This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Production Hurts Exxon Mobil, but Shares Remain Solid

Will Growth Ever Return?

Without question, the most essential topic in this sector today is whether growth is gone for good. Given the production struggles that exist, it will require significant investments to find untapped oil resources. Granted, companies like Exxon and Chevron aren't lacking in cash to fund exploration projects. But they do risk losing their capital investments if oil and gas prices fall further.

Exxon, which already has high production relative to peers, is already suffering revenue declines due to weak prices of oil, which fell $8.66 per barrel from a year ago. Given the uncertainty that still remains regarding oil prices, will management risk throwing good money toward potentially bad projects only to further hurt profitability? Investors can't have it both ways.

This is not a risk I think that is worth taking at this juncture. However, there are other options, such as M&A, which can ignite growth in short order.

Management has to find the right opportunity and mix. In the meantime, there are still plenty of opportunities for Exxon to turn things around -- it's just going to take a little bit longer than investors would like.

Here's Making Sense

Exxon is still in the mix of all phases of upstream and downstream operations. That, along with the company's portfolio of exploration and production projects, should continue to benefit the company through these tough periods.

Lastly, the investment case for Exxon often comes down to safety. The stock is not going to excite investors with strong upswings, but it does present little to no downside risk. That, along with an excellent yield of 2.80%, makes this a "no-lose" situation.

At the time of publication, the author held no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
XOM $88.40 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs