Exxon Mobil and Chevron Corporation

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Petroleum Industry structure:
5 sectors of operations (Upstream, downstream, marine, pipeline, and service/supply)
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Extremely high barriers to entry allowing for sustainable profits in the long run
Supply of oil is controlled by a cartel regime (OPEC)
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Economic market form is close to Oligopoly
Few large sellers dominate industry
High barriers to entry, competitors cannot enter to reduce profits of participating firms
Standardized product
Oil and Gas industry is described well by Cournot-Nash Models of competition ( Two equally positioned firms competing on quantity, not price)
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Major Players (Integrated):
Exxon, Chevron, Royal Dutch Shell, British Petroleum

Operates as an Integrated Oil Company:
-Global exploration, extraction, refinement, transportation and marketing of petrol and chemical Products
Market Statistics:
-Market Cap (intraday) 5 :149.60B
-Market Value Debt: 10.54 B
-Enterprise Value (9-Mar-10) 3 :151.60B
-Trailing P/E (ttm, intraday):14.22
-Price/Sales (ttm):0.94
-Price/Book (mrq):1.63

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WACC = [(D/V)*(YTM*(1-T))]+[(E/V)*(rf + β(Erm - rf)]
Cost of Debt = Weighted Avg. YTM (1-Marginal Tax Rate)
Equity = rf + β(Erm - rf)
Pre. Stock = Div/Price (Chevron does not have P.S.)
0.079299
0.045924
0.081512
DCF Analysis Results:
 2014 FCF $140,499.52
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Terminal Value $91,995
PV $2,076,684.74 Millions Per Share Price Approx $ 685 Current Share Price
($74.60)
 Analysts Recommendations
Buys: 6
Buy/Hold: 8
Hold: 5
Hold/Sells: 0
Sells: 0

Operates as an Integrated Oil Company:
-Global exploration, extraction, refinement, transportation and marketing of petrol and chemical
Products
Market Statistics:
-Market Cap (intraday) 5 :316.23 B
-Market Value Debt: 10.54 B
-Enterprise Value (9-Mar-10) 3 :312.61B
-Trailing P/E (ttm, intraday):16.84
-Price/Sales (ttm):1.13
-Price/Book (mrq):2.84

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WACC = [(D/V)*(YTM*(1-T))]+[(E/V)*(rf + β(Erm - rf)] 0.0615
Cost of Debt = Weighted Avg. YTM (1-Marginal Tax Rate) 0.0330
Equity = rf + β(Erm - rf)
Pre. Stock = Div/Price (Exxon Mobil does not have P.S.)
0.0900
DCF Analysis Results:
 2014 FCF $130,273
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Terminal Value $94,249
PV $3,997,414 Millions
Per Share Price Approx $ 845 Current Share Price ($67.00)
 Analysts Recommendations
Buys: 5
Buy/Hold: 3
Hold: 10
Weak Hold: 1
Sells: 0

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S&P: Fundamental outlook for the Integrated Oil & Gas subindustry for the next 12 months is positive, on expectations of improved global oil consumption amid an economic recovery. S&P projects that S&P 500 Energy sector operating
EPS will drop about 67% in 2009, but rebound about 89% in
2010.
Financial Data Change in 2009 Drop In Net Income
 Exxon Mobil Net Income $19,280 for 2009 vs. $45,219 for
2008 (57% drop)
 Chevron Net Income $10,483 for 2009 vs. $23,931 for 2008
(56% drop)

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 High price over past three years is $93 (April 2008) and it should head back to that level within the next 18 months with the economic recovery or
63.5% annual return
 High price over the past three years $99 (June
2008) and it should head back to that level within the next 18 months or 53.7% annual return