Current XOM Stock Info

ExxonMobil’s Capex cut is one of the smallest seen among supermajors so far

ExxonMobil (ticker: XOM) held an analyst meeting today, giving a presentation with the company’s expectations for 2015. The energy-major cut its capital budget for this year to $34 billion, a 12% cut from 2013, making it one of the smallest cuts for any large-cap company to date.

Pavel Molchanov of Raymond James Equity Research said, “While this (the 12% Capex cut) is a bit steeper than the 5-10% cut that we had anticipated, it is still easily one of the smallest cuts among large-caps in this downcycle.” The only large-cap companies to make smaller cuts to their capital budgets are YPF (3% cut), Statoil (8% cut), BP and Total (11% cut each).

During the company’s presentation, Rex Tillerson, Chairman and CEO of ExxonMobil, said that XOM continues to maintain its long-term view. “The oil and gas business is cyclical and we’ve been here before,” he said. “We have a relentless focus on things we control… We are always looking for ways to lower our cost structure and we expect to lead the cost curve especially under these conditions.”

ExxonMobil’s presentation can be downloaded here.

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Analyst Commentary

Pavel Molchanov, Raymond James Equity Research 03.04.2015
At the risk of stating the obvious, Exxon’s ultra-long-term perspective
means that it is making only small course corrections following the oil price meltdown –
there are no wholesale strategic changes of any kind. Today’s analyst meeting highlighted
the key themes of capital intensity and finally achieving more visible production uplift.
The main headlines were generally positive on both fronts, as the 2015 budget came in a
bit lower than we anticipated, while production growth guidance is encouraging.

William Featherston, UBS Global Research 03.04.2015
XOM disclosed 2015 capex guidance of $34 billion, in line with the
longer-term guidance of $34 billion per annum provided in its 10-K last
week. The guidance represents a ~12% decrease from last year's spending of
$38.5 billion, with all of the decrease due to lower Upstream spending, as
Downstream and Chemical capex are expected to be unchanged to up
modestly YoY. We estimate this level of spending should enable just a modest
~0.45% FCF yield this year. Assuming the current futures strip, this level of
spending should enable $5.5 billion in free cash flow before $12 billion in
dividends and $4 billion in share repurchases in 2015. Post dividends and
repurchases, we forecast a $10 billion FCF deficit (at strip prices).

Roger Read, Wells Fargo Equity Research 03.05.2015
ExxonMobil hosted its annual analyst day Wednesday morning with confirmation of its 2017 production outlook of 4.3 mmboed on slightly lower capital expenditures, higher drilling activity in the U.S. shales, the completion of multiple mega projects and an $8.0 billion debt offering.  

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