Exxon Mobil Q4 2015 Earnings Will Not Matter As Much As Its Acquisition Plans

  • Exxon Mobil Q4 2015 earnings won't matter as much as its acquisition plans.
  • When Exxon Mobil moves it will mean morning in the oilpatch.
  • But will it move?

When Exxon Mobil (NYSE:XOM) reports its Q4 2015 earnings on February 2, the results really won’t matter much.

For the record, analysts are expecting revenue of $57.44 billion and earnings of 65 cents per share. That is an enormous fall from the $82.6 billion in revenue and $1.55 per share it earned in the December quarter of 2014, but if it’s high by $1-2 billion or low by 2-3 cents per share it will matter very little to the Exxon Mobil stock price.

XOM stock chart

Source: Exxon Mobil Stock Price chart by amigobulls.com

What matters to the Exxon Mobil stock price is the price of oil. Exxon Mobil stock is a call on the idea that oil prices will rise again. Financially, it is the Apple (NASDAQ:AAPL) of the oilpatch’s eye, with just $19.8 billion in loans supporting over $340 billion in assets, an operating cash flow gusher that came in at a positive $25 billion in the September quarter alone, even while the rest of the industry was flat on its back.

As the oil bust of 2015 unfolded, Exxon Mobil played the role of Godot. Everyone waited for it, hoping that it would take out weaker players, buy out some big fracking outfit, throw down the gauntlet to the oil bears and make everything OK.

As it was in the play, Exxon-Godot never arrived. Exxon Mobil kept its $278 billion in treasury shares to itself. It hunkered down and worked to conserve its cash, current assets falling by “only” $3.4 billion during the first three quarters of the year, finishing September at $47.2 billion.

Exxon Mobil did not participate in the great fracking boom, instead sticking to its knitting of running international oil operations, moving oil around the world, refining it, and marketing it. Exxon Mobil stock generally rose-and-fell in tune with the rest of the market, hitting a low of just under $60 in 2010. The current price is about $77, and Exxon Mobil's total fall since January 2015 has been less than 18%, but it is still worth $314 billion, about three-fourths of its 2014 annual sales run rate of almost $400 billion.

Still, while most domestic producers have lost at least half their value, and some have become penny stocks, Exxon Mobil stock has rumbled straight ahead, a cruise ship moving through a harbor among small sailboats.

Now, with the recent rise of West Texas Intermediate, the primary U.S. grade, toward $35, with rumors of Russia and Saudi Arabia cutting back on production, and with the U.S. finally able to export raw crude, meaning U.S. oil trades at the world price again, speculation is growing about Exxon Mobil’s next move.

Will it make one? When Exxon Mobil does move, expect a lot of other oil stocks to move. Who it buys, when it buys, at what price, could well determine when we have hit the bottom of the oil slump, and when the oilpatch can start to see the green shoots of recovery again.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :
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