Good morning! U.S. stock futures for Thursday, April 30, forecasted a 25-point decline from Wednesday's close. The markets are reacting to shifts in the U.S. dollar and to the Federal Reserve's statements that it will raise interest rates on a meeting-by-meeting basis.
Exxon Mobil Corp. dominates the world of Big Oil in terms of market cap and brand recognition.
The $364 billion company is widely embraced by income investors thanks mostly to the healthy XOM dividend.
The Exxon Mobil stock price (NYSE: XOM) hit a 52-week low of $84.03 intraday Wednesday. Shares of the oil and gas giant are sitting at their lowest level in 17 months.
The Irving, Texas-headquartered company has certainly taken it on the chin over the last several months. Indeed, a laundry list of issues plague the stock.
With cheap crude oil prices, investors are pondering which stocks to buy when oil is low.
Money Morning Technical Trading Strategist D.R. Barton told viewers of FOX Business' "Varney & Co." today (Thursday) he isn't crazy about oil given the recent slide. But he's also aware that investment prospectuses and investors looking to diversify will still be drawn to the sector.
The stock market today is moving on news from some major earnings reports from GRPN, LNKD, GPRO, SBUX, CVX, and XOM.
Third-quarter earnings overall have been better than expected.
With some 244 companies reporting, the S&P 500 Index is on pace to post earnings growth of 6%. That's up from growth projections of 5.6% at the start of the week.
Hot stocks to watch today based on earnings focus on energy and consumer products.
The U.S. stock market bounced back from a morning downswing to end the day flat, while investors remained cool about European Central Bank President Mario Draghi's intentions to define a specific stimulus program to help stave off recession in the Eurozone.
U.S. crude oil prices rebounded this afternoon after falling to as low as $88.18, the lowest price in nearly 18 months.
Stock market close, August 5, 2014: After ending in positive territory yesterday, U.S. markets crumbled again today on concerns of heightened geopolitical tension in Ukraine. The energy sector saw a broad sell-off during the afternoon.
The CBOE Volatility Index, which gauges investment fear, jumped roughly 11.5% on the day.
Norway's Statoil ASA (NYSE ADR: STO) signed a massive deal with Russian behemoth Rosneft in a venture that may require more than $100 billion over the next few decades.
Specifically, the company aims to help Rosneft develop untapped oil resources in the Arctic, as Moscow struggles to gain a competitive advantage given declining oil production in Siberia.
It's the third recent oil partnership for Rosneft.
"The agreement, signed on Saturday, provided a showcase for president-elect Vladimir Putin, serving out his final days as prime minister before a May 7 inauguration, and Deputy Prime Minister Igor Sechin, in charge of energy and industrial policy.
As a legacy of their time in government, the three deals secure capital and expertise for a push into some of the world's potentially most energy-rich regions."
The deal highlights a number of key issues for both oil companies and Moscow moving forward.
Steve Schaefer at Forbes runs down the numbers:
"The energy giant recorded earnings of $9.5 billion, or $2.00 per share. Those figures were down 11% and 7%, respectively, from the first quarter of 2011, and earnings per share were below the $2.09 analyst consensus. Revenue of $124.1 billion was up 8.8% from a year ago, but just shy of the $124.8 billion expected.
Earnings in Exxon's upstream, or exploration and production, fell 10.1% from a year ago, to $7.8 billion, while downstream earning, which include refining, were up 44% from the prior year to $1.6 billion, thanks largely to gains from asset sales and improvements in volume and mix."
This earnings miss is the least of Exxon's short-term worries as we head into the summer months and the election heats up. There are a lot of problems for the company to overcome all at once - but it shouldn't send ExxonMobil investors headed for the exits.
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On April 16, Exxon (NYSE: XOM) officially entered into a massive offshore exploration partnership with Russia's Rosneft to jointly develop resources in the Kara and Black Seas.
From the Rosneft press release:
"The agreements signed today form joint ventures to manage an exploration program in the Kara Sea and Black Sea. They also set the terms for investments to be made by the partners in Russian offshore projects. The initial cost of preliminary exploration is estimated at over US $3.2 billion.
Neftegaz Holding America Limited, an independent indirect subsidiary of Rosneft registered in Delaware, concluded separate agreements on the acquisition of a 30 percent equity in ExxonMobil's share in the La Escalera Ranch project in the Delaware Basin in West Texas in the United States."
It's also another sign of dramatic shifts in the energy industry, with consumption declining in the United States and rising in emerging economies.
The United States exported 98 million barrels more of fuel than it imported in the first 10 months of 2011. Just a few years ago, in 2005, the country imported almost 900 million barrels of fuel.
"It looks like a trend that could stay in place for the rest of the decade," Dave Ernsberger, global director of oil at Platts, told The Wall Street Journal. "The conventional wisdom is that U.S. is this giant black hole sucking in energy from around the world. This changes that dynamic."
The United States is still the world's largest importer of crude oil, however - although even U.S. oil imports have dropped by 10% since 2006.
Actually, that's one of the reasons the United States has become a net exporter of fuel. New sources of domestic oil from the shale fields in North Dakota and Texas, as well as Canada's Athabasca oil sands, have made more crude available to U.S. refining companies.
Many companies were in the hunt for the Russian Arctic oil, including BP PLC (NYSE ADR: BP), Royal Dutch Shell PLC (NYSE ADR: RDS.A), Chevron Corp. (NYSE: CVX), Total SA (NYSE ADR: TOT) and Statoil ASA (NYSE ADR: STO), but it was Exxon that walked away with the prize.
The arrangement with state-controlled Rosneft (PINK: RNFTF) gives Exxon a significant advantage over its major rivals -- all of which have struggled in recent years to replace the oil they're extracting with new sources.
Rosneft, in which the Russian government has a 75% stake, estimates the three Kara Sea blocks where Exxon will be exploring contain about 36 billion barrels of recoverable oil.
"If that figure is correct and Exxon is able to produce the fields, we are talking about one of the world's largest oil discoveries in the last 50 years," Fadel Gheit, an energy analyst at Oppenheimer & Co., told MarketWatch. "But it remains to be seen how much of that oil is economically recoverable."
Rosneft estimates total reserves in the area at about 110 billion barrels of oil equivalent - an amount four times the size of Exxon's proven global reserves.
Quid Pro QuoHaving access to reserves of that size will help Exxon rectify its replacement ratio for oil. Earlier this year Exxon reported that for every 100 barrels of oil it produced, it found just 95 barrels of new oil.
Exxon has been more successful in replacing natural gas resources - it finds 158 cubic feet of gas for every 100 it extracts. But with natural gas prices slumping, the company would much rather find more oil.