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Non-Tech : Kirk's Market Thoughts

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Nov 26 3:59 PM EST

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To: Kirk © who wrote (8270)	2/21/2020 2:50:10 PM
From: robert b furman	Read Replies (3) of 26631

Hi Kirk, Hi Kirk, As far as XOM not covering their dividend, what the author does not state is their very low debt to assets. It runs 8-12% with the industry average being 30%. Last time I checked the dividend was "safe" with SSD (recently down from very safe). XOM has huge global assets which they are trimming if there is interest in them.ie the Norway sale of 4.5 million last quarter. XOM can add debt to cover the dividend and make their Capex expansion to 2025 and would only be at 25% debt to assets. Keep in mind that XOM is not taking a chance on the Capex expansion it is duplicating (upsizing) recent new builds of plastic plants elsewhere. They have made similar smaller investments in steam crackers and polypropylene plants with their proprietary catalyst process that yields higher capacity and higher quality with higher margins in Mount Belview Tx and one foreign location. Their estimates of profitability have been exceeded. What they are doing is upsizing the steam cracker to the largest ever built in the world, in Corpus Christi. That steam cracker is located near the Kinder Morgan Gulf Coast express pipeline ( a 42 inch 450 mile natural gas pipeline from the permian shale deposits). When XOM bought XTO, it gave them the permian acreage that everyone told them they paid too much for. It's now just beginning to pay off. Much like Chevron, XOM is the number 2 player in the Permian - it is long lived low cost shale oil in the very safe US. The next Capex is a joint venture with SABIC (the US investment Arm of Saudi Arabia). In nearby Portland Tx, thay have begun construction of a 160 acre parcel of land to build 2 polypropylene plants and one glycol plant - a 10 billion investment scheduled to be done in 2-3 years. XOM posits that with the growth of the middle class in emerging markets - they've found that the use of plastics grows with a correlation factor of 150% (even without straws). They are shedding global assets to supersize their plastics operation in Texas. Partnered with the largest proven reserves known - the Saudi's. They are levering the balance sheet to double their projected cash flow by 2025. XOM has increased their dividend for 37 years. That proud track record, coupled with their many assets and low debt,and a known and proven Capex plan built around the lowest cost oil (at whatever price it sells for) is a solid plan and an incredible opportunity to buy stock that will continue to have a dividend yield in the mid 5%. That's my plan and I'm sticking to it. My fingers hurt from typing - do you know how hard it is to type while grasping my buggy whip? <smile> Bob

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