More Reasons to Love Your Rich Uncle Exxon

Last month capped off probably the craziest year in the history of petroleum. By July, lots of folks were sweating each time they pulled up to a gasoline pump -- and it wasn't the heat.

Now, with crude oil prices having hit a downward slick, more than a few Foolish investors are in a quandary about how to treat the energy sector. My opinion is just what it was last month: The industry's majordomo, ExxonMobil (NYSE: XOM  ) , still appears to be the optimum way to gain exposure to energy without excessive risk amid today's crazily unpredictable world.

Just look at the company's powerful balance sheet, with $37 billion in cash, and the potential it provides. Floundering companies in today's market would welcome a sliver of Exxon's cash chest. For that reason alone, there's mounting speculation that at some point this year, Exxon will hit the acquisition trail with an eye toward making a fairly large deal.

Beyond its cash kitty, however, the company has repurchased about $170 billion of its own shares. To put that in perspective, $170 billion is still larger than the combined market capitalizations of Google and Apple.

No wonder some analysts speculate that Exxon could get hold of the likes of Royal Dutch Shell (NYSE: RDS-A  ) -- thereby getting access to a slug of West African reserves -- or perhaps Petrobras (NYSE: PBR  ) , which is tied into some huge deepwater discoveries that'll cost it several arms and legs to develop. A partnership with its Brazilian deepwater neighbor Exxon could give Petrobras ample capital to develop its resources. And beyond that, I wouldn't reject the idea that the company might make a run at our country's largest natural gas producer, Chesapeake (NYSE: CHK  ) , which is rumored be of interest to rival oil company BP (NYSE: BP  ) .

Nevertheless, all this indicates a company that is both rich and potentially intriguing. Exxon just might make 2009 profitable for Fools who recognize the wisdom of keeping a toe in energy.  

ExxonMobil carries a four-star rating in Motley Fool's world of CAPS. Why not weigh in with your opinion?

For related Foolishness:

Petroleo Brasileiro is a Motley Fool Income Investor pick. ChesapeakeEnergy is an Inside Value recommendation. Google is a Rule Breakers recommendation, and Apple is a Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your questions or comments. The Motley Fool has a well-oiled disclosure policy.


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  • Report this Comment On January 15, 2009, at 1:53 PM, trenton1ryan wrote:

    < Why not weigh in with your opinion?>

    All right, here goes: Exxon will go down with the rest as long as demand as seen as being depressed. It doesn't matter how much cash they have on there balance sheet. Let's see the cash, i.e. is it cash or is it tied up elsewhere?? I wouldn't trust some so-called balance sheet. Yeah, they're better positioned than most others, and oil will come back at some point, but right now, there no better off than anyone else. Now that oil looks to be headed to $25 a barrel, maybe lower, you'll be able to pick up XOM at even cheaper prices, and catch a better divvy in the process. No need to hurry. This bear is hungry and has lots more to eat before he goes back into hibernation.

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