Replies to post #1235 on The Rising Influence of Rising Affluence

[DewDiligence]

Article on NG stocks from iHub’s Lotto Project board:

#msg-52089799

[DewDiligence]

Big Jump in Refining Lifts Exxon's 2Q10 Profit

[Oil accounted for 58% of XOM’s 2Q10 boe production vs 64% in 2Q09; 2Q10 results exclude a meaningful contribution from XTO because the merger closed only three days before the end of the quarter.]

http://online.wsj.com/article/SB10001424052748703578104575396922641891674.html

›JULY 30, 2010
By ISABEL ORDONEZ

HOUSTON—Exxon Mobil Corp.'s second-quarter earnings jumped 91%, helped by higher commodities prices and a surge in refining profits and production.

Exxon's quarterly results released Thursday show the rebound of the refining business, which was badly hurt last year by a decline in fuel demand during the economic downturn. Refining margins have slowly improved as the economy has recovered, boosting earnings of companies with large downstream businesses that refine crude oil into gasoline, diesel and other products.

Exxon's smaller rival, ConocoPhillips, said Wednesday its second-quarter earnings tripled, while Chevron Corp. is expected to post substantially higher earnings Friday. The sustainability of the recovery in the refining business is highly uncertain, however, as demand could decline if the recovery slows.

"Exxon showed improvements across the board but its refining results were particularly strong," said Fadel Gheit, analyst at Oppenheimer & Co. "Major oil companies are benefiting from improved refining margins."

Exxon, the world's biggest oil company not under state control, reported a profit of $7.56 billion, or $1.60 a share, up from $3.95 billion, or 81 cents, a year earlier. Revenue rose 24% to $92.48 billion.

The results widely beat analyst's profit expectations of $1.46 a share, mainly due to lower corporate charges and better-than-expected results in the downstream business, according to Credit Suisse. The company's shares rose in early trading but closed down 57 cents at $60.34 in New York Stock Exchange composite trading Thursday.

Exxon's downstream earnings were $1.2 billion in the second quarter, up from $512 million a year earlier. Earnings at Exxon's oil- and gas-production segment increased 40% from a year earlier, totaling $5.3 billion, while earnings in the chemicals segment more than tripled to $1.37 billion.

The Irving, Texas-based company said oil-equivalent production increased by 8% over the year-earlier period to four million barrels a day, driven by start-ups of liquefied-natural-gas projects in Qatar. Excluding the impacts of production-sharing contracts, quotas imposed by the Organization of Petroleum Exporting Countries and divestment, Exxon's production was up about 10%.

Speaking to analysts on a conference call, David Rosenthal, Exxon's vice president of investor relations, said the company's diversified global portfolio has allowed it to successfully avoid the effects of a drilling ban imposed by the U.S. government in the Gulf of Mexico following the explosion aboard the Transocean Ltd. drilling platform Deepwater Horizon on April 20.

"You're starting to see some of the benefits of having a very diverse portfolio," Mr. Rosenthal said.

Due to the moratorium, Exxon suspended drilling activities at its Hoover Diana platform and delayed an appraisal well at the Hadrian discovery in the Gulf of Mexico. But the company said its production outlook for the rest of the year is unlikely to be affected due to the moratorium.

There is a "slight delay in the Gulf of Mexico, but we are progressing full speed ahead in the rest of world," he said.

Exxon plans to increase drilling for unconventional natural-gas resources in various areas onshore in the U.S. and also in offshore Brazil.

"We plan to further increase activity in the Haynesville, Fayetteville, Marcellus, Eagle Ford, and Bakken shale plays," Mr. Rosenthal said. The company was still planning to start drilling its third well in Brazil in the fourth quarter.

Exxon was in discussions with the Brazilian government about drilling a third well in the so-called presalt area after striking a dry hole last year at the Guarani well.

Mr. Rosenthal also confirmed Exxon is leading a multibillion joint water-injection project to be set up in southern Iraq to help offset a water problem facing oil-field development.

Exxon is the operator of Iraq's supergiant West Qurna phase 1 oil field. Mr. Rosenthal declined to give details about the company's plans for the field, but he said that "things are progressing well."‹

[DewDiligence]

XOM 4Q10 factoids:

1. Including XTO, upstream production rose 19% YoY to 5M boe/d.

2. Of the 5M boe/d above, liquids comprised 51% and NG comprised 49% (up from 43% in 4Q09).

3. The addition of XTO tripled XOM’s US production of NG, and XTO accounted for 10% of XOM’s worldwide boe/d from all sources. However, XTO accounted for only 1.6% of XOM’s worldwide upstream revenue due to depressed US gas prices (ouch).

4. Share repurchases in the quarter were $5B; a similar quarterly rate is planned for 1Q11 (and is likely to continue for the rest of 2011, IMO). Buybacks were curtailed during much of 2010 due to the XTO acquisition, which was in the form of a stock swap.

[DewDiligence]

XOM Forecasts 35% Increase in Energy Demand by 2030

[Given the XTO acquisition last year, it’s hardly surprising that XOM is bullish on natural gas. XOM predicts that in 2030 NG will account for 26% of worldwide energy use (up from 21% in 2005) and will have overtaken coal to become the second most important energy source due to its increasing use in power generation. XOM’s 56-page report with some nice graphics is at http://www.exxonmobil.com/corporate/files/news_pub_eo_2010.pdf ; the table on page 55 is a handy summary.]

http://www.bloomberg.com/news/2011-01-27/exxon-mobil-forecasts-35-global-energy-demand-growth-by-2030.html

›By Margot Habiby - Jan 27, 2011

Global energy demand will climb 35 percent by 2030 from 2005 levels amid rapid economic growth and an improvement in living standards in developing nations, an Exxon Mobil Corp. forecast shows.

Consumption of natural gas will surpass use of coal as the second-largest global energy source after oil, according to the company’s Outlook for Energy: A View to 2030, used to guide its investment decisions. Worldwide electricity consumption will rise more than 80 percent during the period, it said.

The estimate by the world’s largest publicly traded oil company is in line with a November forecast by the International Energy Agency, the Paris-based adviser to 28 nations. The IEA said energy demand will grow 36 percent from 2008 to 2035, with 93 percent of the gain coming from nations outside the Organization for Economic Cooperation and Development.

The outlook “clearly points to a growing demand for energy globally,” Exxon Mobil Chief Executive Officer Rex Tillerson said in a statement. “The forecasts also show a shift toward natural gas as businesses and governments look for reliable, affordable and cleaner ways to meet energy needs.”

Non-OECD countries [i.e. emerging markets] will see overall demand grow by 70 percent in the 25 years to 2030, while improvements in energy efficiency will keep consumption flat in the industrialized nations, according to the Exxon Mobil report, which is issued annually. The IEA said that Chinese demand alone will rise 75 percent by 2035 compared with 2005 levels.

Non-OECD demand for power will more than double as more people gain access to electricity, Exxon Mobil said. Demand for natural gas for power generation will jump around the world and increase sixfold in China, it said.

Energy Efficiency

Global growth in energy consumption would be even higher without the projections that efficiency will improve[duh], according to the Exxon Mobil report, which analyzes energy-use patterns in 100 countries.

The Irving, Texas-based company “will continue to invest in technology and innovation to develop new economic energy supplies to help meet this demand while looking for ways to reduce environmental impacts,” Tillerson said.

BP Plc forecast last week that global energy use will rise by almost 40 percent by 2030, led by demand from China, India, Russia, Brazil and other emerging economies.

Daniel Yergin, chairman of IHS-Cambridge Energy Research Associates, said in September that global energy demand will climb 30 percent to 40 percent from 2010 to 2030, spurred by rising incomes in emerging markets and global economic growth. Yergin is the Pulitzer Prize-winning author of “The Prize,” a history of the oil industry.‹

[DewDiligence]

XOM Is Becoming Gassier (Duh)

[2010 reserve replacement was 102% for oil and 328% for gas (including the XTO addition) for a composite replacement ratio of 209%. For the 10-year period ending 12/31/10, the replacement numbers were 95% for oil, 158% for gas (including XTO), and 121% overall. At 12/31/10, proved reserves consisted of 47% oil and 53% gas (up from 49% at 12/31/09).]

http://finance.yahoo.com/news/Exxon-Mobil-Corporation-bw-674317853.html?x=0&.v=1

›Tuesday February 15, 2011, 9:00 am EST

IRVING, Texas--(BUSINESS WIRE)-- Exxon Mobil Corporation (NYSE:XOM) announced today that additions to its proved reserves in 2010 totaled 3.5 billion oil-equivalent barrels, replacing 209 percent of production. Excluding the impact of asset sales, reserves additions replaced 211 percent of production.

“ExxonMobil continues to lead the industry in reserves replacement,” said Rex W. Tillerson, chairman and chief executive officer. “Our strategic focus on quality resource capture, a disciplined approach to investment and excellence in project execution have resulted in replacement of more than 100 percent of production for 17 consecutive years. These reserve additions will enable ExxonMobil to develop new supplies of energy to meet future demand and support economic growth and improved standards of living."

The annual reporting of proved reserves is the product of the corporation’s long-standing, rigorous process that ensures consistency and management accountability in all reserves bookings.

The corporation’s reserves additions in 2010, the highest since the merger of Exxon and Mobil, reflect strategic acquisitions, new developments, as well as revisions and extensions of existing fields resulting from drilling, studies and analysis of reservoir performance. Reserves additions from acquisitions and subsequent revisions totaled 3 billion oil-equivalent barrels. Additions also came from the Sakhalin-1 Arkutun Dagi project in Russia and other countries including Canada, the United States, Nigeria, Norway and Abu Dhabi. Liquid additions totaled 905 million oil-equivalent barrels for a 102 percent replacement ratio and gas additions totaled 2.6 billion oil-equivalent barrels for a 328 percent replacement ratio.

At year-end 2010, ExxonMobil's proved reserves base increased to 24.8 billion oil-equivalent barrels, including 2.8 billion oil-equivalent barrels from XTO. The proved reserves base is split between 47 percent liquids and 53 percent gas, and includes oil sands extracted by mining and equity company reserves. The 2010 proved developed reserves add of 3.3 billion oil-equivalent barrels was also the highest since the Exxon and Mobil merger, driven by the successful startup of several projects, the results of ongoing work programs, and the acquisition of XTO Energy Inc.

Long-Term View

The long-term nature of the industry, and the large size of the discrete projects that provide a significant portion of the corporation’s reserves additions, make it appropriate to consider a time horizon longer than a single year. The 10-year average reserves replacement ratio is 121 percent, with liquids replacement at 95 percent and gas at 158 percent. The reserves additions made during this period comprise a diverse range of resource types and have broad geographical representation. ExxonMobil’s reserves life at current production rates is 15 years.

Industry-Leading Resource Base

ExxonMobil added 14.6 billion oil-equivalent barrels to its resource base in 2010. This represents the largest annual growth and largest total resource base since the Exxon and Mobil merger, driven by resource additions from the United States, Canada, Iraq, Australia, West Africa and Europe. These additions include strategic acquisitions, continued success in making by-the-bit exploration discoveries, undeveloped resource additions, and revisions to our existing resources from ongoing studies. The resource base associated with the XTO acquisition is 60 trillion cubic feet equivalent. Overall, the corporation’s resource base grew by 9.7 billion oil-equivalent barrels to 84.5 billion oil-equivalent barrels, taking into account field revisions, production and asset sales. The resource base includes proved reserves, plus other discovered resources that are expected to be ultimately recovered.‹

[DewDiligence]

Exxon Acquires Private Marcellus Companies for $1.7B

[More evidence that XOM’s buyout of XTO was not a one-off foray into shale gas.]

http://online.wsj.com/article/SB10001424052702304392704576374103408464670.html

›JUNE 8, 2011, 7:09 P.M. ET
By RUSSEL GOLD

Exxon Mobil Corp., the largest U.S. natural-gas producer, got a little larger last week.

The Texas-based company said Wednesday it has purchased two gas producers active in the Marcellus Shale in the northeast U.S. for $1.69 billion.

The deal closed on June 2. Exxon said it will wrap the production and employees into its XTO Energy subsidiary. The companies it acquired are privately held Phillips Resources, Inc. and TWP Inc., according to Exxon spokesman Alan Jeffers.

Exxon took a big plunge into domestic gas production when it purchased XTO Energy in 2010 for $25 billion. Since then, it has been regularly acquiring additional gas production and leases with gas-bearing shale rock underneath. It purchased Ellora Energy Inc. for $695 million, picking up interest in Louisiana's Haynesville Shale. In December, it acquired natural-gas assets in Arkansas from Petrohawk Energy Corp. for $575 million.

Exxon produced 3.9 billion cubic feet of natural gas daily in the first quarter of 2011. The two acquired companies produced 15 million cubic feet, according to Exxon. [Clearly, existing production is not the reason for the acquisitions—see below.]

The bigger draw for Exxon is likely the estimated reserves of untapped natural gas and the 317,000 leased acres held by the two companies. The companies' leases hold an estimated 228 billion cubic feet of gas, mostly in Pennsylvania, but also in West Virginia, Ohio and Michigan as well. Exxon reported at the end of 2010 it held 15.3 billion cubic feet of gas in the U.S. in proved reserves, a financial term that indicates a very high likelihood this gas can be recovered.

Over the years, Phillips has drilled more than 4,000 wells in Pennsylvania, mostly targeting shallow deposits. It has only recently begun drilling deeper into the Marcellus Shale and has completed only 50 of these wells.

Drilling and producing gas from the Marcellus Shale will require hydraulic fracturing, a process of injecting liquid under high pressure to crack open the rocks to let the gas flow out. This technique has become very controversial with activists claiming the process can contaminate drinking water and cause other environmental damage.

Exxon maintains it can produce gas from shale rocks in an environmentally acceptable manner.‹

[DewDiligence]

Table of top US producers of NG during 2Q11:

http://www.bloomberg.com/news/2011-09-23/top-40-u-s-natural-gas-producers-for-q2-2011-table-.html

[DewDiligence]

XOM acquires CLT.T for $3.1B in cash and stock—a 35% premium to yesterday’s closing price:

http://online.wsj.com/article/SB10000872396390444734804578062301449159048.html

Calgary, Alberta-based Celtic said Exxon Mobil's Canadian unit is offering C$24.50 a share for its outstanding shares, plus half a share of a new company, representing a 35% premium to Celtic's closing price of C$18.12 in Toronto Tuesday.

…The Celtic assets being acquired include 545,000 net acres in the liquids-rich Montney shale, 104,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta. Celtic is focused on exploration, development and production of crude oil and natural gas resources primarily in west central Alberta.