ExxonMobil (NYSE:XOM) Will Continue to be Driven by Oil

The story of ExxonMobil (NYSE:XOM) is the story of oil at this time, even though some financial writers have attempted to assign natural gas as a big part of their last quarterly result.

Volumes of natural gas obviously increased for the energy giant, based primarily on their acquisition of XTO. That was a given, and not a surprise. The growth in natural gas, for the most part, wasn't organic for Exxon.

It's hard to tell how soon natural gas will play a big role in earnings for Exxon, as now it's more of a weight on the company. But if oil prices remain high and natural gas prices take off, the value of ExxonMobil will skyrocket, along with its share price.

This isn't going to happen quickly, but we will probably see Exxon move incrementally toward that as an operational reality.

As far as their last quarter, Jefferies commented on their performance, saying, "XOM reported excellent earnings, clean net income of US$9.25bn was a rise of 53% YoY, which at present is the best result of the global integrated majors in this reporting season. EPS of US$1.85 beat consensus by 16%. The key driver of the beat was the upstream, where XOM produced very impressive production growth of 19% on 4Q09. Although XTO accounted for most of this, the base portfolio also performed very well, with much of the 6% annual organic growth from its Qatar developments, which are now operating close to capacity. At our maintained price target of US$75, we calculate XOM would be on a PER of 11.0x, a 10% premium to the sector."

ExxonMobil was trading at $83.69, up $3.01, or 3.73 percent, as of 1:45 PM EST.