Exxon Debates Abandoning Some of Its Biggest Oil and Gas Projects
Exxon Mobil Corp's board of directors is considering abandoning current large-scale projects in Mozambique and Vietnam and is reworking its investment strategy. At least three new members were recently voted on after successfully being nominated by an activist investor. This new board has expressed concerns about a few projects in their infancy and is discussing the fate of future projects as the company faces pressure from investors to restrain fossil-fuel investment, return more cash to shareholders, and repay some of its debt (Matthews & Glazer, 2021).
The ongoing discussion about the corporation's steps over the next five years to invest in new revenue production is a part of an internal review of Exxon's five-year spending program. This review undoubtedly occurs with adjustments to the underlying drivers their financial team uses to modify assumptions within the corporation's five-year forecast. One of the topics in the article that is repeated more than once and stands out as a red flag is a focus on generating more significant short-term returns to pay back their investors and increase dividends. Exxon is indeed looking much further ahead than the next five years and seems to be concerned about its seat at the energy sector's table in 2050 - a year highlighted as a significant turning point by climate change activists. It is also important to note that analysts expect Exxon to report $6 billion in quarterly profits later this month after losing $680 million during the same period last year amidst the pandemic (Matthews & Glazer, 2021). Beyond returning money to investors, their strategy for the next five years will involve investigating their relationship with renewable energy production. It will attempt to position itself as a proponent of change by what it will classify as setting a good example.
Reference:
Matthews, C., & Glazer, E. (2021, October 20). Exxon Debates Abandoning Some of Its Biggest Oil and Gas Projects [Review of Exxon Debates Abandoning Some of Its Biggest Oil and Gas Projects]. Dow Jones & Company, Inc.; The Wall Street Journal. https://www.wsj.com/articles/exxon-debates-abandoning-some-of-its-biggest-oil-and-gas-projects-11634739779
