Could ExxonMobil Buy BP?
CNBC Senior Stocks Commentator
With chatter that BP or its assets may be on somebody’s shopping list, or that somebody may go fishing for Anadarko’s offshore assets, the obvious question: Which big oil company is most financially fit to do those kind of deals?
The answer, without question, based exclusively on its balance sheet: Exxon Mobil , whose balance sheet looks like a fortress:
As of a quarter ago, its net cash was $4.3 billion. That’s considerably below where it was in the same quarter in 2009 and 2008.
But keep in mind that last year the company paid out $26 billion in dividends and in stock repurchases.
Its return on capital was 19 percent.
Return on equity, 22.6 percent.
Compare that with Royal Dutch Shell :
Net debt of $28.8 billion.
Return on capital, 11.8 percent.
Return on equity, 16 percent.
Net debt of $36.6 billion
Return on capital, 9.1 percent.
Return on equity, 13.4 percent.
Net cash, $700 million
Return on capital, 15.5 percent.
Return on equity, $19.4 percent.
Herb’s Hook: Granted, debt of an acquirer is only part of the equation. But if any of these assets go into play, the gushing nature of ExxonMobil’s cash gives it a clear advantage.