XOM - Embedded Expectations Analysis - 2021 10 21
Exxon Mobil Corporation (XOM:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.8x Uniform P/B. Even at these levels, the market is pricing in expectations for profitability to inflect positively, and management is confident about the recovery in their downstream business, the advantages of their portfolio, and their Upstream business operating prowess.Specifically, management is confident the downstream market will come back into balance when the economic recovery kicks in. They are also confident their board of directors recognizes the advantages of their portfolio versus the industry and their emphasis on assets sales allows them to focus on areas where they have advantages. Additionally, management is confident they made a third discovery at Whiptail in Guyana and that they have confirmed the final investment decision on the Bacalhau development during Q2 2021. Furthermore, management is confident they are seeing the benefit of focusing on the value chain in how they are running their Upstream business.
Exxon Mobil operates or markets products in United States and other countries through its divisions and affiliated companies. The company's business involves exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and other products. In United States, the company's development activities are focused on the onshore United States, in the Permian Basin of West Texas and New Mexico and the Bakken oil play in North Dakota. Gas development activities are also focused on the Marcellus Shale of Pennsylvania and West Virginia, the Utica Shale of Ohio and the Haynesville Shale of East Texas and Louisiana.
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