Exxon Mobil (NYSE:XOM) highlighted its 2010 financial and operating achievements at the company's analyst meeting on March 9. The company also discussed its macro view of the oil and natural gas markets and the company's plans for capital spending in 2011. Let's take a look at some highlights. (For background reading, see A Guide To Investing In Oil Markets.)

IN PICTURES: 4 Biggest Investor Errors

Macro Demand for Oil
Exxon Mobil estimates that total demand for energy will grow by 35% by 2030, for a compound annual growth rate (CAGR) of 1.2% over the 2005 to 2030 time frame. Natural gas demand will have the fastest growth at a 2% CAGR rate, with oil growing at a 0.7% CAGR. (Learn more about this metric in Compound Annual Growth Rate: What You Should Know.)

Although demand for alternative sources of energy, like nuclear, solar, biomass and wind will grow at a 1.8% CAGR through 2030, fossil fuels will still provide the vast majority of all energy over the next few decades.

Demand for fuels used in transportation will help power this growth, and Exxon Mobil estimates that demand here will grow by 40% through 2030. This growth will be led by the less developed countries, while demand from the industrialized world will decline.

2010 Summary
Exxon Mobil reported $30.5 billion in net income in 2010, a 57% increase over 2009. Most of this profit was earned in the upstream segment of the company. Despite this staggering profitability, these results were below the peak year of 2008, when oil prices reached over $140 per barrel.

Exxon Mobil reported average production of 4.45 million barrels of oil equivalent (BOE) per day in 2010, making the company the largest oil and gas producer in the world. BP (NYSE:BP) reported average production for 2010 of 3.8 million BOE per day.

Exxon Mobil is focused on its capital and reported a 22% return on capital employed in 2010. This is far above its peers in the industry. Royal Dutch Shell (NYSE:RDS.A) reported a return on average capital employed of 11.5% at the end of the fourth quarter of 2010.

Exxon Mobil's excess cash flow enabled the company to have an aggressive dividend and stock repurchase plan in 2010. The company paid out $8.5 billion in dividends and repurchased $11.2 billion in stock in 2010. (For more on repurchases, see A Breakdown of Stock Buybacks.)

XOM's 2011 Plans
Exxon Mobil is aggressively ramping up its capital spending through 2015 to bring enough supply on line to meet the anticipated demand for energy. The company plans to spend approximately $34 billion in 2011 and between $33 billion and $37 billion each year through 2015. In 2010, Exxon Mobil reported total capital expenditures of $32.2 billion. By comparison, Chevron (NYSE:CVX) spent $21.8 billion in capital in 2010, a slight decline from $22.2 billion in 2009. Exxon Mobil has been spending heavily over the last five years, and has 11 upstream projects scheduled to come on line from 2011 to 2013.

The Bottom Line
Exxon Mobil reported a large profit and excess cash flow in 2010, and plans to increase capital spending to supply energy to meet the higher demand expected over the long term.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  2. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  3. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  4. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  5. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  6. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
  7. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  8. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
  9. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  10. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!