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from Breakingviews:

Exxon Mobil running hard just to stand still

By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Exxon Mobil is having to run hard just to stand still. The world’s biggest company is pumping only a trickle more oil than 12 years ago - and maintaining even that is getting more expensive. Only buybacks are making growth in earnings per share look decent.

Keeping up with its own size is a challenge for a company as large as Exxon. It extracts more energy than the crude output of Canada, Brazil or Iran, according to BP figures. So a 3.5 percent production decline in the first quarter from a year earlier isn’t surprising in isolation. The trouble is, the problem is a long-term one. Exxon is pumping just 3 percent more oil and gas than in 2001. That’s despite the $31 billion purchase of explorer XTO Energy in 2010, which boosted output by more than a tenth at a stroke.

Even holding production roughly steady is increasingly costly. Exxon’s capital expenditure for the first quarter was a third higher than in the first three months of last year after rising 8 percent for 2012 overall.

from Breakingviews:

Apple and Exxon may not be so different, after all

By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Apple and Exxon Mobil may not be so different, after all. The two seemingly disparate companies share more than nearly identical U.S. market-leading values of about $400 billion. Both are threatened by shrinking margins and the struggle to replace their precious wares. Exxon in various iterations has survived four times longer than Apple, but is just as vulnerable.

from Breakingviews:

2012 may be as good as it gets for Exxon

By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

2012 may be as good as it gets for Exxon Mobil. America’s largest oil company pumped out a near-record profit and its best earnings per share ever. But Exxon, like Chevron, is spending huge sums – almost $40 billion last year - to find and extract reserves. Holding output steady is tough enough. Unless oil prices jump, Exxon may have peaked.

from Breakingviews:

Exxon’s fracking gag makes Chesapeake look good

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Exxon Mobil’s reticence to come clean about fracking makes Chesapeake Energy look good. That’s a rare feat - and hardly one to brag about. The troubled gas firm is infamously opaque. But its openness on the risks of fracking puts larger rivals like Exxon Mobil and Chevron to shame. After another large minority vote from investors for more information on this controversial practice, Big Oil should follow its troubled cousin’s lead.

from Breakingviews:

Apple’s cash is key to unlocking suppressed value

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Apple on Friday once again overtook Exxon Mobil as the world’s most valuable publicly traded company. But investors seem to think its roughly $420 billion market capitalization is some kind of limit. The company doesn’t get full credit for its nearly $100 billion cash hoard or its growth. Apple’s cash could be the key to unlocking suppressed value.

from Breakingviews:

Chemicals give Exxon half a reason for integration

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Giant energy firms tend to treat their chemicals units as poor relations. The big exception is Exxon Mobil, whose chemicals business is now benefiting from speedy Asian growth. That gives the biggest oil major an argument for vertical integration that rivals don't have -- but it's only partially convincing.

from DealZone:

Deals wrap: Novell deal a Microsoft maneuver?

Attachmate, a privately held provider of technology services, said it's buying software provider Novell in a $2.2 billion deal. The deal marks the end of a drawn-out auction process the Novell board began back in March after rejecting an unsolicited proposal from Elliott Associates.

A chunk of the deal's value also includes the concurrent sale of some Novell intellectual property assets for $450 million to a consortium led by Microsoft. Novell and Microsoft have crossed each others' paths before when they struck a copyright deal over certain Novell assets in 2006. One theory is that this could be Microsoft's way of maintaining control over the details of that agreement and out of the hands of rivals.

from Breakingviews:

Exxon has suffered too much for flawed XTO deal

Disgruntled investors have wiped more than $40 billion off the value of Exxon Mobil since its splurge on U.S. gas giant XTO Energy -- almost exactly the firm's price tag. With Congress ditching carbon emissions rules, clean-burning gas looks like a bad bet. Yet to assume that XTO has zero value seems wrongheaded.

Even before lawmakers went cold on limiting greenhouse gases, investors were skeptical of the purchase. Between the announcement of the deal on December 14 and Thursday's bumper second-quarter results, Exxon stock had slid 16 percent. Adjusting for an average 4 percent fall of peers Chevron and Royal Dutch Shell, investors have lopped slightly more than XTO's entire $41 billion enterprise value off Exxon's market capitalization.

from Breakingviews:

Exxon’s carbon tax hedge is way out of the money

Exxon Mobil's $31 billion hedge is way out of the money. Gas prices have tumbled since the U.S. oil giant agreed to pay that amount for the gas producer XTO. That doesn't make the deal a bust. A carbon tax might make the XTO purchase look smart -- but Exxon benefits for as long as Congress twiddles its thumbs.

To his credit, Exxon Chief Executive Rex Tillerson has made little attempt to mask the grim economics of the natural gas market. If anything, these have worsened since December when Exxon broke a decade-long deal fast and gobbled up XTO. Since then, the already depressed gas price has fallen nearly another 20 percent. The very technical success of drillers uncovering ever larger quantities of shale gas is proving their financial undoing.

from Breakingviews:

BP’s Gulf fiasco makes it vulnerable to a takeover

By Rob Cox and Christopher Swann

Eventually, BP will definitively stop the flow of oil from its deepwater mishap in the Gulf of Mexico. That's when the autopsy will begin in earnest. But if the information dribbling into the public domain proves correct, the British energy giant will be a weakened creature -- so weak it will be vulnerable to a takeover.

Royal Dutch Shell and Exxon Mobil are almost certainly running the numbers. Governments ought to be plotting their strategy, too.