The objective of this exercise is to get around to the areas of business of S&P 500 companies. The goal here is not to dive deep into financials, but to get a broad understanding, in hopes that an iteration of this exercise would enable an orientation of the diverse scope of industries.
1. 10-K Business
Exxon Mobile’s principal business is exploration and production of crude oil and natural gas, with an integrated pipeline from manufacturing to sales. Their products include petroleum products, and petrochemicals. Adapting to the net-zero framework, the company is expanding into carbon capture and storage, hydrogen, lower-emission fuels and lithium primarily through affiliates. The commodity business of energy and petrochemical industry is highly competitive, driven by supply and demand. The company has an international presence as 60% of workforce is outside of the US. In 2023, 45% of crude oil, 64% of natural gas and 15% of natural gas liquids production was from outside the Americas. The countries where the company has wells are US, Canada, Argentina, Brazil, Guyana, Germany, Netherlands, UK, Angola, Equatorial Guinea, Mozambique, Nigeria, Azerbaijan, Indonesia, Iraq, Kazakhstan, Malaysia, Qatar, Thailand, UAE, Australia, Papua New Guinea. Undeveloped nations often need foreign capital to utilize their reserves.
2. 10-K Properties
Proved Reserves
Exxon Mobile reports end of year proved reserves, which have reasonable certainty of existence and committed funds toward development. At the end of 2023, There are 11 billion gross oil-equivalent barrels (GOEB) in developed proved reserves and 6 billion GOEB in undeveloped proven reserves. In terms of oil-equivalent natural gas reserves, the amount is on par with oil reserves. $15b was invested in 2023 in the development of the undeveloped reserves.
Oil and gas production
Oil and natural gas liquids are reported in thousands of barrels daily. Exxon produced 1.7 million barrels of oil daily, including equity company investment. That is 614 million barrels in 2023. cf. total proved reserves of crude oil was 6.8 billion barrels, roughly 10x production in 2023. Natural gas production is reported in millions of cubic feet daily. Exxon produced 7,734 million cubic feet daily (1.3 million oil-equivalent barrels). That is 2,822 billion cubic feet per year. Natural gas reserve is roughly 5x of 2023 production.
Production Price and Production Cost
Production price fluctuate according to commodity price. In 2023 price ranged in the $70 to $80 range depending on the production region. Cost ranged between $5 to $36, where it was cheapest in Asia and Oceania, followed by Americas, and then Europe. Cost of production is not same every year. Depending on oil price, some high-cost wells may be operated less. There could be geopolitical tension. A cost-effective well may have been depleted. It’s striking to observe that a barrel of oil that charges $70 per barrel takes $5 to produce. However, this is probably excluding transportation, distribution, refining, exploration and development, depreciation of equipment cost. The company also reported a list of countries where they have wells and refining & chemical capacity.
Source: 10-K
Source: 10-K
3. 10-K MD&A
There are four segments to Exxon – Upstream, Energy Products, Chemical Products, and Specialty Products. The management expects world population to increase to 9.7 billion by 2050. Currently, there are 8 billion people. Assuming a worldwide economic growth of 2.5% per annum, Exxon’s electricity demand forecast is an 80% increase from 2021 to 2050. The company expects natural gas, nuclear power and renewables contribution to double, reducing the use of coal. Exxon acknowledges that light-duty vehicles demand for liquid fuel could peak around 2025, however other means of transportation would continue to run on liquid fuels. Per their outlook, natural gas and oil will each account for 25% and 30% of global energy mix in 2050. I think this is a bit aggressive. I hope we decarbonize faster. Upstream is the first phase of the oil and gas business. This involves exploration and production of oil and gas through Exxon’s portfolio of wells. The product of this segment is unrefined crude oil and gas. Energy Products segment encompass refining, logistics, trading, and marketing. Refining margin, the value of refined products at market value minus cost of crude oil, is the most important factor. Gasoline, diesel, jet fuel, heating oil are examples of refined products. Chemical Products segment involves manufacturing petrochemical products such as plastics (Polyethylene, Polypropylene etc.), synthetic fibers (Nylon, Polyester etc.), Fertilizers (Ammonia, Methanol etc.), etc.
4. Yahoo Finance, Bigcharts, Seeking Alpha Overview
Source: Yahoo Finance
Yahoo Finance
Exxon Mobil is in the energy sector, oil & gas integrated industry. The $540b market cap company explores and produces crude oil and natural gas worldwide. The company’s trailing p/e is 15x, forward p/e 14x. In 2023, Exxon Mobil generated $335b in revenue, $84b in gross profit (25%), $43b in operating profit (13%), and $36b in net profit (10%). ROA is 7%, ROE is 15%, debt-to-equity is 15%, levered FCF is $29b.
Source: Bigcharts, Seeking Alpha
Bigcharts, Seeking Alpha
Stock closely follows EPS. The company seems to place an effort to constantly increase dividends. Dividend yield is quite stable at around 4%. As an oil & gas company I wanted to check correlation to CL1. It seems be to closely related. Trailing p/e is stable at around mid-teens.
5. 24Q2 earnings call ChatGPT summary
This part is a copy & paste of ChatGPT 4o
ExxonMobil reported strong second-quarter earnings of $9.2 billion, marking their second-best second-quarter performance in the last decade. Despite softer market conditions, the company set production records in Guyana and the Permian Basin, where output surged to 1.2 million barrels per day, partly due to the Pioneer acquisition. The company distributed $9.5 billion to shareholders, including $4.3 billion in dividends, and closed the Pioneer transaction in just six months, significantly faster than the industry average.
ExxonMobil is also making strides in new business development, particularly with Proxxima, a high-performance, low-emission thermoset resin with significant growth potential. The company expects the Proxxima market to reach $30 billion by 2030, with returns above 15%. Additionally, ExxonMobil is exploring the potential of carbon materials, aiming to convert low-value refining by-products into high-value products like carbon fiber and battery materials.
Looking ahead, ExxonMobil remains focused on long-term value creation through flexibility and adaptability to energy transition scenarios. The company is preparing to lead in areas like hydrogen, biofuels, and carbon capture, and stresses that oil and gas will continue to play a role, especially in sectors like heavy industry and transportation. The integration of the Pioneer acquisition is progressing well, and ExxonMobil expects to surpass the synergies initially announced.
Overall, the company continues to invest in future growth opportunities, developing new markets while maintaining a disciplined approach to capital allocation, ensuring competitive returns even in a volatile energy landscape…
Written from scratch by Meston Ecoa
May contain incorrect data and information