According to data compiled by Bloomberg, ExxonMobil Corporation XOM raised $8 billion of debt in its biggest bond offering ever since the steady fall in crude prices that began in last June. The debts were issued through a combination of fixed cum floating rate notes divided into seven parts.
The energy behemoth as reported by Bloomberg initially planned to raise $7 billion but boosted the deal by about 14% to $8 billion. ExxonMobil plans to use the proceeds for general corporate purposes, including acquisitions, capital expenditures and refinancing.
ExxonMobil is among the select few domestic players having triple-A credit ratings from Moody’s Investors Service and Standard & Poor’s, making it one of only a handful of U.S. corporations standing on nearly equal footing with governments in debt markets. Investors are hungry for the high-quality bonds, as these offer higher yields than sovereign debt with almost no additional risk.
The company at year-end 2014 had total debt of $29.1 billion, with cash balance of $4.7 billion. This resulted in a net debt of $24.5 billion and a net debt ratio of 12.3%.
During the fourth quarter, ExxonMobil generated cash flow from operations and asset sales of $7.7 billion. The company returned $5.9 billion to shareholders through dividends and share repurchases. Capital spending increased 5% year over year to $10.5 billion.
ExxonMobil is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately four-fifth of Exxon Mobil’s earnings comes from its operations outside the U.S.
ExxonMobil is one of the world’s best-run integrated oil companies given its track record of superior returns on capital employed. The energy giant has long been a core holding for investors seeking a defensive name with continued dividend growth. ExxonMobil is fairly active in its investment program.
The strength of ExxonMobil lies in its balanced operations, strong financial flexibility, steady improvement in efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas are aimed at increasing production through a wider exposure to large energy resources with a long reserve life and low field declines. However, we are skeptical about the company’s near-term performance due to its muddled refining fortunes.
ExxonMobil currently holds a Zacks Rank #3 (Hold). Investors interested in the oil and gas sector could consider better-ranked stocks like Valero Energy Partners L.P. VLP, Sunoco LP SUN and Hallador Energy Co. HNRG. All of these carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment