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Wednesday, October 29, 2008

Exxon Earnings Preview

I'll be on Fox Business Thursday at 8 AM to talk about Exxon Mobil's earnings, which will be released before the market opens. Some factoids we may cover in the conversation ...

Exxon recorded the biggest profit for a company last year – more than $40.6 billion. In the most recent (July) quarter, it reported a quarterly profit of $11.7 billion, the largest in American history.

Exxon is a company that until recently had a history of spending more money on stock buybacks than new exploration. In the first quarter of this year, Exxon spent $8.8m on repurchasing its own stock and $5.5bn on exploration. Over the past three and a half years, it bought back just over $96 billion worth of its own shares.

But in March, Exxon said that spending this year on exploration, production platforms and other so-called upstream operations will rise by about 21 percent to $19 billion. The company will start 19 projects by the end of 2010 that will add the equivalent of 725,000 barrels of oil, enough to supply 10 percent of the refineries along the U.S. Gulf Coast.

Keep your eye on costs. Bloomberg reports that it cost $7.14 in 2007 for Exxon to pump a barrel of oil from the ground -- up from 2006's $6.04

According to Bloomberg, every time oil prices by $1 per barrel, Exxon gets another $400 million in each year's after-tax revenue.

Exxon Mobil ranks 25th by booked oil reserves. The top 10 are all state-owned national oil companies (NOCs). The top 13 NOCs own four-fifths of the world's known oil reserves. They don't share them cheaply.

Analysts expect the company to report a profit of $2.38 per share, according to Reuters Estimates. Put/call option activity shows investors are a bit more pessimistic than usual.

XOM is flat in the last month. The Energy sector is down 18%. Over 3 months, XOM is down 8%, the energy sector is down 34%.

In the past 3 months, the S&P 500 is down 25%, the energy sector is down 34%.

OTHER OIL INDUSTRY NEWS (that may come into the conversation) ...

Oil Company Profits Rise, But Outlook is Cautious
Record crude prices this summer are translating into huge profits, as BP and Occidental Petroleum showed Tuesday, but some energy companies are bracing for tougher times, keeping a closer tab on cash and cutting spending.
Oil producers are coming off a quarter during which crude prices reached an all-time high of $147.27. But prices have since tumbled more than 50 percent, and the global economic malaise has raised questions about energy demand at least into 2009.

Gasoline demand remains 6.4% below last year's levels, according to the MasterCard Spending Pulse released on Tuesday by MasterCard Advisors LLC, the research arm of MasterCard Inc.

Credit Crunch May Block 20% of Deep Oil Rigs, Slow Petrobras
As many as 20 of the 100 deepwater oil rigs on order worldwide may be delayed or canceled as loan availability erodes, possibly slowing developments including the biggest petroleum discovery in the Americas in three decades.


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