Exxon Mobil’s stock performance
Exxon Mobil (XOM) announced its earnings results on April 29, 2016, before the Market opened. The stock opened higher on the day, likely because the company’s 1Q16 earnings surpassed analyst estimates.
Exxon Mobil stock opened at $88.70 per share on April 29, higher than the previous close of $88. XOM saw a high of $89.80 and a low of $87.80 during the day. Eventually, it closed at $88.40, about 0.42% higher than its previous day’s close.
On April 29, 2016, XOM’s peers YPF (YPF) and Petrobras (PBR) rose 0.15% and 0.13%, respectively. PetroChina (PTR) fell 0.6%. For exposure to global stocks, you can consider the Vanguard Total World Stock Index ETF (VT).
Exxon Mobil’s 1Q16 update
In 1Q16, Exxon Mobil (XOM) incurred capex (capital expenditure) of $5.1 billion, of which $3.9 billion was in the upstream segment. The company expects to incur capex of approximately $23.2 billion in 2016, around 25% lower than its 2015 level.
In 1Q16, the company began production at the following four projects in the upstream segment:
- Heidelberg truss spar
- Gorgon LNG Train 1
- Julia subsea tie-back
- Point Thomson initial production system
These projects have added 170,000 barrels of oil equivalent per day of working interest production capacity. Exxon Mobil also expects to start production on the following two major projects this year:
But in 1Q16, Standard & Poor’s reduced Exxon Mobil’s credit rating to AA positive with a stable outlook. Currently, integrated energy companies are facing a challenging situation with falling crude oil prices. In this scenario, earnings and cash flows are declining, and leverage is rising. A case in point is Exxon Mobil’s (XOM) $12 billion bond issue. For details, please refer to Exxon Mobil Raises $12 Billion: A Must-Read Company Update. This series discusses the likely impact of the bond issue on Exxon Mobil’s leverage position. It also analyzes XOM’s cash flow position.
Next, let’s look at analysts’ recommendations for Exxon Mobil after 1Q16.