Williams 1

Rhett Williams

Jerry Patton

Finance 350 Section C

September 22, 2008

INTRODUCTION TO EXXON-MOBIL (XOM)

Since its inception in 1882, Exxon Mobil Corporation has aimed to become the

world’s most successful petroleum, and petrochemical company. For this purpose, they

continuously strive to achieve the most superior financial and operating results. With the

growing expectations, shareholders, employees, and customers expects only the best out

of Exxon Mobil, and that is exactly what they provide to them by maintaining the highest

standards of business conduct.

Exxon and Mobil decided upon a merger, and signed an agreement in 1998 to

form a new company with the name; Exxon Mobil Corporation. The Chairmen, and Chief

Executive officers of Exxon, and Mobil were thrilled with the merger and they should

their enthusiasm with the following words; “This merger will enhance our ability to be an

effective global competitor in a volatile world economy and in an industry that is more

and more competitive (“BBC News”).” On November 30, 1999, the merger was finally

completed after the approval of shareholders and regulatory.

Exxon and Mobil became a part of the American industry during the late 19 th

century, when the country was booming in various sectors of the economy including;

railroads, steel, and banking. Moreover, the petroleum industry rapidly developed with

the growing demand for lubricants, greases, and kerosene.

During that period, the infamous John D. Rockefeller, acquired an assortment of

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petroleum interests under the banner of Standard oil Trust. The same year the two main

successors of Exxon and Mobil namely; Standard Oil Co. of New Jersey and Standard

Oil Co. of New York, or more commonly known as ‘Jersey Standard’ and ‘Socony,’ were

introduced as refining and marketing organizations. Both companies aimed to expand

internationally, and large ‘kerosene clippers’ made their job easy since they facilitated the

shipments of products overseas in large quantities of bulk. Soon, they were able to spread

across Europe and Asia.

In 1911, the U.S. Supreme Court, ordered to terminate Standard Oil Trust, which

resulted in sudden disarray, and 34 four companies including Jersey Standard and Scoony

went into complete dismay. Moreover, the kerosene output of the country was withheld

by a formal product; gasoline, for the very first time. Hence, with the growing automotive

market, Mobil oil registered by Scoony in 1920 was able to make its place in the market.

The exploration opportunities are identified, pursued, captured, and then

evaluated on a large scale by the ExxonMobil’s Exploration Company. Resource certainty

is ensured by assessing concepts, and tests of new plays, and long term resource growth

is assessed. Furthermore, the already established plays are assessed which commonly

have potential for near-term additions to the basis of the resource. Finally, the

undeveloped, or partially developed plays, and discoveries are explored on a mature level

of exploration.

The company’s affiliates and divisions are largely engaged in the exploration, and

production of natural gas, crude oil, and the manufacturing of petroleum products. By

market capitalization, Exxon Mobil is the second largest in the world after the Chinese

Oil Company, PTR. Due to the shortage in supply because of the geopolitical conflicts in
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fairly rich regions, and the rapid growth in demand for oil, Exxon Mobil was able to

reach at the time in no time. The company’s earning largely came from the upstream

exploration and production of E&P activities, which helped in producing barrels of oil

equivalent to approximately 4.18 million. Six ‘super-major’ petroleum companies are

headed by Exxon Mobil. Moreover, Exxon had a fairly good year as the revenue

increased from $377.6 billion to a record of $404.6 billion.

With nationalization treats in Venezuela, the company has just recently

experienced trouble intentionally. However, it can be said that the news that the

Venezuelan President Hugo Chavez wants Exxon-Mobile Corporation to no longer do

business in Venezuela seems like a bluff since the United States is the biggest market for

oil exports, and the home for oil refineries which have been especially made to

accommodate the Venezuelan brand of heavy, and high-sulfur crude. Moreover, to find

another customer to accommodate the Venezuelan needs would be very hard, and such a

harsh step could even create serious political problems for them. (“Wilson”)

INTRODUCTION TO VALERO ENERGY (VLO)

Valero Energy Corporation is one of the largest petroleum refiners present in

North America. The company produces gasoline, kerosene, and lubricants by refining,

and processing crude oil. Valero mainly operates from the United States, and the

company has benefited from the growing demand of petroleum products in the United

States. The total revenue of Valero Corporation grew from 29 billion in 2002, to 95

billion in 2007. In order to expand its network of refineries, the company has made many

acquisitions. Valero has also aimed to enter new segments of business such as opening

retail gas stations. Till date Valero has approximately 5,800 retail gas stations, and
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wholesale branded outlets under the most well-known brand names other than Valero

which include; Diamond Shamrock, Ultramar, and Beacon. With a combined capacity of

approximately 3.1 million barrels per day, Valero Energy has successfully been able to

operate 17 refineries in the United States, Canada, and Aruba.

Selection/Companies:
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Calculation of Basic Ratios:

Exxon-Mobil (XOM)

Per share TTM: 9.57

Dividend: 2.07

5yr Growth rate: 6.11

Quick Ratio MRQ: 1.35

Valero Energy (VLO)

Per share TTM: 7.52

Dividend: 1.82

5yr Growth rate: 22.74

Quick Ratio MRQ: 0.91

BRIEF DISCUSSION OF INITIAL THOUGHTS/REACTIONS

After doing my initial research on both companies Exxon-Mobil and Valero I

have learned so much in just a few hours than I have known before. Overall many people

think oil companies are evil villains in society. In retrospect Exxon-Mobil is a high

technology based company that protects the environment first and foremost before any

drilling is started. Then as I continued on my research on Valero I learned that they

owned many retail petrol stations around the US. I feel that this will not only be a great

finance project, but a learning experience on oil companies as well. Furthermore I also

see how politics’ can make a huge or substantial impact on these two companies. Valero

is more vulnerable due to the political instability in the US and being purely based

company in the US.

EXXON VS. VALERO

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When one is referring to the oil and gas sector, it includes the oil and gas

extraction as well as refining. The United States is ranked 3 rd in the petroleum producing

countries, having more than 500,000 producing wells and a whopping 4000 oil and gas

extraction platforms in the water. Oil and gas provide 65% out of all the energy

consumed in the United States. Also, over more than 17 million barrels of crude oil are

processed every day. There are 16000 establishments being a part of the oil and gas

sectors and the value of total shipments of the oil and gas sector is $134 billion. The

companies that are involved in the oil and gas extraction industries are responsible for

operating and developing oil and gas field properties. Activities that encompass this

segment include exploration of crude oil and gas fields, drilling, developing and

equipping the wells, operating separators, desilting equipment, emulsion breakers, and all

such arrangements and installations that are necessary for the shipment from the

producing properties. The crude oil or petroleum refining segment or industry on the

other hand is responsible for breaking the crude oil into the useful components such as

naphtha, gasoline, diesel, kerosene etc. (Mcintyre 233)

Valero Energy Corporation is one of the major players of the oil refining industry

of the United States. The corporation processes crude oil through its refineries and

produces products such as gasoline, kerosene, lubricants, and numerous others. The

company is unique that despite being an oil giant, its operations are mainly concentrated

in the US which nevertheless is one of the biggest markets of petroleum products. The

refining industries market has become even more lucrative recently since there has been a

shortage of refining capacity in the United States and that no new refinery has been added
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in a long time. In fact it has been more than or around thirty years since any new refinery

has been built. Whatever expansion in refining capacity has been produced has been due

to the up gradation of existing refineries through technological advances and other ways.

One of the reasons no refineries have been added is due to the high cost involved and also

the strict environmental regulations that have been imposed. Nevertheless there has been

a shortage of refining capacity and this has lead to a higher price.

Hence it has not been surprising to find that this has resulted in rapid growth for

Valero. It is shocking to find that the company’s revenues have almost tripled in 5 years

to 95 billion dollars from 2002 to 2007. Not only is the company boasting this heavy

accolade, but also it claims to have a cost advantage over its rivals. It says that it refines

sour crude oil which has higher sulpher content and is cheaper. Thus this gives the

company lesser input costs and thus it can price its products more competitively. Other

refineries process sweet crude which is more expensive. The company seems determine

to capitalize on this cost advantage and is willing to go as far as to sell its Aruba refinery

which processes sweet crude.

Not only is Valero into reefing but is also has one of the largest retailing networks

in the country. In fact its network is the largest. It also operates in Canada and the

Caribbean under various brand names (Sampson 69). This widespread network gives it a

close contact to the customer. As the company is itself involved with distribution it does

not have to pay anything to distributors as commissions which would eat into its revenues

and this one of the contributing factors in its revenue growth. However such a sector is

highly correlated with the economic growth and slow economic growth is detrimental to

the company. The company also faces other challenges such as natural disasters,
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regulatory issues and environmental hazards. For example hurricanes Rita and Katrina

both proved disastrous for the company’s bottom line and also the company had to face

safety regulations from the federal regulatory commission.

Exxon mobile is yet another energy company but it is not just any other. It has

revenue that is four times that of Valero and a ranking that tops the six big energy giants

of the world. Furthermore, it has the highest value of any company in the world and at a

time it was valued at over 500 billion us dollars. Not only that, its recent net income was

40 billion dollars, the highest ever in America’s corporate history. But all of this has not

completely been its own doing. The company is actually riding a wave of good omen. A

number of factors contribute to Exxon’s success. For example there has been no major

alternative of Petroleum as an energy source. Apart from that, petroleum process in the

world has not only been increasing but consumption has also been increasing despite the

supply being low. Also, its geography diverse portfolio means that it is less affected by

any discrepancy in a given part of a world. However despite all the gaga, the company is

at a mercy of the major energy producers that is OPEC which controls about 40% of the

world supply and thus has great control over prices. However Exxon has gone through

one of the amazing years of its financial life (Bender and Bender 44).

Exxon Mobil Corp. is featuring as one of “blend” stocks within the large-cap

firms in Business Week article by Beth Piskora. This strongly supports the idea of buying

Exxon Mobil Corp. since it is expected to be one of the sixteen companies to hit the

highest upside scale in next 12 months period. The reason for the substantial success of

Exxon Mobil Corporation lies beneath the record profit of $40.6 billion, because of

Exxon Mobil’s growing technology. Due to the massive advancement in technology,

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Exxon Mobil has been able to refine heavier petroleum with higher sulfur content than

any of its competitors which make them distinctive, and gives them a higher competitive

advantage because of which they have been able to increase their capital expenditure to

further expand.

Exxon increased its profits y $1.1 billion in Fiscal 2007 as compared to Fiscal

2006. According to a recent analysis, Exxon Mobil Corp. currently has $12.14 P/E Ratio

where the industry average is $11.19. P/B Ratio is 3.91 where the industry average is

3.01. In last three years period 2004-2007 a $10,000 investment in Exxon Mobil has

grown up to $25,000 where an alternate investment in S&P 500 has grown up to only

$15,000. As of March 18, 2008 Tuesday with 0.75% cut in interest rates by Federal Bank;

Exxon Mobil Corp. (XON) stock was traded at $88.47 with a $2.68 increase or +3.12%

from previous day’s closing where the main competitors BP’s and Chevron’s

performance was limited to +2.06% and +2.29% respectively.

Works Cited
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“Business: The Company File Oil Merger Faces Monopoly Probe.” BBC News. 2

December, 1998. 7 Sep 2008 <http://news.bbc.co.uk/2/hi/business/226097.stm>.

Bender, Rob, and Tammy Cannoy-Bender. An Unauthorized Guide to: Mobil Collectibles

— Chasing the Red Horse. Atglen, Pennsylvania: Schiffer Publishing Company,

1999.

McIntyre, J. Sam. The Esso Collectibles Handbook: Memorabilia from Standard Oil of

New Jersey. Atglen, Pennsylvania: Schiffer Publishing Company, 1998.

Sampson, Anthony. The Seven Sisters: The 100-year Battle for the World’s Oil Supply.

New York: Bantom Books, 1991.

Wilson, Peter. “Chavez’ Big Oil Bluff.” BusinessWeek. 11 February, 2008. 7 Sep 2008

<http://www.businessweek.com/bwdaily/dnflash/content/feb2008/db20080211_0

52826.htm?campaign_id=rss_daily>.
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FINANCIAL ANALYSIS

EXXON
CASH FLOWS
Millions of U.S. Dollars 2,007.00 2,006.00 2,005.00 2,004.00 2,003.00
Net Income/Starting Line 40,610.00 39,500.00 36,130.00 25,330.00 21,510.00
Depreciation/Depletion 12,250.00 11,416.00 10,253.00 9,767.00 9,047.00
Amortization -- -- -- -- --
Deferred Taxes 124.00 1,717.00 (429.00) (1,134.00) 1,827.00
Non-Cash Items (2,175.00) (3,512.00) (1,263.00) 825.00 (3,723.00)
Changes in Working Capital 1,193.00 165.00 3,447.00 5,763.00 (163.00)
Cash from Operating Activities 52,002.00 49,286.00 48,138.00 40,551.00 28,498.00
Capital Expenditures (15,387.00) (15,462.00) (13,839.00) (11,986.00) (12,859.00)
Other Investing Cash Flow Items, Total 5,659.00 1,232.00 3,569.00 (2,924.00) 2,017.00
Cash from Investing Activities (9,728.00) (14,230.00) (10,270.00) (14,910.00) (10,842.00)
Financing Cash Flow Items (579.00) (270.00) (974.00) (430.00) (677.00)
Total Cash Dividends Paid (7,621.00) (7,628.00) (7,185.00) (6,896.00) (6,515.00)
Issuance (Retirement) of Stock, Net (30,743.00) (28,385.00) (17,280.00) (8,991.00) (5,447.00)
Issuance (Retirement) of Debt, Net 598.00 73.00 (1,502.00) (1,951.00) (2,124.00)
Cash from Financing Activities (38,345.00) (36,210.00) (26,941.00) (18,268.00) (14,763.00)
Foreign Exchange Effects 1,808.00 727.00 (787.00) 532.00 504.00
Net Change in Cash 5,737.00 (427.00) 10,140.00 7,905.00 3,397.00
 Williams 12

VALERO
CASH FLOWS
Millions of U.S. Dollars 2007 2006 2005 2004 2003
Net Income/Starting Line 5,234.00 5,463.00 3,590.00 1,804.00 622.00
Depreciation/Depletion 1,376.00 1,155.00 840.00 605.00 511.00
Deferred Taxes (131.00) 290.00 255.00 345.00 287.00
Non-Cash Items (752.00) (452.00) 83.00 23.00 (432.00)
Changes in Working
Capital (469.00) (144.00) 1,082.00 203.00 429.00
Cash from Operating
Activities 5,258.00 6,312.00 5,850.00 2,980.00 1,417.00
Capital Expenditures (2,260.00) (3,187.00) (2,133.00) (1,292.00) (976.00)
Other Investing Cash
Flow Items, Total 1,678.00 216.00 (2,767.00) (1,393.00) (355.00)
Cash from Investing
Activities (582.00) (2,971.00) (4,900.00) (2,685.00) (1,331.00)
Financing Cash Flow
Items 287.00 143.00 (13.00) (8.00) 10.00
Total Cash Dividends
Paid (271.00) (184.00) (106.00) (79.00) (51.00)
Issuance (Retirement) of
Stock, Net (5,629.00) (1,898.00) (389.00) 201.00 276.00
Issuance (Retirement) of
 Williams 13

RATIO ANALYSIS
Valuation Ratios EXXON VALERO
S&P S&P
Company Industry Sector 500 Company Industry Sector 500
P/E Ratio (TTM) 9.93 9.8 6.53 26.36 7.68 2.51 42.81 26.37
P/E High - Last 5 Yrs. 16.29 5.45 3.47 30.62 13.85 0.06 1.97 30.67
P/E Low - Last 5 Yrs. 10.4 2.76 0.97 9 5.08 0.04 0.55 9.01
Beta 0.93 1.13 0.94 0.98 1.39 1 0.53 0.98
Price to Sales (TTM) 0.88 1.09 2.79 2.37 0.15 0.3 3.59 2.37

Dividends
S&P S&P
Company Industry Sector 500 Company Industry Sector 500
Dividend Yield 1.99 2.44 0.55 2.48 1.78 0.08 0.31 2.49
Dividend 5 Year Growth Rate 8.29 12.98 20.44 11.64 36.85 27.21 11.63 11.69
Payout Ratio(TTM) 17.9 28.89 21.83 49.51 11.3 6.38 12.42 49.56

Growth Rates
S&P S&P
Company Industry Sector 500 Company Industry Sector 500
Sales (TTM) vs TTM 1 Yr. 26.31 24.38 191.11 13.17 37.55 13.24 108.75 13.21
Ago
Sales - 5 Yr. Growth Rate 14.62 16.69 25.86 14.98 26.83 18.67 14.71 15.01
EPS (TTM) vs TTM 1 Yr. Ago 15.83 -- -- -- -54.17 -- -- --
EPS - 5 Yr. Growth Rate 35.09 32.02 30.42 19.4 106.08 32.61 17.3 19.44
Capital Spending - 5 Yr. 6.11 13.92 28.56 13.41 22.74 17.41 16.25 13.45
Growth Rate
Financial
Strength
S&P S&P
Company Industry Sector 500 Company Industry Sector 500
Quick Ratio (MRQ) 1.14 0.89 1.05 1.05 0.81 0.84 0.75 1.05
Current Ratio (MRQ) 1.35 1.18 1.34 1.28 1.19 1.33 0.99 1.28
LT Debt to Equity (MRQ) 5.87 18.16 50.69 113.45 33.53 86.12 311.84 113.56
Total Debt to Equity (MRQ) 7.72 25.21 70.6 159.71 34.66 125.9 507.29 159.9
Interest Coverage (TTM) 42.43 15.37 4.35 17.38 37.34 0.67 2.47 17.38

Profitability
Ratios
S&P S&P
Company Industry Sector 500 Company Industry Sector 500
Gross Margin (TTM) 20.63 24.96 23.11 36.87 5.51 17.16 24.46 36.9
Gross Margin - 5 Yr. Avg. 21.42 28.01 35.68 36.94 9.72 19.86 20.29 36.96
Pre-Tax Margin (TTM) 16.64 16.45 9.74 14.83 2.97 6.32 8.82 14.87
Pre-Tax Margin - 5 Yr. Avg. 15.93 15.24 20.06 17.91 6.57 7.48 11.41 17.94
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Net Profit Margin (TTM) 9.21 9.48 6.67 10.9 2.06 4.98 6.06 10.93
Net Profit Margin - 5 Yr. Avg. 9.57 9.1 10.32 12.61 4.42 5.56 5.87 12.63

Management
Effectiveness
Secto S&P Secto S&P
Company Industry r 500 Company Industry r 500
Return on Assets (TTM) 17.63 12.17 6.81 8.14 5.74 7.38 6.61 8.17
Return on Assets - 5 Yr. 16.35 9.7 9.89 7.52 11.74 7.9 5.63 7.53
Avg.
Return on Investment 23.85 17.41 9.44 11.19 7.81 9.87 11.14 11.23
(TTM)
Return on Investment - 5 21.56 13.14 13.55 10.06 15.31 11.83 7.71 10.07
Yr. Avg.
Return on Equity (TTM) 36.19 26.94 13.9 20.08 13.1 14.11 89.76 20.13
Return on Equity - 5 Yr. 31.57 21.41 19.43 20.32 27.04 17.21 11.05 20.34
Avg.
Receivable Turnover (TTM) 13.14 12.29 7.79 10.77 18.84 5.85 8.74 10.78
Inventory Turnover (TTM) 25.29 14.16 5.29 9.52 23.31 4.04 7.74 9.53
Asset Turnover (TTM) 1.91 1.37 0.57 0.79 2.78 0.67 0.85 0.79
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DUPONT ANALYSIS

EXXON VALERO
Net Profit Margin 9.21 2.06
(TTM)
Asset Turnover (TTM) 1.91 2.78
EQUITY
MULTIPLIER 1.99 2.31

ROE = (Net profit / Sales) * (Sales / Assets) * (Assets / Equity)

= (Profit margin) * (Asset turnover) * (Equity multiplier)

ROE 35.006289 13.228908

The ROE clearly reflects that Exxon is far ahead from Valero in terms of stability

and risk absorption. Even though high return comes with high risk, Exxon has the buffer

to absorb such risks with larger equity base earning more profits which increase retained

earning. Thus adding more value to its stockholders

BALANCE SHEET FOR 2007

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CALCULATION OF NET WORTH

EXXON VALERO

PERIOD ENDING 31-Dec-07 31-Dec-07

Assets
Current Assets
Cash And Cash Equivalents 33,981,000 2,495,000
Short Term Investments 519,000 -
Net Receivables 36,450,000 7,938,000
Inventory 11,089,000 4,184,000
Other Current Assets 3,924,000 175,000

Total Current Assets 85,963,000 14,792,000

Long Term Investments 28,194,000 -
Property Plant and Equipment 120,869,000 21,709,000
Goodwill - 4,061,000
Intangible Assets 7,056,000 290,000
Deferred Long Term Asset
Charges - 1,870,000

Total Assets 242,082,000 42,722,000

Liabilities
Current Liabilities
Accounts Payable 55,929,000 11,173,000
Short/Current Long Term Debt 2,383,000 402,000
Other Current Liabilities - 339,000

Total Current Liabilities 58,312,000 11,914,000

Long Term Debt 21,549,000 6,470,000
Other Liabilities 13,278,000 1,696,000
Deferred Long Term Liability
Charges 22,899,000 4,135,000
Minority Interest 4,282,000 -

Total Liabilities 120,320,000 24,215,000

Stockholders' Equity
Common Stock 4,933,000 6,000
Retained Earnings 228,518,000 16,914,000
Treasury Stock -113,678,000 -6,097,000
Capital Surplus - 7,111,000
Other Stockholder Equity 1,989,000 573,000

Total Stockholder Equity 121,762,000 18,507,000

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For a company, total assets minus total liabilities. Net worth is a vital and very important
determinant of the value of a company, especially considering it is composed mainly of
all the money that has been invested since its inception, as well as the retained earnings
for the duration of its operation. Net worth can be commonly used to determine
creditworthiness because in a way, it provides us with a snapshot of the company's
investment history. Also called shareholders’ equity, net assets, or owner’s equity.

Common Stock 4,933,000 6000

Retained Earnings 228,518,000 16914000
Treasury Stock -113,678,000 -6097000
Capital Surplus 7111000
GOODWILL 4061000
Other Stockholder Equity 1,989,000 573000
121,762,00 22,568,00
NET WORTH 0 0

VALERO
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Analyst Recommendations and Revisions

1 Month 2 Month 3 Months
1-5 Linear Scale Current Ago Ago Ago
(1) BUY 7 7 8 7
(2) OUTPERFORM 1 1 1 2
(3) HOLD 8 9 9 10
(4) UNDERPERFORM 1 1 0 0
(5) SELL 1 1 1 1
No Opinion 0 0 0 0

Mean Rating 2.33 2.37 2.21 2.3

EXXON
Analyst Recommendations and Revisions
1 Month 2 Month 3 Months
1-5 Linear Scale Current Ago Ago Ago
(1) BUY 4 4 3 5
(2) OUTPERFORM 3 3 3 5
(3) HOLD 8 9 10 8
(4) UNDERPERFORM 0 0 0 0
(5) SELL 1 0 0 0
No Opinion 0 0 0 0

Mean Rating 2.44 2.31 2.44 2.17

Suggestions For Post Acquisition Scenario

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1. EXXON must resolve the issues that affect its public face, issues such as the Valdez

Spill and the Venezuelan conflict. Once resolved these issue would add value to its stocks

due to a better socio-financial manifestation in the market.

2. Since financing an expansion is not an issue for Exxon (due to a good net worth and

credit worthiness; as proven by its historical data and ratios), it should further diversify

its operations and try to capture some of the refinery business. Valero is not a competition

for Exxon for now, but refinery is not affected by oil prices and this has ensured Valero’s

high profits in recent years. A refinery for Exxon would be a measure leading to cost-

effectiveness and smoother flow of operations while adding value to its stock.

3. Oil stocks are not volatile as finance stocks, thus stability is a strength which should be

utilized by Exxon to give a much more stringent competition to industry. We see that the

gross margin low as compared to industry, it may be improved by bluff transactions to

move towards economies of scale.

4. Bad press, resentment for high prices, internal issues and transportation problems

trouble the company. All these can be resolved by a more welfare oriented approach

towards society and employees.

CONCLUSION

From the above analysis it can be said that, even though, Valero seems more
 Williams 20

favorable to acquire as its market value is considered strong and rising, the equity base of

Exxon is an undeniable strength. Moreover, Exxon is a more diversified entity and with

the help of its better equity base, it enjoys the liberty of a better expansion and

operational optimization capability when compared to Valero.

The size does matter when it comes to buffer against risk. The return associated

with the forecasts of the revenues and risks a mitigated due to a large equity base which

enables Exxon to absorb more risks. Past difficulties such as the oil spilt case of Valdez

has been met with least impact on rising stocks of Exxon. Valero, on the other hand, has

had to discontinue some of its operations.

To sum it all up, our choice is Exxon due to its large equity base, ability to absorb

risks and stable returns which enables it to continuously add value to its stockholders.