Monday, February 04, 2008

Exxon -- Another Great Year

The world runs on oil and ExxonMobil provides about 3% of the world's daily consumption.

In late 1999 – when Bill Clinton was president – the Federal Trade Commission allowed Exxon and Mobil to recombine, giving us ExxonMobil.

The business includes Oil & Gas Exploration & Production (9% of sales, 67% of earnings); Refining & Marketing (82% or sales, 22% of earnings); and Chemicals (9% of sales, 11% of earnings).

The company has an ownership interest in 40 refineries in 20 countries capable of refining 7 million barrels of oil a day. Meanwhile, based on reports from the John Herold Research organization, the leading source of independent oil analysis, ExxonMobil replaced about 130% of reserves pumped since 2004. Its cost of finding and development was about $7 per barrel, which is below the industry average.

The superior management of ExxonMobil led to 2007 revenue of about $405 billion and net profits of $40.6 billion

Total costs were $334 billion; capital spending was $21 billion; income before taxes was $70.6 billion; income taxes were $30 billion; dividends were $7.6 billion.

In addition to income taxes, ExxonMobil generated sales taxes of $31.7 billion and other taxes of $44.1 billion for total tax payments of $105.8 billion. Its effective income tax rate was 44% in 2007.

The company produced an average of 2.6 million barrels of oil per day and 9.4 billion cubic feet of gas per day. Not bad. The thousands of employees of ExxonMobil do a great job of providing the fuel that allows the world to prosper. The world needs more ExxonMobils and fewer restrictions on exploration and production.

However, the stock is not attractive at these levels. The good news is already priced in and it looks like oil demand will ease a little in the year ahead.


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