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Analyst Blog

Shares of ExxonMobil Corporation (XOM - Analyst Report) hit a 52-week high of $99.95 during yesterday’s trading session. However, the stock closed the session at $99.54, which reflects a solid year-to-date return of 15.0%. The average trading volume for the last three months aggregated 12,937,600 shares.

ExxonMobil is the world’s best run integrated oil company given its track record of superior return on capital employed. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking a defensive name with continued dividend growth.
 
ExxonMobil is fairly active in its investment program. The company plans to spend about $185 billion over the next five years, up 29% from the last five-year period. The capex covers as many as 21 important oil and gas projects currently on the anvil and the company is estimated to generate over 1 million net oil-equivalent barrels per day by 2016.
 
The key projects include the Kearl Oil Sands development project in Canada, four in West Africa and Kashagan Phase 1 in Kazakhstan. Exxon is also engaged in a large liquefied natural gas project in Papua New Guinea. It will further unearth more oil from the development of Hebron oil field, off the shore of Canadian province Newfoundland and Labrador.
 
Exploration activities include unconventional natural gas across North America as well as offshore regions, including the Gulf of Mexico. Notably, Exxon achieved success in the exploration of a well offshore Tanzania, where it came across a massive amount of recoverable gas of high quality.
 
ExxonMobil is in excellent financial health and has an AAA credit profile. With strong cash generation ability, the company is consistently returning value to it shareholders.
 
We, however, remain skeptical due to the company’s sharp drop in refinery utilization rates during the third quarter. Owing to lower crack spreads and narrowed crude oil differentials, fortunes of refiners industry wide went southward. In the quarter, ExxonMobil's refinery throughput averaged 4.8 million barrels per day (MMBPD), down 1.7% from the year-earlier level of 4.9 MMBPD. As a result, the segment recorded profit of $592 million against $2.6 billion in the year-ago quarter.

ExxonMobil currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Abraxas Petroleum Corp. (AXAS - Snapshot Report), Clayton Williams Energy, Inc. (CWEI - Snapshot Report) and Harvest Natural Resources Inc. (HNR - Snapshot Report). All these hold a Zacks Rank #1 (Strong Buy).

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