Thread regarding ExxonMobil Corp. layoffs

ROCE is a ratio made famous during the Raymond era. It's a nice metric, but will ultimately be higher for larger corporations with massive assets deployed globally and is more reflective of the use of debt (which we did a GREAT job of under Raymond, but might not be the best use of capital - debt is not bad in corporate America). He was able to sell this metric to Wall Street as a de facto ratio but it favors companies with larger scale than others. Wall Street used it for years helping boost the stock price. Brilliant move by the best CEO of our company....helped me retired rich and, by the looks of it, many wish he was still around.

The Oil Industry average ROCE over the last decade was 10 to 11 percent. With the growth of renewables, the average ROCE for the energy industry is expected to drop even with government subsidies.

The majors are selling low performing, under 10% ROCE refineries and holding onto the more profitable integrated refinery-petrochemical complexes in order to compete long term.

Are you really using ROCE numbers from 2004 and 2005? lmao, whoever you are, I’d love to see how poorly your portfolio is doing.

ROCE and productivity drops when a corporation goes ESG and WOKE. No surprise really!

@1mvj+1lof5uML

I hope you send a "Thank You" Card to Vladimar Putin. If it were not for the Ukraine-Russia war, our ROCE would have been closer to 10-11 percent.

Since 2006, we have consistently declined in ROCE because of poor capital deployment decisions from 2006 to 2020.

In its 2005 Financial & Operating Review, ExxonMobil states:

"The Corporation has consistently applied its ROCE [return on capital employed] definition for many years and views it as the best measure of historical capital productivity in our capital-intensive, long-term industry, both to evaluate management's performance and to demonstrate to our shareholders that capital has been used wisely over the long term."

Each of the other major integrated oil companies also point to ROCE as the primary measure of its success to its stockholders. For example, in its 2005 Annual Report, ConocoPhillips touted its 32.1% ROCE in 2005 as follows:

"Refining remains our primary focus, and the business performed exceptionally in terms of return on captial employed (ROCE) and other key measures . . . We are an industry leader in downstream ROCE . . . ."

So what do oil company profits look like when viewed as return on capital?

The following table shows the ROCE for the five largest integrated major oil companies over the last two years:

Return on Capital Employed (ROCE)
(in percent)
2004 2005
ExxonMobil 23.8% 31.3%
Chevron 25.8% 21.9%
BP 16.4% 19.9%
Shell 20.1% 25.6%
ConocoPhillips 23.3% 32.1%
AVERAGE 21.9% 26.2%

Do you even know what ROCE means? Anything plus 20 is like a VG assessment. 25%+ is really outstanding, especially for the O&G industry that has long horizon capital investment and return cycles. I’d imagine 25% is highest in the industry for the super majors (I’m lazy so will let you look it up). Lots of negative things can be said about the company but their ROCE isn’t one of them.

The net profits are just pure luck and out of high market prices for the crude oil. It is only a matter of time when an incompetent organization will be shown the mirror.

Eventually the cat will be ringed.

Am I part of that Capital Employed measure?
That's about the level of effort I'm willing to put in - 25%.
I'm no Durwood, but seems about right.