Exxon Mobil enhances portfolio with Denbury acquisition and expanded buyback program

In a strategic move to strengthen its position in the energy sector, Exxon Mobil (NYSE:) has made significant advancements through acquisitions and shareholder returns throughout the past year. The company’s most recent acquisition of Denbury Inc. on November 2, 2023, for $4.9 billion in an all-stock deal, is a pivotal step in enhancing its low-carbon solutions segment. This deal granted Denbury shareholders 0.84 ExxonMobil shares for each share they held, as confirmed by Exxon’s CEO Darren Woods, who emphasized the company’s ongoing commitment to paying dividends.

Building on its growth strategy, Exxon amplified its buyback program late in 2022 and also procured Pioneer Natural Resources (NYSE:NYSE:), further cementing its industry leadership. These moves have been part of a larger effort to bolster the company’s financial position and reward shareholders.

By the third quarter of 2023, Exxon had successfully boosted its cash reserves to $32.97 billion and returned $8.1 billion to shareholders. Additionally, the company increased its fourth-quarter dividend and achieved a significant milestone by accomplishing a $9 billion cost reduction goal.

The post-acquisition period saw Exxon extend its CO2 pipeline network by an impressive 1,300 miles and add 15 onshore CO2 storage sites. These additions are expected to contribute meaningfully to reducing emissions by over 100 million metric tons annually. The acquisition also expanded Exxon’s operations in the Gulf Coast and Rocky Mountain regions.

In a move that underscores its focus on sustainability, Exxon welcomed Dina Powell McCormick (NYSE:) to its board on January 1, 2023. McCormick brings valuable experience from her time leading Goldman Sachs’ sustainability initiatives and her service under two U.S. presidents.

Throughout these developments, Exxon has maintained a strong financial footing despite market challenges in 2020. The company has consistently reported profitability, kept a low debt-to-equity ratio, and reinforced its reputation as a stable stock in the volatile energy market.

InvestingPro Insights

In line with the information from InvestingPro, Exxon Mobil (NYSE:XOM) has shown remarkable consistency in its dividend payments, having raised its dividend for 41 consecutive years. This fact solidifies its commitment to rewarding shareholders, as mentioned in the article. Furthermore, the company’s stock is currently in oversold territory according to the Relative Strength Index (RSI), indicating potential for a price increase.

From a financial perspective, Exxon’s market capitalization stands at a robust $411.15 billion. The company has shown resilience with a P/E Ratio (Adjusted) of 10.71 as of Q3 2023, which is relatively low, signifying that the stock could be undervalued. Furthermore, Exxon’s revenue for the same period was a substantial $344.75 billion, underlining the company’s strong market position.

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