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

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  2. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  3. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  4. Investing Basics

    Learn How To Trade Gold In 4 Steps

    Trading spot gold or gold futures, equities and options isn’t hard to learn, but the activity requires skill sets unique to these markets.
  5. Economics

    The Effect of Fed Fund Rate Hikes on Gold

    Explore the historical relationship between interest rate increases and the price of gold, and consider what effect a fed funds rate hike might have on gold.
  6. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  7. Savings

    Easy Ways to Go Green and Stay Budget Friendly

    Social entrepreneurs recruit "skeptics" to team green, by providing economically efficient products and services that minimize consumers' carbon footprint.
  8. Investing

    Top Investment Banks In The Energy Industry

    Many global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
  9. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  10. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  1. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  2. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  3. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  4. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  5. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  6. 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 >>

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!