In its annual presentation to investment analysts at the New York Stock Exchange, ExxonMobil Corp. (XOM) claimed industry-leading results in 2009. The company also asserted that it is well positioned for future growth.
Exxon’s focus for each of its three business segments (Upstream, Downstream and Chemical) remains on investment discipline, operational and technology excellence, the value of integration and on industry leading returns.
By segment, Exxon’s results are expected to be as follows:
Exxon anticipates its production of oil and gas should increase by 3% to 4% this year, excluding its pending acquisition of U.S. natural-gas company XTO Energy Inc. (XTO) and a 2009−2013 CAGR (compounded annual growth rate) of 2−3%.
The company has started eight projects in the last year, including 3 LNG mega-trains in Qatar and 2 LNG terminals in Europe. One more mega-train (RasGas Train 7) is expected to come online this year. In the 2011−12 time frame, five major projects are scheduled to start.
Management is cautious about the present surplus of refining capacity. It also believes that the current refining environment is no different than most. It expects 2010 to be another rough year for refining.
However, Exxon has been keen to increase the supply of lower-sulfur diesel. For this, it will invest more than $1 billion towards two U.S. refineries and one in Europe. Upon completion this year, the company expects production of lower-sulfur diesel by about 6 million gallons per day.
The chemical business continues to see attractive growth opportunities on the back of an investment of $3.1 billion in 2009, the highest level in more than 10 years.
Capex to Rise
Exxon anticipates its 2010 capex will be $28 billion, up 3% from the 2009 level. In the period of 2011−14, the annual guidance range is $25 billion to $30 billion.
We continue to have a high regard for Exxon with respect to the company’s ability to consistently generate industry-leading returns. The company has a strong history of returning cash to shareholders through share buybacks and a consistent track record of increasing the dividend. In 2010, we believe, more benefits will be coming from increased investment and, of course, from the pending XTO merger.
“XOM” Free Stock Analysis: Buy? Sell? Hold?
“XTO” Free Stock Analysis: Buy? Sell? Hold?
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