ExxonMobil's Refining Base Solid, Expensive Drilling A Woe
Zacks Investment Research | Aug 08, 2017 08:54AM ET
We issued an updated research report on energy giant ExxonMobil Corporation (NYSE:XOM) on Aug 7. We believe that the lucrative and extensive refining operations of the integrated energy player will make up for the company’s heavy reliance on expensive offshore drilling activities.
The company currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
ExxonMobil is the world’s best run integrated oil company based on its track record of high return on capital employed. As the largest publicly traded oil firm, the company has long been a core holding for investors seeking defensive as well as continued dividend growth.
In a bid to enhance manufacturing and export capacity, ExxonMobil has decided to invest in refining and chemical manufacturing facilities along the U.S. Gulf Coast. The company started investing in 2013 and anticipates continuing spending through 2022. ExxonMobil is likely to spend as much as $20 billion over the 10-year span.
Also, the company continues to return cash to shareholders on a regular basis. In fact, subsequent to the merger of Exxon and Mobil, the integrated major has returned as much as $370 billion to shareholders.
However, the upstream activities of ExxonMobil are heavily dependent on offshore resources. Drilling in those areas is getting excessively expensive, which might affect the company’s cash flow. The firm might make more profits if it relies on comparatively cheaper onshore operations like domestic shale resources -- where most of the explorers have been gathering over the last few years. Investors should also know that ExxonMobil posted an Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.