(XOM) Sector Oil Gas (Integrated) by kxh11968


									                                                                                      (XOM) Sector: Oil & Gas (Integrated)

Intrinsic Value        Purchase Price 52 Week High 52 Week Low                 Beta     P/E Market Cap              Dividend Yield
     $ 127.83                 $ 80.65                  $96.12      $7151       0.92     9.98 $420 billion (Large Cap)     2.00%

 Business Summary                                                          Competition
 Exxon Mobil Corporation (EXXON). The Group's principal                    • There are relatively few firms that have any competitive
 activities are exploration, production, transportation and sale of          advantage over Exxon Mobil. As a result, Exxon enjoys
 crude oil and natural gas. The Group operates through three                 oligopolistic control (excluding OPEC) in the energy
 segments: Upstream, Downstream and Chemicals. The Upstream                  markets. Other large firms that have the capital resources
 operates to explore for and produce crude oil and natural gas. The          to compete with Exxon:
 Downstream segment manufactures and markets petroleum                     • Chevron Corp (CVX, $86.95)
 products. The Chemicals segment manufactures and markets                  • BP (BP, $54.55)
 petrochemicals. The Group manufactures petroleum products,                • Royal Dutch Shell (RDS-B, $64.15)
 which includes olefins, aromatics, polyethylene and polypropylene
 plastics and other specialty products. It is also a major worldwide
 manufacturer and marketer of petrochemicals and participates in           Company Specific Strengths
 electric power generation. The Group operates and markets in the          • Most profitable company in the world
 United States, Canada, Europe, Africa, Asia Pacific and Middle            • Highly capitalized firm with adequate investment capability
 East, Russia and Caspian and South America.                                 which facilitates costlier exploration and extraction
 Industry Trends                                                           • Global demand for all of the companies products diversifies
 • Global demand has waned since oil highs of $147/bbl                       the associated risk exposure to any one economic climate
 • East Asian development, specifically China, is key factor to oil        • Reinvestment into non-fossil related energy solutions
    price direction                                                          continues to diversify the company’s mobility and
                                                                             continues to solidify its position as the front runner in
 • Recent price pullback has boosted long term attraction
                                                                             providing developing energy solutions
 • Global oil demand is due to increase by 40% by 2030
 • Alternative energy sources are not expected to provide the most
    cost effective solutions to growing demand in the largest              Company Specific Threats
    developing countries including Brazil, Russia, India & China           • High visibility to environmental concerns
                                                                           • Profits are under constant scrutiny from political interests
                                                                             as being excessive and unwarranted
                                                                           • Prices are dictated on the commodity exchanges and vary
                                                                             widely from income perspective
                                                                           • Demand tied in conjunction with global growth and

                                                                               Expected Real Return       7.44%
                                                                               Assumed inflation          2.5%
                                                                               Assumed P/E                9.9

 Source: finance.yahoo.com. XOM compared to the S&P 500 and DJIA               Beta                       0.92
                                                                               Risk Free Rate             3.08%
                                                                               Risk Premium               5.51%
                                                                               WACC rate                  8.2%

                                                                               Growth Assumptions
                                                                               2009-2013                  11.00%
                                                                               2014-2017                  8.00%
                                                                               Perpetual                  3.00%

                                                                               Intrinsic Value $127.83
                                                                               (Undervalued by 36%)

                                                                               Report Prepared By: Jason Codespoti

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