ExxonMobil (XOM, Financial) looks pretty strong with its international refining and United States chemicals businesses. Its growth investments are turning out great prospects for the company. Also, other growth initiatives such as enhancing downstream environments and favorable margin mix from its upstream business, are gearing up its business and returning profits to the shareholders.
ExxonMobil is benefiting from its new project startups and work programs. It is observing fairly higher margins and production growth in many regions such as Papua New Guinea, Angola and North America. It has recently enhanced its oil recovery projects in Malaysia. It has started with the startup production of Tapis projects. This project is expected to augment overall fuel recovery by exploiting a water-alternating-gas injection process. It also expects this project to observe left oil reserves to producing wells.
New projects are catalysts
ExxonMobil has additionally completed construction for various other projects such as Banyu Urip in Indonesia and the Qatargas II maintenance projects. Its Banyu Urip project is expected to yield extra 10,000 barrels per day of early production. Banyu Urip is currently producing 40,000 barrels per day. Meanwhile, the Qatargas II maintenance projects will enable the company to maintain about 10 million of annual LNG production over the years. This project also added another new onshore facility for sulfur handling.
Moreover, the company should benefit from the startup of its central processing facility, which is about to get completed soon. This central processing facility is anticipated to upload offshore storage vessel that is at present moved to another location for a final hookup. The company expects this project to attain full capacity of 165,000 barrels per day in 2015. These projects will certainly increase its production growth and enhance performance for both the top as well as the bottom lines going forward.
In addition, ExxonMobil is expected to benefit from various additional project startups in the current quarter. The company expects these projects to collectively produce about 300,000 net oil-equivalent barrels per day of production. One of these projects include LNG project in Papua New Guinea. This project has liquefied natural gas or LNG plant at sea level. This plant is manufacturing 6.9M tons of LNG per year to supply it in the global markets.
Furthermore, the company expects its Sakhalin-1 project in Russia to be completed by this year end. This project is forecasted to be one of the largest offshore oil and gas facilities in the region. ExxonMobil expects this project to produce approximately 630M barrels of oil annually, with the platform production capacity of 90,000 barrels per day. Similarly its Block 17 project in Angola is expected to produce incremental 160,000 barrels of liquids per day.
Apart from these projects, the company is constructing one of the largest fields in the world in Abu Dhabi. This project is expected to yield approximately 50 billion gross barrels per year. This project has production capacity of 750,000 barrels per day. Overall the company expects to attain production of 4M oil equivalent barrels per day, on the back of new production from its project start-ups.
Conclusion
ExxonMobil certainly is a good pick. The company is benefiting remarkable from the start-ups of its new projects. Also, it has strong pipeline of projects that unveils strong growth prospects for the company in the future. The analysts have estimated CAGR of 4.00% for the next five years that indicate not so impressive yet pretty good potential for the stock in the long-run. The company is trading at the trailing P/E of 12.15 and forward P/E of 13.98. This indicates that the stock is high-priced. It has profit and operating profit margins of 8.73% and 11.23% respectively for the trailing twelve months. Its balance sheet carries total cash of $4.96 billion, while its total debt remains at $21.83 billion. It has operating cash flow of $47.91 billion and leverage free cash flow of $12.35 billion.
