SOURCE: The Bedford Report

The Bedford Report

November 24, 2011 08:16 ET

Exxon Mobile and Suncor Are Strong in the Short Term and Prepared for the Long-Run

The Bedford Report Provides Equity Research on Exxon Mobil & Suncor Energy

NEW YORK, NY--(Marketwire - Nov 24, 2011) - Oil and gas explorers have turned to more profitable business segments in recent quarters. With natural gas prices stagnating this year, explorers have focused on the more lucrative oil and liquids markets to keep profits strong. Natural gas prices could be due for a turnaround in the near future, however, as demand is expected to surge. The Bedford Report examines the outlook for companies in the Oil and Gas sector and provides equity research on Exxon Mobil Corporation (NYSE: XOM) and Suncor Energy, Inc. (NYSE: SU) (TSX: SU). Access to the full company reports can be found at:

www.bedfordreport.com/XOM

www.bedfordreport.com/SU

The US Energy Information Administration (EIA) has observed markedly higher levels of volatility in the pricing of WTI crude since early August. This coincides with similar volatility in global stock markets in the wake of the US and European debt crises, and highlights the extent of the correlation that has developed between financial and oil markets. The price of oil ended last week lower than it began, despite a surge of trading that temporarily pushed crude above $100 at midweek for the first time since July.

Gas prices, meanwhile, have remained low for most of 2011. As a result, several high profile oil and gas explorers are increasing production of more lucrative oil and liquids as oil trades at its highest level relative to gas. US oil production will reach 5.92 million barrels a day in 2012, up 4 percent from 2011 and the highest amount since 1998, according to the US Energy Department. Meanwhile Gas output is forecast to grow a mere two percent to 66.87 billion cubic feet a day in 2012, slower than the 6.1 percent increase this year.

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While in the doldrums at the moment, gas demand is expected to surge higher in the long term. The retirement of coal-fired plants due to toughening environmental standards in the US would increase the share of total electric power generation fueled by natural gas by 6 percentage points, according to Fitch Ratings.

Exxon Mobil's quarterly profit rose 41 percent because the company sold oil and natural gas at higher prices, making up for lower production. The company said prices rose sharply in the third quarter. Its refineries also charged more for gasoline and other fuels that they make from oil.

Exxon Mobil Corp.'s total net income rose to $10.33 billion, or $2.13 per share, in the third quarter. That compared with $7.35 billion, or $1.44 per share, a year earlier.

Earlier this month Suncor Energy outlined plans to increase oil sands production 12% by next year, while boosting capital expenditures by about C$800 million. Approximately $3.6 billion -- or nearly half -- of the 2012 capital spend is expected to go toward growth projects.

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