ExxonMobil (NYSE: XOM) is one of the better oil dividend investments you can make because of its enormous scale and diversified business model. However, there are three risk factors that I think investors need to be aware of. Risks that could negatively affect future returns include the expensive race against production declines, exposure to geopolitical risks, and the oil crash's effects on future buybacks and dividend growth. 

Exxon's production decline treadmill
All oil companies face the prospects of naturally declining production, which Exxon estimates will be around 3% in the coming years if it doesn't invest heavily in new production projects. 

To be fair, the oil crash has increased the company's efforts to maximize production as cheaply as possible. For instance, Exxon thinks it can bring 16 major projects online through 2017 that can allow it to increase production 2% in 2015 and 3% in 2016 and 2017 while cutting capital spending 12.5% to $34 billion per year over the next three years. 

However, investors should be aware that oil projects are complicated and often run over budget. For example, Exxon's Kipper gas joint venture in Australia ended up running 63% over budget. In the first quarter, the company was able to cut capital spending by 9%, which is below its capital spending reduction guidance target, possibly indicating that some of its more recent projects are also coming in over budget. 

Growth plans could be derailed by politics or war
Exxon explores for and produces oil all over the world, including in some politically unstable areas that expose it to political risk that can cost it billions in lost investment. 

For instance, in 2007 Venezuela nationalized certain oil assets, specifically Exxon's 41.67% interest in the Cerro Negro Heavy Oil Project, after the government attempted to change the terms of its previous agreements, and Exxon refused to play ball. Exxon took the issue to the International Center for Settlement of Investment Disputes and was awarded a $1.6 billion judgment on June 27, 2007. However, the Venezuelan government has been able to avoid paying by throwing up appeal after appeal, and to this day Exxon has yet to see a dime. 

A potentially bigger hit to future growth prospects comes from the impositions of Western sanctions against Russia, which forced Exxon to halt drilling on a major offshore Arctic Ocean joint venture with Russian oil giant Rosneft last year. Rosneft has recently indicated that it's ready to restart offshore drilling in the Arctic and may have to choose alternative global partners.  

That's because in 2011 Exxon signed a major deal with Rosneft that covers 63.6 million acres worth of drilling rights in the Kara, Laptev, Chukchi, and Black seas. The U.S. Geological Survey estimates that the Arctic contains the oil equivalent of 413 billion barrels of oil and gas, and Vladimir Putin has stated that Exxon's Rosneft deal could eventually provide as much as $500 billion of future investment opportunities.

Tensions between the West and Russia are only growing over Russia's actions in Ukraine, and Exxon has stated that it will honor sanctions that forbid oil-related investment. Thus, for however long the geopolitical crisis in Ukraine continues, Exxon stands to lose out on potentially billions in future profits and cash flow opportunities.

Shareholder cash returns are dependent on volatile free cash flows
Giant oil companies such as Exxon can't really grow production at a fast rate, and given the volatility of crude prices, the only consistent way to grow long-term earnings and free cash flow per share -- which pays for dividends and buybacks -- is by reducing its share count through aggressive share-count reductions. 

Analysts at Barclays estimate that each dollar-per-barrel decline in oil prices represents a $280 million hit to Exxon's annual operating cash flows. However, because of the enormous overhead costs of constructing, maintaining, and growing its production the effects on Exxon's free cash flows are even stronger.

In the first quarter, Exxon's free cash flow rang in at $1.15 billion, down 85% compared with Q1 of 2014. This drop forced management to reduce share buybacks by 54% and guide for a 67% reduction in year-over-year buybacks for the second quarter of 2015.

Takeaway: Exxon is among the safest oil majors, but even it's not bulletproof
Don't get me wrong. As far as big oil companies go, Exxon is among the best choices you can make because of its track record of consistent buybacks, dividend growth, and market-beating returns. However, investors need to be aware that even mighty Exxon isn't impervious to major risks to its future earnings, cash flows, and dividend growth prospects.