Financial Forecasting: Exxon vs. Chevron (Case Study Sample)

Financial Forecasting: Exxon vs. Chevron Name Institution Financial Forecasting: Exxon vs. Chevron This paper looks at the 2015 financial statements of Exxon Mobil Corporation and Chevron Corporation and seeks to provide a 5 year financial forecast of the two companies based on growth and change prospects described in the Management Discussion and Analysis section of the companies’ financial reports. In developing the financial statements forecast, estimates of the expected future revenues based on demand forecasts deduced from the MDAs sections of the Sec-10 K 2015 filing of Exxon Mobil and Chevron Corporation have been used. The financial statements forecasting technique was used to produce the forecasted Income Statements and Balance sheets. Exxon Mobil Corporation According to predictions in Exxon Mobil’s Management Discussions and Analysis (MDAs) it is stated that the global energy demand is set to increase by 25% between 2014 and 2040 and in so far as this is concerned the volume numbers in 2015 are still in line with this trend. Between 2015 and 2020 therefore, the increase in global energy demand according to Exxon Mobil is set to be about 5 %; this is a 1% annual increment in demand. Performance in the year 2015 significantly went down in dollar terms by almost a half because of the depressed product prices in the oil market which has significantly cut down the company’s margin. This trend is predicted to hold for the foreseeable future. The conservative estimation of depressed product prices and the 1% annual demand growth has been used to prepare the forecasted financial statements for Exxon Mobil as shown below: Consolidated Statement Of Income - USD ($) $ in Millions 12 Months Ended   Dec. 31, 2020 Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2013 Revenues and other income                 Sales and other operating revenue 272724 270024 267351 264704 262083 259,488 394,105 420,836 Income from equity affiliates 8034 7954 7876 7798 7720 7,644 13,323 13,927 Other income 1839 1821 1803 1785 1768 1,750 4,511 3,492 Total revenues and other income 282598 279800 277029 274287 271571 268,882 411,939 438,255 Costs and other deductions                 Crude oil and product purchases 136634 135282 133942 132616 131303 130,003 225,972 244,156 Production and manufacturing expenses 37402 37032 36665 36302 35943 35,587 40,859 40,525 Selling, general and administrative expenses 12088 11968 11849 11732 11616 11,501 12,598 12,877 Depreciation and depletion 18969 18781 18595 18411 18228 18,048 17,297 17,182 Exploration expenses, including dry holes 1601 1585 1569 1554 1538 1,523 1,669 1,976 Interest expense 327 324 320 317 314 311 286 9 Sales-based taxes 23835 23599 23365 23134 22905 22,678 29,342 30,589 Other taxes and duties 28656 28372 28091 27813 27538 27,265 32,286 33,230 Total costs and other deductions 259511 256942 254398 251879 249385 246,916 360,309 380,544 Income before income taxes 23086 22858 22632 22408 22186 21,966 51,630 57,711 Income taxes 5691 5635 5579 5524 5469 5,415 18,015 24,263 Net income including non-controlling interests 17395 17223 17053 16884 16717 16,551 33,615 33,448 Net income attributable to non-controlling interests 421 417 413 409 405 401 1,095 868 Net income attributable to ExxonMobil 16974 16806 16639 16475 16312 16,150 $ 32,520 $ 32,580 Consolidated Balance Sheet - USD ($) $ in Millions Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Current assets               Cash and cash equivalents 90325 72159 54442 37144 20240 $ 3,705 $ 4,616 Cash and cash equivalents - restricted             42 Notes and accounts receivable, less estimated doubtful amounts 20889 20682 20477 20274 20074 19,875 28,009 Inventories               Crude oil, products and merchandise 12651 12526 12402 12279 12157 12,037 12,384 Materials and supplies 4423 4379 4336 4293 4250 4,208 4,294 Other current assets 2941 2912 2883 2854 2826 2,798 3,565 Total current assets 131228 112657 94539 76845 59547 42,623 52,910 Investments, advances and long-term receivables 35992 35635 35283 34933 34587 34,245 35,239 Property, plant and equipment, at cost, less accumulated depreciation and depletion 264439 261821 259229 256662 254121 251,605 252,668 Other assets, including intangibles, net 8708 8621 8536 8452 8368 8,285 8,676 Total assets 440367 418736 397587 376892 356624 336,758 349,493 Current liabilities               Notes and loans payable 19719 19524 19331 19139 18950 18,762 17,468 Accounts payable and accrued liabilities 34065 33728 33394 33063 32736 32,412 42,227 Income taxes payable 2945 2916 2887 2858 2830 2,802 4,938 Total current liabilities 56729 56168 55612 55061 54516 53,976 64,633 Long-term debt 19,925 19,925 19,925 19,925 19,925 19,925 11,653 Postretirement benefits reserves 36473 33157 30143 27403 24912 22,647 25,802 Deferred income tax liabilities 38696 38313 37934 37558 37186 36,818 39,230 Long-term obligations to equity companies 5417 5417 5417 5417 5417 5,417 5,325 Other long-term obligations 22245 22024 21806 21590 21377 21,165 21,786 Total liabilities 179485 175004 170837 166954 163332 159,948 168,429 Commitments and contingencies             Equity               Common stock without par value 11612 11612 11612 11612 11612 $ 11,612 $ 10,792 Earnings reinvested 495649 478675 461869 445230 428756 412,444 408,384 Accumulated other comprehensive income -24710 -24466 -24223 -23984 -23746 (23,511) (18,957) Common stock held in treasury -229734 -229734 -229734 -229734 -229734 (229,734) (225,820) ExxonMobil share of equity 252817 236088 219524 203125 186887 $ 170,811 174,399 Non-controlling interests 8065 7644 7226 6813 6404 5,999 6,665 Total equity 260882 243731 226750 209938 193291 $ 176,810 181,064 Total liabilities and equity 440367 418736 397587 376892 356624 336,758 $ 349,493 Chevron Corporation Looking at Chevron’s MDAs it is also clear that the impact of the mid 2014 slump in oil prices especially in the upstream market has been significant and these market conditions are expected to hold into the foreseeable future. Chevron Corporations’ net revenue in the year 2015 reduced by almost a half due to tough market conditions similar to those faced by Exxon. According to the MDAs, the earnings of the company depend heavily on the profitability of the upstream business. However the company intends to keep volumes up in order to boost revenues going into the future. Using the energy demand growth estimation of 1% per annum as predicted earlier, the forecast financial statements of Chevron Corporation are produced as shown below: Consolidated Statement of Income - USD ($) $ in Millions Revenues and Other Income Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2013 Sales and other operating revenues 136552 135200 133862 132536 131224 $ 129,925 $ 200,494 $ 220,156 Income from equity affiliates 4922.9 4874.19 4825.93 4778.15 4730.84 4,684 7,098 7,527 Other income 4065.3 4025.06 3985.2 3945.75 3906.68 3,868 4,378 1,165 Total Revenues and Other Income 145541 144100 142673 141260 139862 138,477 211,970 228,848 Costs and Other Deductions                 Purchased crude oil and products 73309 72583.2 71864.5 71153 70448.5 69,751 119,671 134,696 Operating expenses 24209 23969.3 23...