https://www.wsj.com/articles/exxon-cant-catch-a-break-11627666841
7 replies (most recent on top)
Does Exxon deserve a break? Their relative Ranking compared to other majors does not point to that.
Because there is no authentic path forward for the long term. Reactive thinking and actions, getting dividend paid without reducing even a penny, and treating employees bad - what a great start. Not.
Darren says he wants debt down to get back to AA rating. Wants to leave it the way he found it? Or just ego.
Fu-k XOM. Thank You.
Can someone who knows more about these things explain possible reasons why ExxonMobil didn't start a share buyback? The dividend yield is much higher, I believe, than interest rates on debt, so wouldn't it make more sense to buy back shares, or even to take on more debt to buy back shares - using a cheaper form of debt to pay off a more expensive one? (Maybe I'm wrong to think of equity like an interest-only loan, where dividends are the interest, and a share buyback would be paying back the principal?) Is it that paying off debt improves some metrics that are more important than profit?
We keep doubling down in capex decisions because all the key stake holders don’t want to admit any form of failure. Look at how many times we do ish at work just because our supervisor doesn’t want to admit it doesn’t work or worth our time. So we double down and do them because at one point someone committed to it. We are the most hardheaded O&G major and it shows. #weARExom
back. Questions regarding long-term strategy still cloud its valuation.
By
July 30, 2021 1:40 pm ET
Save
Share
Text
Exxon XOM -2.31% Mobil might have expected a hearty pat on the back after Friday’s earnings announcement. It didn’t get one from investors.
By many measures, the company’s results look stronger than they have in awhile with oil prices at levels not seen since 2018. ExxonMobil posted $4.7 billion in quarterly profit, its strongest in at least a year and beating Visible Alpha’s analyst consensus by more than 10%. Its $9.7 billion of cash flow from operations was the highest it has been in almost three years and sufficient to cover dividends, capital investments and debt reduction. The numbers look especially flattering compared with the same three-month period last year, when the world faced an unprecedented glut of crude and prices briefly went negative.
Not all segments posted record results, but the quarter underscored the advantage of an integrated energy business. Downstream earnings were weak because of a slow recovery in jet-fuel demand even as Exxon’s chemicals segment posted its best-ever quarter of earnings. Chemicals have been Exxon’s saving grace since last year when demand for packaging and hygiene products spiked. Demand from the automotive industry, which is itself recovering from its own supply crunch, is improving, too.
But Exxon has less flexibility than peers because of a brutal 2020 and years of overspending. It is committed to keeping its capital expenditures this year at the lower end of its previously telegraphed range of $16 billion to $19 billion. Debt levels have come down from the record highs reached last year, but it will take some time to contemplate splashier cash returns. That could become a sore point: This week, European majors Royal Dutch Shell and TotalEnergies and U.S. peer Chevron CVX -0.74% all announced a return to share buybacks.
Questions also remain over how Exxon plans to allocate long-term capital going forward, especially with a new board makeup after activist investor Engine No. 1 won three seats in May. Chief Executive Officer Darren Woods said on a Friday morning earnings call that the company has had “productive discussions” with the new board. While the company stressed the need to address the energy transition, it didn’t lay out any more substantive details beyond previously announced plans to invest in carbon capture, hydrogen and biofuels.
Much of that uncertainty seems baked into Exxon’s share price; it has shaved off nearly a quarter of its market capitalization since the last time oil prices were this high. At 13 times forward-12-month earnings, Exxon share prices remain a bargain compared with its 10-year average. For investors running out of reasons to bet on hydrocarbons, that could be one compelling reason to get in.