Many investors have simply avoided the oil & gas industry like the plague of late, and companies like ExxonMobil Corporation (NYSE:XOM) have been caught in the crossfire.
With the price of oil stabilizing within a band which is much tighter (and lower) than in previous years, prudent investors considering income-generating companies with excellent dividends like ExxonMobil as core portfolio holdings will be focusing increasingly on the ability of Exxon to grow earnings and revenue in a period of low (or perhaps declining) commodity prices.
Here’s why I believe Exxon will be able to accomplish exactly this, and why investors interesting in oil & gas companies should look first to companies such as Exxon.
For starters, the sheer size of Exxon compared to its peers means a company such as Exxon has lower input costs for its wells globally, and is much farther along on the experience/learning curve than other junior companies getting into the game today.
The company’s oil production and extraction activities are diversified across the world, with Exxon maintaining a very low cost of oil production, relative to its peers.
Exxon is also heavily vertically integrated, and diversified across the value chain, allowing Exxon to extract value at both upstream and downstream operations, something most pure play oil producers cannot do.
Complemented by a significant chemicals business unit, along with transportation and marketing revenues, Exxon’s business is one which will remain relatively impervious to the price of oil, offering investors a healthy dividend for decades to come, should the company continue with its impressive dividend payment schedule it has implemented over the years.
Invest wisely, my friends.
