Exxon Mobil Corp. (NYSE: XOM) recently committed to keeping its high dividend, but many investors have wondered how long that can be maintained. After all, oil prices are so low that profitability is nonexistent for the oil companies, and its dividend yield screens out as 8.1%. It is not normal for a Dow Jones industrial average component to come with a yield that high, when the 10-year Treasury note’s yield is not even at 1%.

The big news now is that Exxon is raising $9.5 billion in a mixed shelf offering of debt securities. The note and bond offerings are showing maturities out in 2023, 2025, 2030, 2040 and 2051. Its joint book-running managers were listed as BofA Securities, Citigroup and JPMorgan. Citi and JPMorgan both currently rate Exxon stock as Neutral, leaving BofA Securities with the only Buy rating within its underwriting syndicate.

As for the use of proceeds, Exxon used the general “for general corporate purposes” terminology but also earmarked refinancing a portion of its existing commercial paper (short-term debt), working capital, acquisitions, capital spending and other business opportunities. As of March 31, 2020, Exxon’s commercial paper carried an average interest rate of 1.759%.

What should be more than obvious here is that Exxon is tapping the capital markets at lower interest rates. Some would argue that the offering is being opportunistic, and others would say it is accessing capital while it can do so with ease.

It was just in March that Standard & Poor’s lowered Exxon’s credit rating to AA from AA+ and its outlook remains Negative. On April 2, Moody’s lowered Exxon’s rating to Aa1, and its outlook also remained Negative.

Ahead of the offering, Exxon’s cash and cash equivalents were $3.09 billion at the end of 2019, and that was shown to be $11.55 billion on a pro forma basis. The portion of its long-term debt due within a year was $1.7 billion, with total long-term debt of $26.34 billion on an actual basis and $34.8 billion on a pro forma basis. The SEC filing further said:

In addition, as of December 31, 2019, we had $18.6 billion of commercial paper outstanding. To provide additional liquidity and flexibility in the current market environment, we increased cash balances to more than $10 billion as of March 31, 2020, and had approximately $24 billion of commercial paper outstanding as of such date. On March 17, 2020, Exxon Mobil Corporation established a short-term revolving credit facility to provide an additional $7.0 billion of borrowing capacity that supplements its existing $7.5 billion short-term revolving credit facility. We have not drawn funds under either of these credit facilities.

Refinitiv still somehow has Exxon projected to earn $0.38 per share in 2020 and $1.87 per share in 2021. For the latter to occur, oil prices are going to have to recover greatly, and Exxon’s big bet in Guyana is going to have to deliver flawless execution.

Exxon Mobil stock traded up 1.5% at $43.42 on Tuesday morning, and the 52-week trading range is $30.11 to $83.49.

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