Energy

The Value of All Oil at Exxon Mobil: Over $2.2 Trillion!

Exxon Mobil Corp. (NYSE: XOM) was just featured as one of our seven DJIA stocks that would lead the DJIA to 15,000 and the company is delivering its production and capital spending estimates to analysts today. The oil and gas giant projects that its new major project start-ups will deliver 1 million oil-equivalent barrels over the next five years. What the company did not show you is that its proved reserves has a current snapshot market value of more than $2.2 trillion.

CEO Rex Tillerson tells analysts that the company’s crude oil production and other liquids should increase by 4% per year between 2013 and 2017, based on the new production analysis of 28 major oil and gas projects. Tillerson also said that 24 of those projects are liquids or liquids-linked projects. Twenty-two major projects will start production over the next three years, including an expansion of the Kearl Oil Sands Project in Alberta, Canada, and a liquefied natural gas export project in Papua New Guinea.

In a presentation to investment analysts, Tillerson said the company has a “growing global portfolio of high-quality resource opportunities with exploration success most recently in Romania and Tanzania.” Tillerson also said that the company is planning to more than double its exploration acreage in a range of proven and emerging locations that includes Russia by name to feed its inventory in the coming years. Its capital spending plan is to invest roughly $190 billion over the next five years.

Exxon Mobil said that it replaced 115% of 2012 production and has replaced 174% of its crude oil and other liquids, making it the 19th consecutive year the company replaced more than 100% of its production, with proved reserve additions of 1.8 billion oil-equivalent barrels.

Here is the figure that you need to know about the largest oil company: its proved reserves are at 25.2 billion oil equivalent barrels. Imagine what this translates to in real dollars at $90.00 a barrel oil. That is $2.268 trillion worth of oil in its proved reserves.

Exxon Mobil’s market cap is $403 billion. If Exxon Mobil was merely treated as a closed-end fund, investors would say that the company trades at only about 18% of its net asset value. Things are far more complicated than that, but it is an interesting way for investors to look at this. If you just consider what Exxon Mobil is expected to make in profits this year, Exxon trades at about 11 times earnings. That is the real way to look at the company.

We are sticking with our prediction that both Exxon Mobil and Chevron Corp. (NYSE: CVX) will hike their dividends in the coming weeks.

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