality is that whether we like it or not, fossil fuels (specifically gasoline) are going to be a primary source of our energy for a long time to come. Exxon knows this and is just being honest about their mission to make enormous profits for their shareholders by taking advantage of this fact. That's basic business and basic reality!

    I think Exxon brings a lot more negative attention to themselves by failing to acknowledge the negative externalities that the fossil fuel economy produces, and as mentioned above, sometimes actively muddying the waters, especially regarding climate change.

    It looks like Exxon will keep being Exxon, so if folks want to accelerate the transition from fossil fuels, it's time to start new companies working on alternative fuels, efficiency, alternative ways to generate electricity, as well as alternatives to driving all together – and most importantly, to reward those companies with our dollars. That's the only thing that will really drive change.

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