what is the deal with Exxon?

[KTP]

I just had to add to my Exxon stock today. I had bought in at 72 and didn't sell at 75, certainly not selling at 68.5 as it was today. I just bought more. I kind of hope it stays down for a couple more months so I can add a bit more.

What do people think? China and India are going to start a cap and trade system and decide to switch to solar or capturing methane from pig farts?

[Broken Arrow]

Well, part of it is that it's the end of the year now. Trading volume has tapered off, although if you think about it, it's still been a rather remarkable 4th quarter to have seen a gain of 500 points after breaching Dow 10,000.

The other part is that oil is still traded in Dollars, and we're experiencing a peculiar liquidity bubble of sorts where, right now, both traditional stocks as well as commodities are riding more or less in tandem.

I'm sure there's more to it, but I wouldn't pin too much of the short term fluctuations to some kind of fundamental shift. Much of it is just the erratic market doing what it does best.

I've been out of the oil play for a while now... I think since crude hit $70/barrel. From there, I couldn't tell where it was headed next. Sooo... I haven't gotten back into energy yet, but that's just me.

[Slug]

I opened my first XOM position on that dip into the 60's.

[Broken Arrow]

I might get back into energy again, but if I do, it'd be next year. I'm definitely interested if it dips below $60.

[EEinNJ]

I've had XOM for years and years, done very well with it, and getting out bit by bit. Just sold more at 75.

The reason it took a hit is because of the acquisition of XTO. Even for Exxon, spending 51 billion is a lot of money.

IMO the outlook for integrated oil companies is not so great. The easy oil has already been found. The trend is flattening production and much higher cost to get at new sources. Add in weak global demand from a soft economy, a weak dollar, and the push towards alternatives, and growth is not there. Still, Exxon has always been a well run company.

[Broken Arrow]

That's very informative, thank you for sharing.

Personally, I think the long term prospects are still decent because so long as the basic demand does not wane, the greater difficulty in obtaining oil will cause prices to increase, which is bad at the pump, but good for the stock.

Also, a dip in acquisition could mean a good time to buy XOM if XTO does turn up new oil reserves.

Similarly, a good energy prospect to consider would be deep sea drilling companies such as Transocean (RIG). Despite having had a fairly decent amount of media coverage, the PE is still 8 and change, and I think it's fair to say that the world will need to rely more and more on these harder to reach oil reserves.

But short-term and perhaps even mid-term, I agree it's there isn't much upside in buying in unless you can get in at a decent price and then hold for at least a few years.