By Emily Burleson – Reporter, Houston Business Journal
4 February 2022
Exxon Mobil Corp. (NYSE: XOM) announced earlier this week that its corporate headquarters is moving from the Dallas-area suburb of Irving to City Place, a master-planned community north of Houston. The headquarters relocation, which should be final by mid-2023, plays into the company's plans to cut costs, as the executives and other North Texas employees will move into the company's existing City Place campus.
It also marks a cultural shift for Exxon, said Fernando Valle, a senior energy analyst for Bloomberg Intelligence. The Houston Business Journal spoke with Valle, who covers integrated oil and gas companies and refineries in North America, about the Houston move.
What were your initial thoughts on Exxon's announcement that its executives are moving to the Houston area?
I think it's actually understated as far as importance.
*The first part is that the Irving office is very small, right? * There are fewer than 300 people in that office, and it's pretty much all the higher executives and finance folks that work over there. The Houston campus was actually much larger and focused on operations.
There was a certain — call it "old school" — idea of keeping that separation. Not to sound cliche, but putting them together is the modern way of doing things, especially as you go into more shale production. (Fracking) is a lot more dynamic than traditional oil and gas exploration, when it took you five to 10 years to put anything into production. Shale is about short-term decisions. You ramp up and ramp down in six months.
As far as connectedness and being more inclusive, it's also better that upper management is together with the everyday employee of the company. It's one company as opposed to having a separation. I think that was a very old school way of running things.
*Do you think the separation of executives and the rest of Exxon's employees was intentional, or did it gradually occur over the time since Exxon moved its headquarters from the New York area to Irving in the late '80s? *
It was intentional back then. It was a different world. It was a cultural thing for Exxon, and also in the world at that time. It was meant to be a beautiful place to work but also where the executives would be able to be a little bit more free in their dealings among themselves. It was the "old boys' club" sort of thing. (That's) no longer the norm. I think it's a good reflection of Exxon moving forward and changing with the times.
*Did this shift away from the "old boys' club" start when Darren Woods became CEO in 2017? Or was there another catalyst? *
I think Darren has certainly made a lot of changes, culturally, within Exxon. There has also been the activist investor, Engine No. 1, which elected three members to the board last year. I think Darren was already moving Exxon to a much more modern structure, and I think the new Engine No. 1 board members accelerated some of those shifts.
If you look at Exxon from today versus under (previous CEO) Rex Tillerson, it's night and day in how they conduct themselves with the press, analysts and investors. They used to not do any events with the sell-side analysts at all. They've been a lot more engaging with the investor community, and I think even with media, than they were in the past. Obviously, they've also made changes in how they publish their data on emissions, setting targets including the net-zero-emission-by-2050 goal.
*I think, so far, he's made the right moves. It's just a matter of executing on them. *