Recently I was reading the Exxon Mobil magazine, proxy material and 10K documents. In 2010, there are these numerical connections between barrels of oil operations and corporate profits.
- Exxon earned $14.85 for each barrel of oil in its upstream operations (exploration, extraction)
- Exxon earned $1.50 for each barrel of oil in its downstream operations
- Each barrel of crude equates to approximately 19 gallons of gasoline
- Exxon’s 2010 profit was about $0.85/gallon of gasoline
- (14.85+1.50)/19. Profit/barrel divided by number of gallons of gasoline in a barrel
- The average price of a gallon of gasoline was $2.75
Exxon’s profit was almost one-third of the pump price of gasoline in 2010.
This company has excellent prospects for use in a portfolio. It’s dividend is rich (almost 8%) and well-covered. It has steady growth with the financial prowess to convert bursts of income associated with oil price jumps into capital expenditures—and back to income if the price falls dramatically.
Image of oil game board courtesy of @morningbrew on unsplash.com