Understanding The True Nature Of Politics And Its Finality ( Archived) (852)

emmaline: 02/28/11 - 05:22 PM EDT
The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.
NEW YORK (Trefis) -- Exxon Mobil (XOM) competes with other major oil companies such as BP (BP), Chesapeake (CHK), Anadarko (APC) and Chevron (CVX). In a recent article , we tried to give an idea of Egypt's importance for Exxon Mobil and how the unrest in the country could affect its stock price. We've also discussed how the situation in Libya forced BP to start evacuating its staff from the country. With the political unrest spreading to more countries over the past few weeks, this may be a bigger concern for Exxon Mobil and other oil & gas majors worldwide. We have a current price estimate of $78.97, which is about 10% below the market price.
Exxon Mobil is very diversified globally…
Exxon Mobil's oil and gas exploration and production operations are spread out all across the globe. In 2009, Exxon Mobil's oil and gas production was 25% from Asia-Pacific and the Middle East, 22% from Europe, roughly 15% each from Africa and the U.S., and the remaining from Canada and Russia.

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While this geographical diversification does cushion the company considerably from being adversely affected by the political scenario in a particular region, it no doubt has a direct impact on Exxon Mobil's long-term growth prospects. Moreover, the process of oil and gas exploration and production is extremely capital intensive and time consuming, and disruptions due to political instabilities only means additional expenses with a delay in the ability of the company to generate returns.
… but the ‘Jasmine Revolution' could cause disruption
Since protests began in Tunisia on Jan. 14 this year, unrest has spread gradually to other countries in the Middle East and Africa. Although the circumstances surrounding each situation are different, Egypt, Libya, Sudan, Yemen, Algeria, Iran, Oman, Morocco and Jordan have all been influenced by what some are calling the "Jasmine Revolution." In fact, China has also been pulled into the situation with the Chinese government censoring all media coverage and cracking down on social media sites after some groups in China called for a show of support for the movements in the Middle East.
But the biggest risk for oil companies like Exxon Mobil is the possibility of the unrest spreading to other OPEC nations, notably Saudi Arabia, U.A.E. and Kuwait. Reports have surfaced that Saudi Arabia, the world's largest exporter of oil, is dealing with certain pro-democracy and ethnic minority groups that want to take advantage of the situation going on in the Middle East to air their concerns. This has the potential to impact the dynamics of the global oil & gas industry.