ExxonMobil
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ExxonMobil

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Presented 11/10/09

Presented 11/10/09

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ExxonMobil ExxonMobil Presentation Transcript

  • Brought to you by the TFG Energy Analysts
  • Outline
    • Industry overview
      • Oil & Natural Gas
    • Intro to company
    • Ongoing & future projects
    • Catalysts for growth
    • Competition
    • Financials
    • Risk
    • Management
    • 5 reasons to invest
    • Price Target
  • Oil and Natural Gas Industry Overview
    • National Companies vs . “ Super - Majors ”
    • Oil is used mostly for transport fuel and petrochemical production - competes with biofuels and potentially , electric / hybrid cars
    • Natural Gas is used for electricity production and heating and competes with coal ( to some degree with nuclear and hydro )
    • Oil accounts for 1/3 of world ’ s energy use and growing
    • Natural Gas accounts for ¼ word ’ s energy use and growing
  • Industry Sectors
      • Upstream
        • Exploration, development, production, and marketing of energy sources (oil, natural gas, etc)
      • Downstream
        • Refining, marketing, distribution and transport of fuels ( producing, transporting and selling of gasoline, jet fuel, etc)
      • Chemical
        • Production of various petrochemicals (plastics, lubricants, electronic equipment parts, lots more)
        • Some companies are Integrated (ExxonMobil, Shell, Chevron)
        • Some companies are specialized (AnaDarko) , transport firms
  • Future Outlook
    • Demand for Natural Gas and Oil will rise – especially in developing world (China, India, etc)
    • Oil and Gas prices will rise with recession’s end
    • Demand for petrochemicals will rise- also mostly in the developing world
    • Supply of oil is more closely related to the dollar than it is to demand
  • Projected world energy demand
  • Company Background
    • ExxonMobil emerged in 1999 from a merger between Exxon and Mobil . Both companies descendant from Rockefeller’s Standard Oil.
    • Currently the largest publicly traded petroleum and petrochemical company worldwide .
    • Engaged in the exploration for and production of crude oil and natural gas (upstream) , the manufacture of petroleum products , and the transportation and sale of crude oil , natural gas , and petroleum products (downstream).
  • Company Background
    • In addition , ExxonMobil markets and manufactures commodity petrochemicals (chemicals).
    • Partake in operations on every continent
    • Ideology of the company- 5 principles
      • Portfolio quality
      • Global integration
      • Discipline and consistency
      • Value maximization
      • Long term perspective
  • Downstream Business Lines
    • Retail : 29,000 service stations worldwide ( e . g . your local gas station )
    • Industrial & Wholesale : serves transportation fleets , power generation companies , the agriculture sector manufacturers , and mining operations ( e . g . your local utility company )
    • Aviation : serves airports , commercial airlines , general aviation , and military aviation .
    • Marine : provides fuel to the shipping industry fleet ( container carriers , tankers , ferries , and cruise ships )
  • Ongoing Projects -Upstream -Downstream -Chemical
  • Upstream- New Projects
    • ExxonMobil well positioned to capitalize on emerging growth in oil, natural gas markets (N. America, Western Europe, Asia-Pacific)
    • Example Projects: 1) Qatar Gas- biggest private gas field 2) Papua New Guinea LNG 3) Pinecone Basin – Colorado
    • Comparative Advantages: superior return on capital, superior technology, jumpstart due to host country relations and capital
    10
  • Downstream and Chemical Projects
    • Increasing efficiency and thus profit margins (through technology R&D)
    • Competitive Advantages in Downstream and Chemical: Brand Recognition and Trust, Strategic Global Alliances (Car companies, rubber companies, etc.), growth in emerging markets
    • New Refineries and Petrochemical Facilities in China, Singapore, Qatar
    • Recently announced joint venture with Toray Industries to produce separator films for lithium ion batteries
  • Revenue / profit breakdown This shows that although Downstream operations account for most of the revenues , the margins for upstream revenues are much higher .
  • Geographical revenue / profit breakdown and CAPEX Margins are slightly better for the non - US arm of their business In response to larger margins from upstream operations , a majority of CAPEX for 2008 was invested for upstream purposes
  • Diversification of investments
  • Catalysts for Growth
    • Industry Growth
      • Transportation
      • Energy Production
    • Asset Acquisition and Development
    • Technological Advancement
      • Efficiency
      • Green Tech
    • Legislative Action
  • Projected production by region
  • Outperforming their competitors
  • Competitors
  • Return on Equity P / FCF Financial Comparison
  • Net Income Comparison
  • Financials
    • 5 year revenue CAGR : 14.8%
    • 5 year net profit CAGR : 16.02%
    • Price / FCF : 9.21*
    • Net profit margin : 10.64%*
    • Cash : $15.73 B *
    • Debt : $9.27 B *
    • 5 year avg . ROE :33.69%*
    • ROA : 19.24%*
    * indicates industry leader
  • Revenue 2004- present Net Income 2004- present EPS 1989- present ROE 1989- present
  • Risks
    • Industry & Economic Risks
        • Change in economic conditions or consumer demographics or preferences
        • Supply disruptions : weather , supply development
        • Member adherence to OPEC quotas
    • Legal & Political Risks
        • Changes in regulation or taxation
        • Political unrest
        • Restrictions on exploration
  • Management
    • Rex Tillerson was CEO & Chairman of Exxon Corporation prior Exxon Mobil merger in 1999
    • Business Philosophy : investing in long - term success rather than reacting in short - term market fluctuations
    • ExxonMobil does not base long - term investment strategy on short - term trends in commodity pricing
    • Continues heavily invest in innovation
      • $126 B over the 5 next years
  • Reasons to Invest
    • Pristine balance sheet / well capitalized
    • Best project management team in the industry
    • Great upstream operations
    • Increasing demand for oil / natural gas worldwide out of recession
    • Only share buyback program in industry , as well as a consistently growing dividend
    • Future estimates are among the best in the industry
  • Price Target
    • Current price : $72.54
    • EPS 2010 ( est .): $5.97
    • EPS 2011 ( est .): $6.68
    • 5 year historical P / E ratio : 13.7
    • ( Historical P / E multiple ) X (2010 EPS estimate ) = 2010 Price Target
    • 13.7 x 5.97 = $81.79 (12.75% return )
    • 2011 Target
    • 13.7 x 6.68 = $91.51 ( ~ 13% annual return )
    source: Bloomberg