Chevron Corporation (CVX), BP plc (ADR) (BP): Why Exxon Mobil Corporation (XOM) Makes So Much Money

That is a trend that’s not likely to end. Looking ahead, ExxonMobil is only expected to grow its production from 4.2 million barrels of oil equivalent per day, or Boe/d to 4.8 million Boe/d. This is about 14% by 2017, which is around 2-3% each year. For ExxonMobil, that growth is focused on projects that will drive economic returns. This is evidenced by the fact that oil and other liquids production is expected to grow by about 4% annually, while less profitable natural gas will just grow about 1% each year.

In looking at Royal Dutch Shell plc (ADR) (NYSE:RDS.A), for example, it is expected to grow its production from 3.3 million Boe/d last year to about four million Boe/d by 2018. That’s about 21% growth. Meanwhile, Chevron Corporation (NYSE:CVX) sees its production growing from 2.6 million Boe/d this year to about 3.3 million Boe/d by 2017. That’s slightly better growth of 27%. ExxonMobil simply isn’t interested in growing as fast, because to do so would require it to invest in less profitable projects.

The reason why ExxonMobil makes so much money is because it has disciplined itself to only invest in high return projects. That philosophy might not sit well with some investors or consumers, but it is a strategy that has enabled it to double the return of the S&P 500 over the past decade, while crushing the returns of rivals BP plc (ADR) (NYSE:BP) and Shell. Only Chevron Corporation (NYSE:CVX) has done better over the past decade.

The article Why ExxonMobil Makes So Much Money originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Chevron.

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