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Morgan Stanley this morning set a new target price for xom ...$48/share.

You can read the news item at forbes.com ...but below is a copy ...two items I love ...Morgan Stanley calls the company "The Model for Success"... notice they did not say, "a" model ...but "the" model.

Secondly they talk about their "disicplined" approach to capital msnagement, which is one of the reason we told the Saudis to take a walk.

Why ExxonMobil May Dominate Global Petroleum
03.02.04, 11:56 AM ET

Morgan Stanley raised earnings estimates and the target price on ExxonMobil (nyse: XOM - news - people ), saying the company has the best profile among "super major" energy companies. Morgan Stanley raised ExxonMobil's earnings estimates for 2004 to $2.45 per share from $2.40 and for 2005 to $2.45 from $2.40 and raised the target price on the stock to $48 from $42. "ExxonMobil remains the model for success in the global petroleum sector," Morgan Stanley said. The research firm went on to say that ExxonMobil "is positioned to be a dominant player in the global petroleum sector longer-term, in our view, given its competitively advantaged investment opportunity set, and disciplined approach to capital management." Morgan Stanley rates ExxonMobil at "overweight." Among ExxonMobil's peers, Morgan Stanley rates BP (nyse: BP - news - people ) at "overweight" and rates at "equal-weight" ChevronTexaco (nyse: CVX - news - people ), Royal Dutch (nyse: RD - news - people ) and Shell Transport & Trading (nyse: SC - news - people ).

For those who had expressed before disappointment for the lack of negotiating flexibility Exxon has shown negotiating with the Saudis, I direct you to the statement that Morgan Stanley makes this morning upgrading xom ... that ExxonMobil is positioned to be a dominant player ...,in our view, given its competitively advantaged investment opportunity set, and disciplined approach to capital management"

Negotiating with the Saudis was a losing proposition for the shareholders if we had accepted their lower return demands on billions of $ of investments they wanted xom and others to dump in that country's infrastructure.

There is not sufficient capital to do all the energy projects needed in the next 10 years -- so we are in the cat's bird seat. And xom can be as damn selective as it wishes. So expect smart price appreciation and safe but acceptable returns in the double digit region for the next few years.

If Shell and Total want to tie up billions of dollars in low return projects ...so be it ...let them do it...that will be better for us...they will not be able to participate in the other more juicy projects in other places ....

madame butterfly



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