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