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Feb 06, 2017

ExxonMobil Corporation (NYSE: XOM)

Zacks Rank 3-Hold

$83.54

Style:Value:

USD ( As of 02/03/17 )

Momentum:

VGM:

Summary

Data Overview 52 Week High-Low

$95.55 - $77.58

20 Day Average Volume

12,279,426

Beta

0.91

Market Cap

346.52 B

Dividend / Div Yld Industry

Growth:

$3.00 / 3.59% Oil and Gas - Integrated International

Industry Rank

231 / 265 (Bottom 13%)

Current Ratio

0.86

Debt/Capital Net Margin Price/Book (P/B) Price/Cash Flow (P/CF) Earnings Yield Debt/Equity

ExxonMobil’s recent acquisition of companies owned by the Bass family of Fort Worth, Texas is expected to double its Permian Basin resource to the equivalent of 6 billion barrels. ExxonMobil is the latest company to grow in Texas’ red-hot Permian basin in a bid to expand its drilling portfolios in West Texas and New Mexico. The company intends to use the position to drill longer horizontal wells, a technique many have adopted in the crash that lowers costs by extending the reach of drilling operations. The company boasts a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix as well as geographical footprint. However, shares of the company underperformed the Zacks categorized Oil & Gas-International Integrated industry in the last one year. Additionally, the company’s dividend yield is among the lowest in the industry.

14.04% 3.47%

Elements of the Zacks Rank

1.95 14.52

Agreement

Estimate Revisions (60 days)

5.07%

67%

0.16

67%

90%

80%

Value Score P/E (F1) P/E (F1) Rel to Industry

19.83 15.03

PEG Ratio

1.59

P/S (F1)

1.14

P/S (TTM)

1.53

P/CFO

7.15

EV/EDITDA Annual

9.18

Qtr CFO Growth 2 Yr CFO Growth Return on Equity (ROE) (NI - CFO) / Total Assets Asset Turnover

94.21%

F2 (Next Year)

Revisions: 10

Revisions: 5

Up: 2 Down: 1

Up: 1 Down: 2

Up: 1 Down: 9

Up: 1 Down: 4

30 Days

7 Current Days

60 Days

-13.39%

Q2

Q1

30 Days

7 Current Days

-11.81%

60 Days

30 Days

7 Current Days

F1

-6.24%

60 Days

30 Days

7 Current Days

F2

-3.37%

10.75 5.69

Upside Zacks Consensus Estimate vs. Most Accurate Estimate

-53.34 556.01% -4.72 0.67

Momentum Score 1 week Volume change

F1 (Current Year)

Revisions: 3

Magnitude Consensus Estimate Trend (60 days)

60 Days

Growth Score

Hist. EPS Growth (Q0/Q-1)

Q2 (Next Qtr)

Revisions: 3

14.52

P/CFO Rel to Industry

Proj. EPS Growth (F1/F0)

Q1 (Current Qtr)

Most Accurate:

0.97 Most Accurate:

1.12 Most Accurate:

4.20 Most Accurate:

Zacks Consensus:

0.97 Zacks Consensus:

1.12 Zacks Consensus:

4.21 Zacks Consensus:

Q1

0.00%

Q2

0.00%

F1

-0.24%

F2

4.87 4.87

0.00%

9.62%

1 week Price Cng Rel to Industry

-1.88%

(F1) EPS Est 1 week change

-2.01%

(F1) EPS Est 4 week change

-3.38%

(F1) EPS Est 12 week change

-5.89%

(Q1) EPS Est 1 week change

-0.55%

Surprise Reported Earnings History

© 2017 Zacks Investment Research, All Rights Reserved

Reported: 0.90

Reported: 0.63

Reported: 0.41

Reported: 0.43

Estimate: 0.72

Estimate: 0.60

Estimate: 0.64

Estimate: 0.28

Q End 12/16

Q End 09/16

Q End 06/16

Q End 03/16

Average 4 Qtr Surprise

10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606

The data on the front page and all the charts in the report represent market data as of 02/03/17, while the report's text is as of 01/18/2017

Overview Irving, TX-based ExxonMobil Corporation (XOM) is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon’s earnings come from its operations outside the U.S. The company divides its operations into three segments: Upstream, Downstream and Chemicals. Upstream: ExxonMobil has very large and established exploration and production operations in all the major hydrocarbon producing regions of the world. In 2015, production averaged 4.097 million barrels of oil-equivalent per day (MMBOE/d), up 3.2% year over year. Liquid production increased 11.1% year over year to 2.345 million barrels per day but the natural gas production fell 5.6% on an annualized basis. This segment contributed 20% of the company’s third quarter earnings. Downstream: This segment – responsible for 41% of third quarter earnings – comprises Exxon’s worldwide portfolio of refining, marketing and distribution assets. Out of the refining capacity of about 6.3 million barrels per day, more than twothirds is located outside the U.S., mostly in Europe, the Asia Pacific and Canada. Chemicals: Exxon is the largest worldwide producer of olefins, paraxylene, benzene and polyolefins, and holds a leading position in a variety of other specialty chemicals. Chemicals accounted for roughly 39% of third quarter earnings.

Zacks Equity Research: XOM

www.zacks.com

Page 2 of 9

Reasons To Buy: ExxonMobil is the world’s best run integrated oil company based on its track record of high return on capital employed. The strongest return comes from the company’s large scale of operations and diversification benefits. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors. ExxonMobil has extensive chemical and refining businesses that could cushion it in case of a downturn in oil and gas prices. ExxonMobil’s recent acquisition of companies owned by the Bass family of Fort Worth, Texas is expected to double its Permian Basin resource to the equivalent of 6 billion barrels. ExxonMobil is the latest company to grow in Texas’ red-hot Permian basin in a bid to expand its drilling portfolios in West Texas and New Mexico. This will immensely help the company to benefit as oil prices recover and subsequently enhance shareholder value.

Exxon Mobil is the world’s best run integrated oil company, given its track record of high return on capital employed.

The OPEC’s recent deal to cut production amid the oversupplied commodity market has led to crude price recovery. Non-OPEC players have also agreed to limit crude output. Since ExxonMobil’s production comprises a significant amount of oil, it will be able to sell the commodity at higher prices. This in turn will allow it to share more profits from its upstream business with its shareholders. Notably, ExxonMobil also has a huge base of chemical and refining operations that will continue to support growth if its upstream operation underperforms. The company’s existing oil and gas development project pipeline is among the best in the industry. Some of the oil and gas projects that are currently underway include the Kearl Oil Sands development project in Canada and a large liquefied natural gas project in Papua New Guinea, which was brought online in 2015. Recently, the company discovered huge recoverable oil resources on the Owowo field, offshore Nigeria. The field is estimated to hold recoverable resources of 500 million and 1 billion barrels of oil. The discovery is expected to boost ExxonMobil’s production in the long run. Exxon’s strength lies in its balanced operations, strong financial flexibility and continuous efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas reflect its aim to increase production through higher exposure to large energy resources with long reserve life and low field declines. Despite the collapse in natural gas prices, Exxon expects unconventional gas to play a dominant role in future supplies owing to the rapid decline in conventional production. The company possesses more than 8 million unconventional acres in North America.

Reasons To Sell: Despite substantial improvement in oil prices since last February, the commodity is still trading much below the level reached during mid-2014. Hence, the persistent weakness in commodity prices remains as overhang on the stock. Moreover, shares of the company underperformed the Zacks categorized Oil & Gas-International Integrated industry over the last one year. During the period, ExxonMobil stock gained 14.4%, while the broader industry improved by 32.6%. Given its large base, achieving growth in oil and natural gas production has been a challenge for ExxonMobil over the past several years. With the established oil-producing regions of Europe and North America well beyond their prime, the search for growth has pushed the company into riskier regions. As a result, the share of production coming from Qatar and West Africa is on the rise.

Given its large base, achieving growth in oil and natural gas production has been a challenge for ExxonMobil over the past several years.

Although ExxonMobil has diversified operations, it offers lower dividend yields than its peers. Moreover, ExxonMobil continues to reduce capital spending to tackle the weak pricing environment. However, this procedure might hamper the company’s long-term production growth prospects. As a result, the company’s free cash flow position is likely to remain under pressure. This in turn may affect dividend and share repurchases. In a bid to lower greenhouse gas emissions, Energy Information Administration (EPA) has mandated an increase in the amount of renewable fuel to be added by refiners to gasoline. For 2017, EPA increased the level to 19.28 billion gallons of renewable fuel from the 2016 mark of 18.11 billion gallons. Following this development, the company’s refining division will be forced to divert cash flows to ensure regulatory compliance, which can limit profitability. This apart access to new energy resources is becoming increasingly difficult and hence, ExxonMobil - like most of its peers - will likely face headwinds to replace its reserve. With access to new energy resources becoming increasingly difficult, ExxonMobil, like most of its peers, will likely face headwinds to replace its reserve.

Last Earnings Report Quarter Ending 12/2016

Third-Quarter 2016 Results Zacks Equity Research: XOM

www.zacks.com

Page 3 of 9

ExxonMobil posted better-than-expected third-quarter 2016 earnings. Project startups along with favorable volume and mix effects led to the outperformance. This was offset partially by lower oil and gas realizations, lower refining margins and an increased downtime in Nigeria. The company reported earnings of $0.63 per share, beating the Zacks Consensus Estimate of $0.60. The bottom line, however, deteriorated from $1.01 per share in the year-ago quarter.

Report Date

Jan 31, 2017

Sales Surprise

-4.02%

EPS Surprise

25.00%

Quarterly EPS

0.90

Annual EPS (TTM)

2.37

Total revenue in the quarter decreased to $58,677 million from $67,344 million in the year-ago quarter. The top line also came in below the Zacks Consensus Estimate of $60,562 million. Operational Performance Upstream: Quarterly earnings for the segment declined $738 million from the third quarter of 2015 to $620 million. Lower realizations for liquids and gas affected earnings by $880 million. However, volume and mix effects helped earnings to rise by $80 million. Production averaged 3.811 million barrels of oil-equivalent per day (MMBOE/d), down almost 3% year over year. Liquids production totaled 2.2 million barrels per day, down 120,000 barrels per day. Increased downtime in Nigeria led to the output decline, which was negated partially by project startups. Natural gas production, however, was 9.6 billion cubic feet per day, up 77 million cubic feet per day from the prior-year period. Project startups led to the improvement. Downstream: The segment recorded profits of $1.2 billion, down $804 million from the July to September quarter of 2015. Decreased refining margins hurt earnings by $1.6 billion. ExxonMobil's refinery throughput averaged 4.4 million barrels per day, down 2.1% from the year-earlier level. Chemical: This unit contributed approximately $1.2 billion, which is $56 million less than the third quarter of 2015. Weak margins lowered earnings by $10 million. However, favorable volume and mix effects drove earnings by $20 million. Financials During the quarter, ExxonMobil generated cash flow of $6.3 billion from operations and asset sales. The company returned $3.1 billion to shareholders through dividends. Capital and exploration spending decreased 45% year over year to $4.2 billion.

Recent News Exxon Attains Bass Family Assets, Doubles Permian Yield – Jan 17, 2017 ExxonMobil Corporation intends to more than double its Permian Basin resource to the equivalent of 6 billion barrels through the acquisition of companies owned by the Bass family of Fort Worth, Texas. These acquired assets are estimated to hold resources of 3.4 billion barrels of oil equivalent in New Mexico’s Delaware Basin. An upfront payment of $5.6 billion will be made by ExxonMobil along with a series of additional contingent cash payments totalling up to $1 billion, to be paid starting in 2020 and ending no later than 2032 proportionate with the development of the resource. The acquired companies, which include the operating entity BOPCO, is estimated to about 275,000 acres of leasehold, and production of over 18,000 net oil equivalent barrels per day, of which about 70% is liquids. This includes about 250,000 acres of leasehold in the Permian Basin, the majority of which lies in contiguous, held-by-production units in the New Mexico Delaware Basin, with over 60 billion barrels of oil equivalent estimated in place. The company intends to use the position to drill longer horizontal wells, a technique many have adopted in the crash that lowers costs by extending the reach of drilling operations. ExxonMobil’s production across its Permian Basin leasehold is about 140,000 net oil-equivalent barrels per day. ExxonMobil is the latest company to grow in Texas’ red-hot Permian basin in a bid to expand its drilling portfolios in West Texas and New Mexico. In spite of the drop in oil prices, the value of the land in the Permian basin has shot up to records amid a bout of land buying as companies get prepared for a rebound. ExxonMobil Hits Natural Gas in Onshore Papua New Guinea On Dec 28, 2016, ExxonMobil announced that it has made a new natural gas discovery in the Papua New Guinea North Highlands. Zacks Equity Research: XOM

www.zacks.com

Page 4 of 9

Located 13 miles (21 kilometers) northwest of the Hides Gas Field, the Muruk-1 well came across similar high-quality sandstone reservoirs as the Hides field, same as the pre-drill expectations. The well was drilled to a depth of 10,630 feet (3,130 meters). Located in petroleum prospecting license 402, the well spans across an acreage of 126,000 acres (510 square kilometers). The size of the discovery is currently being assessed. Oil Search Limited is the operator of the well with a holding of 37.5%. ExxonMobil holds 42.5% and the remaining 20% is owned by Barracuda Limited, a subsidiary of Santos Limited. Oil Search started drilling the Muruk-1 well on Nov 2. ExxonMobil’s involvement in exploration in Papua New Guinea dates back to the 1930s. Moreover, the Muruk exploration success validates the strength of ExxonMobil’s long-term investment approach and reiterates its commitment to Papua New Guinea.

Zacks Equity Research: XOM

www.zacks.com

Page 5 of 9

Industry Analysis Zacks Industry Rank: 231 / 265 (Bottom 13%)

Top Peers Braskem S.A. (BAK) BP p.l.c. (BP) Chevron Corporation (CVX) ENI S.p.A. (E) OMV AG (OMVJF) Premier Oil PLC (PMOIY) PetroChina Company Limited (PTR) Royal Dutch Shell PLC (RDS.A) Repsol SA (REPYY)

Industry Comparison Oil And Gas - Integrated - International | Position in

Industry Peers

Industry: 1 of 14 XOM VGM Score Market Cap # of Analysts Dividend Yield

346.52 B

X Industry

S&P 500

-

-

19.10 B

19.97 B

BAK

BP

7.92 B

CVX

116.58 B

214.39 B

17

3

14

2

11

16

2.98%

3.59%

1.84%

3.78%

5.65%

3.75%

-

-

Value Score Cash/Price

-7.45

0.68

2.27

-6.36

-3.91

-3.51

EV/EBITDA

9.18

5.22

12.34

3.68

20.63

9.52

PEG Ratio

1.59

-0.08

1.87

NA

3.75

0.78

Price/Book (P/B)

1.95

1.21

3.06

6.07

1.22

1.43

Price/Cash Flow (P/CF)

14.52

4.22

13.03

3.97

8.67

14.95

P/E (F1)

19.83

13.97

17.93

8.89

15.00

23.76

1.14

0.76

2.38

0.53

0.45

1.34

5.07%

7.18%

5.54%

10.80%

6.68%

4.26%

Debt/Equity

0.16

0.45

0.69

5.13

0.57

0.27

Cash Flow ($/share)

8.21

4.44

5.30

3.84

6.89

11.30

-

-

58.40%

7.49%

-24.24%

172.70%

257.11%

Price/Sales (P/S) Earnings Yield

Growth Score Hist. EPS Growth (3-5 yrs) Proj. EPS Growth (F1/F0) Curr. Cash Flow Growth Hist. Cash Flow Growth (3-5 yrs) Current Ratio Debt/Capital Net Margin Return on Equity Sales/Assets Proj. Sales Growth (F1/F0)

94.21% 78.33%

53.16%

8.65%

-24.24%

172.70%

377.92%

-31.35%

-20.59%

4.10%

35.14%

-22.86%

-16.72%

-5.43%

-4.30%

7.83%

-5.71%

-8.49%

-11.72%

0.86

1.17

1.37

1.26

1.25

1.17

14.04%

31.34%

41.81%

83.68%

36.49%

21.08%

3.47%

-0.01%

10.06%

4.36%

-2.03%

-0.43%

556.01%

3.96%

15.96%

235.24%

6.01%

126.16%

0.67

0.56

0.54

0.82

0.69

0.44

34.10%

6.47%

4.22%

6.55%

28.51%

40.21%

-

-

0.00%

0.68%

-3.78%

0.36%

1.21%

Momentum Score Daily Price Chg

0.11%

1 Week Price Chg

-1.88%

0.03%

0.01%

-8.56%

-1.38%

0.23%

4 Week Price Chg

-5.66%

-1.33%

0.66%

-10.86%

-6.87%

-3.19%

12 Week Price Chg

-4.03%

11.67%

5.85%

17.45%

5.83%

5.36%

52 Week Price Chg

4.65%

29.59%

18.94%

58.50%

17.35%

33.94%

12,279,426

115,236

0

405,919

5,174,497

5,799,867

(F1) EPS Est 1 week change

-2.01%

0.00%

-0.05%

0.00%

-3.46%

-3.77%

(F1) EPS Est 4 week change

-3.38%

-2.41%

-0.24%

-1.11%

-2.05%

-2.77%

(F1) EPS Est 12 week change

-5.89%

-4.68%

0.83%

4.93%

-5.79%

-6.02%

(Q1) EPS Est Mthly Chg

2.61%

8.54%

-0.10%

NA

0.00%

14.46%

20 Day Average Volume

Zacks Equity Research: XOM

www.zacks.com

Page 6 of 9

Zacks Equity Research: XOM

www.zacks.com

Page 7 of 9

Zacks Rank Education The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement This is the extent which brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of estimates being revised higher, the better the score for this component. For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up, and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the percentage of agreement the better.

Magnitude This is a measure based on the size of the recent change in the current consensus estimates. The Zacks Rank looks at the magnitude of these changes over the last 60 days. In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago, 7-days ago, and the most current estimate The difference between the current estimate and the estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will score better on this component.

Upside This is the difference between the most accurate estimate, as calculated by Zacks, and the consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most accurate estimate of $1.05 will have an upside factor of 5%. This is not an indication of how much a stock will go up or down. Instead, it's a measure of the difference between these two estimates. This is particularly useful near earnings season as a positive upside percentage can be used to help predict a future surprise.

Surprise The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have positively surprised in the recent past have a tendency of positively surprising again in the future (or missing if they recently missed). A stock with a recent track record of positive surprises will score better on this factor than a stock with a history of negative surprises. These stocks will have a greater likelihood of positively surprising again.

Zacks Style Score Education The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Academic research has proven that stocks with the best Growth, Value, and Momentum characteristics outperform the market. The Zacks Style Scores rate stocks on each of these individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than a C; and so on.

Value Score Growth Score Momentum Score VGM Score

As an investor, you want to buy stocks with the highest probability of success. That means buying stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.

Zacks Equity Research: XOM

www.zacks.com

Page 8 of 9

Disclosures The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market.

Zacks Equity Research: XOM

www.zacks.com

Page 9 of 9