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Dow 30 Earnings: Exxon Mobil
Oil giant Exxon Mobil's (XOM - Free Analyst Report) second-quarter share earnings of $1.60 were above our estimate of $1.40 and nearly double the year-earlier figure of $0.81. Strength was across the board, with the oil and natural gas production, refining, and chemicals businesses all doing better both stateside and abroad. Significantly higher oil prices were a big help. Also notable was a turnaround in refining in the United States, where Exxon suffered a loss a year ago.
Good news on the production front cheered investors, as well. The company is getting a big lift from the recent startup of some large natural gas projects in Qatar. Those endeavors have more than offset a slight dip in the amount of oil pumped. Combined oil and gas production rose a healthy 8% in the quarter.
The closing of the XTO Energy acquisition was another highlight. Exxon rarely does acquisitions, preferring to develop its own properties using in-house methodologies. The last corporate purchase prior to this one was Mobil, over ten years ago, so the XTO deal can be viewed as something special. In this case, Exxon gained access to large-scale unconventional natural gas reserves in the United States. The move further pads production, but will dilute year-ahead earnings modestly.
About The Company: Exxon Mobil Corp. is the largest publicly traded oil company in the world. It also owns 69.6% of Imperial Oil (Canada). Daily production in 2009 was as follows: crude oil, 2.4 million barrels (flat vs. ’08); natural gas, 9.3 billion cubic feet (+3% vs. ’08). The average realized 2009 prices in the U.S. were: oil, $55.54 per barrel; natural gas, $3.85 per mill. cubic feet. Reserves as of 12/31/09 were 23.3 billion barrels of oil equivalent, 51% oil, and 49% gas. The reserve life at current production rates is about 15.7 years. The 10-year average reserve replacement rate is 112%. The daily refinery runs in 2009 were as follows: 5.4 million barrels (flat vs. ’08); product sales, 6.4 mill. barrels (-5% vs. ’08); chemical sales, 25.0 mill. tons.
* This report includes late-breaking news not reflected in our full-page review of this company.