Irving, Texas-based Exxon’s E&P performance was below expectations this year despite Goldman’s early-2012 bullish outlook that production was on-track to inflect positively by 2013 and accelerate in the 2014-2015 periods.
“With our economists forecasting a recovery in global GDP growth over the course of 2013, we tilt back toward higher beta energy equities over XOM,” the analysts said. “Our call for a secular upturn in the super majors now appears to be deferred until 2014.”
While Exxon’s defensive characteristics did perform in line with expectations this year, Goldman said that’s less of an investment consideration at this time as investors gravitate toward higher-beta energy equities.
Meanwhile, Exxon’s ROCE (return on capital employed) is “strong but deteriorating,” Goldman said, as the oil company is in the midst of a heavy capital spending phase which may negatively impact near-term volume growth.
Shares of Exxon traded virtually flat Friday morning at around $107.93.