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Pain deferred

2 February 2015 By Kevin Allison

Exxon Mobil shareholders are giving the petroleum giant the benefit of the doubt. The oil major only beat fourth-quarter estimates thanks to tax and legal breaks. And it is keeping mum on spending plans, even as rivals cut back. Unlike rival Chevron, though, Exxon is still buying back stock, if less than before. Such relative resilience appeals to investors, but might not last.

Texas-based Exxon’s stock has taken less of a beating than that of peers after the more than 50 percent drop in Brent crude prices since last summer. Factoring in a 1 percent increase in early trading, Exxon’s market value has slipped a relatively modest 14 percent since oil peaked at $115 a barrel in June – better than the 21 percent hit suffered by rival Chevron and a 23 percent slide at ConocoPhillips.

It helps that Exxon still plans to buy back its own shares. True, the $1 billion of repurchases planned in the first quarter is down sharply from the $3 billion of stock the company bought back in the last three months of last year. But it’s better than axing buybacks entirely, as Chevron did last week.

Unlike its smaller competitors though, Exxon shied away from announcing any new cuts to 2015 spending on Monday. In October it said it was sticking with earlier guidance of “just shy” of $37 billion of capital investment in coming years, which would represent a cut of only about 4 percent from last year’s $38.5 billion. It won’t update the market on its new plans, if any, until its investor day in early March.

That seems to be enough to keep shareholders happy for now. But if oil prices stay low for longer than expected, Exxon will need more than Monday’s patchy earnings beat to keep the full black-gold blues at bay.

 

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