3. Exxon Mobil Corp. (NYSE:XOM)
Forward Price-to-Earnings Ratio: 13.44
Number of Hedge Fund Holders: 92
Exxon Mobil Corp. (NYSE:XOM) is engaged in every aspect of the petroleum business, from exploration and production to refining and marketing. It operates in various regions around the world and is known for its technological advancements in the energy industry, committed to providing reliable, affordable energy solutions while addressing environmental and social challenges.
The company is working on developing Proxxima, a new type of plastic, and other carbon materials for many different uses. It’s also focusing on producing more oil and gas at a lower cost and in a way that is better for the environment. This will help the US economy and energy security.
It had record production in Guyana and the Permian Basin. In Q2 2024, revenue grew by 12.24% from a year-ago period. Oil production increased by 15%, producing 574,000 barrels of oil per day. Product sales also increased by 10%. It’s expanding into LNG projects in Mozambique and the US, which are cleaner energy sources. These initiatives show the company’s commitment to sustainability.
Recently, Exxon Mobil Corp. (NYSE:XOM) bought Pioneer Natural Resources, which created the world’s largest potential for high-return unconventional resource development. It also agreed with Air Liquide to produce carbon-free hydrogen, with 98% of CO2 removed. The company also increased its share repurchase program to $20 billion through 2025, depending on market conditions, and it plans to buy back over $19 billion by the end of 2024.
The company’s strategic focus on diversification, innovation, and sustainability positions it well for long-term growth and success. Exxon Mobil Corp.’s (NYSE:XOM) recent acquisitions, investments in emerging energy technologies, and strong operational performance demonstrate its ability to adapt to changing market dynamics and deliver value to shareholders.
Madison Dividend Income Fund stated the following regarding Exxon Mobil Corporation (NYSE:XOM) in its first quarter 2024 investor letter:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…” (Click here to read the full text)
