ExxonMobil Corp. shareholders loved Lee Raymond, the chairman and chief executive who has his own encyclopedia entry and who has run a company with an annual budget larger than that of many countries. During 66-year-old Raymond's 42-year career with the supermajor, that included 21 years as a director, it has consistently produced shareholder returns. He retired December 31. Rex Tillerson, 53 and who joined Exxon in 1975, is now in the chairman and CEO seat. Raymond's career included the industry's movement into the brutal North Sea and prolific Alaska, the Arab oil embargo, nationalization of some important oil assets, such as in Saudi Arabia and Venezuela, the Exxon Valdez oil-spill disaster, Russia's collapse, an oil-price collapse, and the takeover of Mobil Corp. The 1998 merger with Mobil has contributed to ExxonMobil's ranking as the world's largest publicly traded company, in terms of market cap-currently some $400 billion. "Lee Raymond's history with ExxonMobil covers the entire modern oil era," report Paul Sankey and Adam Sieminski, analysts with Deutsche Bank in a recent review of the company. In what shape does Raymond leave ExxonMobil and where to from here? "From a corporate perspective, ExxonMobil seems in extremely good shape, with major identifiable growth drivers over the next five years-West Africa, Sakhalin, Qatar-yet sufficient free cash flow to drive a huge buyback program," the analysts write. "The biggest relative weaknesses in the current XOM: dividend yield at an all-time low; per-barrel-of-production capex at an all-time high... and it is at half its peak size of some 8 million barrels per day of production in 1970." Current production is some 4 million barrels per day. Free cash flow is no problem. Instead, it is "truly remarkable," the analysts write. "Over the Raymond era, the company's shape in terms of refining and marketing and production has changed dramatically. From a company with a huge production arm that refined and marketed a portion of its oil, there has been a new-found total dominance of marketing as an operation, even if production continues to dominate earnings." Costs are high, however. "Per-unit costs of capex have never been higher." Costs per barrel of oil equivalent produced versus real capex is at an all-time high, and "there is little evidence of lower unit costs going forward." What to do with the cash flow? "This is perhaps the single biggest and most powerful legacy of Lee Raymond-raw profitability...The company has never before seen such high levels of free cash flow, and we continue to feel that the market is severely undervaluing the cash flow power of ExxonMobil at this time." Real revenue per employee has become enormous under Raymond. And, the company earns four times as much now as it did in 1999, with fewer employees, the analysts report. "Given the levels of profitability, arguably the most disappointing aspect of the current ExxonMobil story is the paltry cash return to shareholders." That may be the single biggest factor in the company's relatively low multiple, the analysts add. "Overall dividend yield is at historic lows. This is the most visible element of cash return and is the most disappointing." The company now has "far, far, too much cash relative to its needs for a sustained dividend increase going forward...." The analysts hope for a dividend increase in April. Sankey and Sieminski recommend XOM as a Strong Buy, and forecast that it and Occidental Petroleum will be the two integrated companies with the highest net income per barrel in a flat $60 oil-price environment. Tied for third-favorite are ConocoPhillips and Chevron, but they also like Amerada Hess and Marathon Oil. "Broadly speaking, we see the integrateds as woefully undervalued as cash returns in dividend and buyback ramp up against huge free cash flows." Overall, they surmise that Raymond leaves the company "in quite outstanding condition, with remarkable levels of profitability, and an all-time low market rating. To the company: please return more cash faster. To the market: Buy."