It’s #technicaltuesday and this week, we do a quick look at a former Dow component Exxon. It’s a behemoth but financial reports are really helpful.

H1 ’20
Cash flow from Operations: $6.3 B
Cash flow used in Investing: $11.5 B
Dividends paid: $7.5 B
Additions to Debt: $22.5 B

Summary: In the first 6 months of the year, they used $18 billion and generated $6.3 billion of cash flow. How did they plug that hole? Debt. Is oil price better than the average from H1? No (that was $36.78/bbl). So will it get better? There is a reason they are looking at layoffs, cutting retirement benefits and reducing the capital program.

How about the overall value components?

SMOG: $89.9 B (at $55/bbl and $2.57/mcf flat)
Future CAPEX: $135 B (roughly 6 years of development)
Shares: 4.228 B
Debt: $46.5 B (assume 34.2/12.3 split Upstream/non)
Upstream “NAV”: $13.17/share

H1 Chemical and Downstream earnings: $976 mm
At Valero’s P/E of 18.5 net of $12.3 b of debt = $23.8 B ($5.63/share)

Result: $18.85/share.
G&A Drag: $2.36/share/year ($9.98 B/yr)

I don’t give investment advice, and Lord knows this is “quick” but it’s how I see it. And to me, explains why the stock has fallen. And why it’s out of the DJIA. And why it’s not about ESG, it’s about NAV.

Tell me I’m wrong.

#hottakeoftheday