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Missing among the dozens of articles about how ExxonMobil on Friday broke its own record of being the most profitable company on the planet was any mention of the billions it could have made but did not.

It was easy for an energy executive to look like a genius during the bull market in oil and gas prices that peaked last summer. Nearly every project was a winner, but Exxon’s executives applied a far higher hurdle rate, choosing to generate free cash flow as others invested.

Some shareholders chided them for their conservatism. Added to this was sniping from environmentalists for failing to embrace green technologies to the same extent as some of its peers and by irate motorists for simply making so much money. Love them or hate them, Exxon’s bosses navigated the energy boom superbly and are now well positioned to make the most out of the bust.

Last year they returned $40.1bn to shareholders through buybacks and dividends or 154 per cent of their capital investment and exploration spending. This is in sharp contrast to fellow supermajors. Royal Dutch Shell returned just 37 per cent of expenditures to shareholders. BP and Chevron were at 61 and 67 per cent, respectively, while ConocoPhillips was the next most prudent at 87 per cent.

Meanwhile, the credit crunch has left some mid-tier oil companies poorly prepared to develop promising fields as internally generated cash flows slump. North American oil and gas companies now sport valuations that assume oil prices of $52.50 a barrel in perpetuity, according to Tudor Pickering & Holt.

By contrast, equilibrium prices may be closer to $80, says the International Energy Agency. With big projects still elusive, these valuations have spurred talk of Exxon expanding reserves through acquisitions rather than the drill-bit. Like a value investor, it was fearful when others were greedy and now has the cash to be greedy when others are fearful.

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