Exxon Mobil (NYSE:XOM) reported its typical spectacular earnings report for the fourth quarter of 2008, but gave few clues as to the evolution of its capital spending in 2009.

The company earned $7.8 billion in the fourth quarter of 2008, or $1.55 per share. While this number was down year over year and sequentially, it is clearly a profit that most companies can only dream of. The report also engendered some political heat about how much profit "big oil" is making during hard times, but it is refreshing to see an American company standing on its feet rather than begging Washington for a bailout. (Oil and gas investments can provide unmatched deduction potential for accredited investors, learn more in Drilling For Big Tax Breaks.)

IN PICTURES: Top 10 Solutions For A Big Tax Bill

Capital Spending
Exxon spent $26.1 billion in capital spending in 2008. This was up strongly from the $20.8 billion in 2007. A closer examination shows that it spent 75% of this on the upstream to explore and develop oil and natural gas projects.

Exxon Capital Spending (billions)
Location 2008 2007
U.S. $ 3.3 $ 2.2
Non-U.S. $16.4 $13.5
Total $19.7 $15.7

What was noticeably absent from the report was any talk of what the company hopes to spend in 2009. The company has always said that it plans to spend $125 billion over the next five years on capital spending - that's an average of $25 billion a year.

Rex Tillerson, the CEO of Exxon Mobil, told reporters in an American Petroleum Institute meeting in October 2008 that the drop in oil prices had not impacted the company's spending plan. "Nothing that we had in our plans has been affected by this change in prices. We were never planning on $100, $150 oil. The credit crisis also has little impact on Exxon Mobil because obviously we carry very low debt." Of course, oil prices in October were much higher than today, and Exxon Mobil is notable for its extreme capital discipline.

It was difficult to get any further info from the quarterly earnings call, because unlike its peers, the senior management of Exxon Mobil does not participate in the call. The company is planning an analyst meeting in March 2009, and may have further announcements at that time. (These events offer the average investor a chance to hear management respond to analysts' hard-hitting questions, see Conference Call Basics.)

Competitor Marathon Oil (NYSE:MRO) just announced it would cut capital spending in 2009 by 25%. The cuts would come mostly from a delay in developing some projects in the Canadian Oil Sands.

Production Growth
Like its fellow integrated oil peers, Exxon had difficulty growing its production in the fourth quarter of 2008. Its reported production was down 3% year over year, but after excluding OPEC quota cuts and lower entitlement volumes, production declined 1%. The full year was worse, with reported production down 6%, and 3% after the exclusions noted above.

Tony Hayward, the CEO of BP Inc. (NYSE:BP), recently suggested that one way out of the problem that the large integrated oil companies have with growing production and reserves is to merge with national oil companies (NOC). This would allow the companies to integrate their technological edges with large undeveloped reserves that the NOCs control.

Other integrated companies have had problems with their production growths. For example, Chevron (NYSE:CVX) reported during its recent conference call that it would have difficulty meeting its goal of a 3% compound annual growth rate in production from 2005-2010.

Exxon Mobil reported great earnings for the fourth quarter of 2008, but gave precious few clues as to whether it will adjust its mammoth capital spending plan of $125 billion over five years. It also was plagued with the problem of growing its production, so though this behemoth is still making money, it might be wise to investigate further before jumping on this stock.

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