Replies to post #1227 on The Rising Influence of Rising Affluence

[CT]

When XOM says over 70 TCFE unconventional resource holdings, what number should I use to turn that into a $ value today? Should I use the price of NG today? I'm not familiar with the "cubic feet equivalent" terminology.

[DewDiligence]

XOM Comes Full Circle on Turkmenistan Gas

[Out in 2002; back in 2010.]

http://www.reuters.com/article/idAFLDE69Q03L20101027

›Wed Oct 27, 2010 3:27am EDT
By Marat Gurt

ASHGABAT, Oct 27 (Reuters) - U.S. energy major ExxonMobil (XOM) has reopened its office in Turkmenistan and said it was keen to develop its giant natural gas resources.

Turkmenistan, Central Asia's largest natural gas producer estimated to hold the world's fourth-largest reserves of the fuel, is eager to triple its current annual output of some 75 billion cubic metres (bcm) within 20 years.

"Turkmenistan has great potential to be a regional energy and economic leader given its abundance of natural gas, which is the fastest growing fuel around the world," Joerg Weller, general manager of ExxonMobil Exploration and Production Turkmenistan Ventures B.V., said in a statement.

ExxonMobil, the largest natural gas producer in the United States which is also involved in Russia and Kazakhstan, pulled out of Turkmenistan in 2002, citing economic reasons [a euphemism for an outlaw host government].

Turkmen President Kurbanguly Berdymukhamedov met Rob S. Franklin, president of ExxonMobil Upstream Ventures, on Tuesday and "stressed the large potential for partnership with this company", the official Neitralny Turkmenistan daily said on Wednesday.

Berdymukhamedov said "the huge experience of ExxonMobil could be successfully used in geological exploration and development of Turkmen hydrocarbon reserves on the Caspian Sea shelf, and in oil processing".

Like his predecessor, late Turkmen President-for-life Saparmurat Niyazov, Berdymukhamedov enjoys sweeping powers and there is no real opposition to his authoritarian rule in the reclusive desert nation [no kidding].

He is lionised by a docile domestic media, but his authority contrasts the bizarre personality cult which Niyazov enjoyed during his life. Berdymukhamedov has also launched some long-delayed economic reforms and is more investor-friendly.

Turkmenistan said in June that it would welcome U.S. support to diversify its energy exports. It is offering gas to consumers in Europe, China and Iran as it seeks to diversify supplies from its traditional market, Russia.

Turkmenistan is also keen to to revive its ambitious trans-regional pipeline project, aimed to bring Turkmen natural gas via Afghanistan to Pakistan and India and known as TAPI after the four countries through which it would pass. [There’s nothing like a politically stable project!]‹

[DewDiligence]

Exxon Needs to Show, Tell and Sell Its Vision

[XOM reports 3Q10 results tomorrow (Thursday).]

http://online.wsj.com/article/SB10001424052702303443904575578733771593278.html

›OCTOBER 28, 2010
By LIAM DENNING

Exxon Mobil isn't known for its loquaciousness on earnings calls. That may be about to change with Thursday's results.

The apparent reticence of Big Oil's biggest may have been admirable in the past given how many companies focus so slavishly on quarterly show-and-tells. But with its stock down 4.4% this year to $65.67, while competitors are up, Exxon might feel it needs to put on a bit of a show.

On its own, even a 42% year-on-year jump in third-quarter earnings per share, as implied by the $1.39 consensus forecast, isn't likely to galvanize investors. And they have little reason to expect a big earnings surprise, either. Over the past eight quarters, Exxon has beaten the consensus forecast just four times and on those occasions by 8% on average, according to Thomson Reuters. Rival Chevron has beaten forecasts five times by an average 17%.

Instead, Exxon needs to sell its vision. Last December, Exxon surprised investors by purchasing U.S. shale-gas developer XTO Energy for $31 billion. Exxon's thinking looks sound; oil is unfashionable in the West and often untouchable in reserves-rich countries. Natural gas, with lower carbon emissions and more diverse supply sources, looks like the best prospect for long-term growth.

The problem is most investors don't think in terms of decades. And since Exxon bought XTO, the December 2010 gas price is down 43%.

Since the deal's announcement, Exxon's stock has fallen, but still commands a premium. At 10.8 times 2010 earnings, its multiple remains 21% above Chevron's. So barring an unlikely rebound in natural-gas prices, there is little to suggest Exxon's stock can outperform rivals near term.

Two things could change that. Exxon's defensiveness served investors well during the financial crisis. If markets turn tail again, money should flow back to the stock.

Exxon also could buy back more stock; investors had come to rely on hefty buybacks, which were disrupted by the XTO deal. Macquarie reckons that at today's price Exxon could repurchase about 400 million shares this year and next, not far off the 416 million issued for the XTO deal.

That would alleviate some concerns about diluted profits. Throw in some convincing slides Thursday on XTO's more tangible benefits, and investors might start to reconsider the stock.‹