The massive recovery of oil prices in the last two years (the Brent Crude increased of approx. 180% between 2016 and 2018, from a bottom level of 30$ per barrel to approx 75$) is driving Investors attention on the oil and energy sector again.
Within the investment opportunities in oil and gas companies, Exxon Mobil (XOM) is surely a target to look at, and for a number of reasons:
- The company profits have been boosted by the surge of the crude oil prices, like any other energy company, in the last two years
- Exxon Mobil has developed a diversified and integrated business model, which reduces the dependence of the company’s profits from the oil price (examples are, the large refining and chemical downstream activities)
- The company owns some of the top upstream oil and gas production assets in the world and has in the pipeline the development of major strategic projects. Exxon seems to have invested harder in the quality of the managed assets, rather than on production volumes (which have been quite stable in the past few years, actually)
- Exxon has a geographically distributed asset base and is less exposed to regional risks (example instability of the Permian Basin)
- The company enjoys a strong dividend history and a solid credit profile in the financial community
Further, the ExxonMobil’s downstream chemical operations have taken the benefit of cheaper natural gas supply, focusing on ethane from shale fracking instead of naphtha.
Considering all the above, Exxon seems, definitely, a good option to look at for those investors interested in holding positions in the energy industry.
Other energy stocks that may be worth looking at are Shell Midstream, Petrobras and Chevron.