Why Exxon won't produce more oil By BusinessWeek
But how is it that crude can still trade above $100 a barrel, three times what it sold for at the start of the decade, despite a very wobbly economy?
If you want to understand that, it helps to listen in to ExxonMobil's (XOM, news, msgs) presentation to analysts in New York City in early March. Halfway through the three-hour meeting, Exxon management flashed a chart that showed the company's worldwide oil production staying flat through 2012.
Ponder that for a minute. Exxon is the largest publicly traded company in the energy business. In fact, it's the most profitable company in the history of capitalism, earning a record $40.6 billion last year on sales of $404 billion. Yet even with crude oil prices near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year.
That means the company's oil output won't even keep pace with its own projections of worldwide oil demand growth of 1.3% a year. http://articles.moneycentral.msn.com/Investing/Ext...
Is ExxonMobil's future running dry? By Jim Jubak
Are we witnessing the death of ExxonMobil (XOM, news, msgs)?
Strange question to ask with oil above $120 a barrel and ExxonMobil reporting $11 billion in first-quarter profits?
Not if you understand that ExxonMobil's management has bet the company. If that bet is wrong, over the next 15 years or so, investors will get to watch the gradual disappearance of ExxonMobil.
In one scenario, the company disappears as a public company, going private by 2018 after buying up all its public stock. In another, the company simply liquidates as it distributes its cash to shareholders until there's nothing left.
Far-fetched? Not at all. The warning signs were pasted all over the company's May 1 earnings report.
Yes, revenue for the quarter was up 34%, to $117 billion, from the first quarter of 2007. And, yes, net income climbed 17%, to $10.9 billion.
But production of oil and natural gas was down almost 6%.
[...] What's going on here? If any oil company in the world should be able to find more oil and natural gas, it's ExxonMobil, with its immense reserves of both engineering skills and cash resources. http://articles.moneycentral.msn.com/Investing/Jub...