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Of course, it wasn't unexpected. The likes of ConocoPhillips (NYSE: COP), BP (NYSE: BP), and Royal Dutch Shell
(NYSE: RDS-A) have watched their earnings tumble in the most recent
quarter, as crude oil and natural gas prices became shadows of their
year-ago selves. ExxonMobil, which still has a market valuation that
tickles $330 billion, saw its earnings slide by 58% during the most
recent quarter, to $4.55 billion, from $10.89 billion a year ago.
And while the upstream (exploration and production) had been the
star of the show for the past several quarters, it checked in for the
March quarter with earnings of $3.5 billion. That number sounds
impressive, but it was down from nearly $8.8 billion in the first
quarter of 2008. Exxon's production was up on an oil-equivalent basis
by 2%, liquids production was up about 7,000 barrels a day, and natural
gas was down 34 mcfd year over year.
Beyond that, this was not a quarter where upstream strength offset
downstream weakness, or vice versa. For the quarter, the company's
downstream earnings were $1.13 billion, down slightly from a year ago.
As we consider Exxon, one significant (and too often ignored) issue
regarding the company -- along with its operating successes -- is its
cash situation. In the most recent quarter, for instance, capital and
exploration expenditures were up 5% year over year to $5.8 billion.
Cash flow from operations and assets sales totaled $9.1 billion during
the quarter. Beyond that, the company spent about $9 billion for
dividends and share repurchases, and Exxon is still sitting on $25
billion in cash.
But the real key for Fools is the way they should look at the
company from an investment perspective. I hold to the belief that crude
prices are likely to ascend slowly from their current levels. And while
companies like Chevron (NYSE: CVX) and Total (NYSE: TOT) make for solid oil-related investments, it's hard to beat Exxon.
With its strong cash position, its solid technological capabilities,
and its wide geographic spread, I believe ExxonMobil constitutes an
excellent energy proxy for Fools looking to dabble in this
still-relevant group.
For related Foolishness:
15 More Reasons to Like ExxonMobilMore Reasons to Love Your Rich Uncle Exxon5-Star Stocks Poised to Pop: ConocoPhillips
© 2009 UCLICK, L.L.C.
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