Exxon Mobil Corporation (XOM), ConocoPhillips (COP): Are Energy Exploration Stocks Worth the Risk?

Page 1 of 2

Government bonds, certificates of deposit and money markets were once the mainstays of retirement portfolios. The rates of return these conservative investments earn have dwindled to the point where boomers can no longer rely upon them the way their parents and grandparents did.

Exxon Mobil Corporation (NYSE:XOM

So, as they look beyond the tried and true in an effort to secure their retirements, should boomers turn to energy exploration stocks such as Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP) and BP plc (ADR) (NYSE:BP)? Well, the answer to that question is at least a qualified “yes” because these corporations are bolstered by immense financial reserves and the industry shows signs of continued expansion.

ConocoPhillips could benefit from shale-gas exploration

With a market capitalization of almost $75 billion, ConocoPhillips (NYSE:COP) obviously enjoys a very firm financial footing. And analysts predict that ConocoPhillips (NYSE:COP)’s EPS for 2013 will be $5.48 with performance climbing to $6.02 for 2014, an uptick that bodes well for its continued future profitability.

But one fact might be even more indicative of its potential for ongoing expansion. ConocoPhillips (NYSE:COP) is considering splitting its U.S. operations from its other divisions, a move that could position shareholders to garner impressive profits from the production of shale gas. The flow of new crude oil from fields scattered from North Dakota to south Texas helped boost U.S. production during 2012 to 8.9 million barrels a day, an increase of 14% over the previous year’s total.

ExxonMobil has the heft to take risks

At this point, Exxon Mobil Corporation (NYSE:XOM) is one of the only American-based energy companies that still simultaneously explores, refines and markets fuels worldwide. Lacking the resources to become involved in all aspects of the industry, most other oil companies simply sell their fuel to a refinery or purchase crude and refine it for sale at their gas stations.

And looking to the future, Exxon Mobil Corporation (NYSE:XOM) is being sought after as a partner to participate in exploration projects in yet-to-be-discovered Arctic and deepwater fields.  It is also positioned to be a major player in the Canadian tar sands and the exploration of Bakken Shale reserves in North Dakota.

These undertakings come with some considerable risk. But even if, for example, Canadian exploration becomes unprofitable, that outcome would not prove nearly as disastrous for Exxon Mobil Corporation (NYSE:XOM), whose revenue for 2014 is projected to top $437 billion, as it would for a smaller company.


BP: Developing countries will provide a valuable market

Natural gas consumption in Asia grew by 9.9% during 2012. And that same year, oil consumption in China climbed by 5%, a figure below the 10-year average but still substantial results. This upsurge will likely intensify as these countries continue to urbanize, a process that will be helped along by the Chinese government pushing an estimated 250 million people to settle in cities.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!