By Dan Ferris in Extreme Value:

Speaking to a reporter in the Persian Gulf nation of Qatar last week, ExxonMobil CEO Rex Tillerson said the company's capital spending would total about $129 billion over the next five years. He said ExxonMobil would spend about $29 billion this year, up from $26 billion last year.

This is exactly what we expect from ExxonMobil. While oil prices boomed, from below $11 in 1999 to more than $140 a barrel last year, ExxonMobil collected the biggest profits of any company (oil or otherwise) in history, bought back shares, raised its dividend, and built up a $32 billion cash hoard.

Now, with over 3 million treasury shares and $32 billion in the bank, it's got well over $240 billion of buying power. So in addition to committing to higher levels of capital spending to find more oil reserves, it can also buy just about any oil company on Earth, another great way to acquire reserves.

The timing is pure contrarian genius. All those who criticized ExxonMobil for not growing reserves during the bull market in oil are getting a lesson on how to run a commodity business... as are most of the oil companies in existence. Think of all the oil and gas companies that levered up, spent money, drilled like crazy... and are now in dire condition.

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