Exxon Mobil’s survival skills tested amid crisis, change
HOUSTON— Over the last 135 years, Exxon Mobil has survived hostile governments, ill-fated investments and the catastrophic Exxon Valdez oil spill. Through it all, the oil companymadebundles of money.
But suddenly Exxon is slipping badly, its vulnerabilities exposed by the coronavirus pandemic and technological shifts that promise to transform the energy world because of growing concerns about climate change.
The company, for decades one ofthe mostprofitableandvaluable American businesses, lost $2.4 billion in the first nine months of the year, and its share price is down about 35% this year. In August, Exxon was tossed out of theDowJonesIndustrialAverage, replaced by Salesforce, a software company.Thechangesymbolized the passing of the baton from Big Oil to an increasingly dominant technology industry.
“Is Exxon a survivor?” asked Jennifer Rowland, an energy analyst at Edward Jones. “Of course they are, with great global assets, great people, great technical know-how. But the question really is, can they thrive? There is a lot of skepticism about that right now.”
Exxon is under growing pressure from investors. D.E. Shaw, a longtime shareholder that recently increased its stake in Exxon, is demanding that the companycutcostsandimproveits environmental record, according to a person briefed on the matter.
Another activist investor, EngineNo. 1, is pushing for similar changes in aneffort backed bythe California State Teachers Retirement System and the Church of
England. Last week, the New York state comptroller, Thomas P. DiNapoli, said the state’s $226 billion pension fund would sell shares in oil and gas companies that did not move fast enough to reduce emissions.
Of course, every oil company is struggling with the collapse in energy demand this year and as
world leaders, including President-elect Joe Biden, pledge to address climate change. In addition, many utilities, automakers and other businesses have pledged to greatly reduce or eliminate the use of fossil fuels, the biggest source of greenhouse gas emissions, and have embraced wind and solar power, and electric vehicles
. As recently as last month, Exxon reaffirmed it plans to increase fossil fuel production, though at a slower pace. The company is investing billions of dollars to produce oil and gas in the U.S., and offshore fields in Guyana, Brazil and Mozambique.
Exxon committed to its strategy even as it acknowledged that one of its previous big bets did not go well. Exxon said it would write down the value of its natural gas assets, most of which it bought around 2010, by up to $20 billion. The company is also laying off about 14,000 workers over the next year or so. But if this crisis is an existential threat, there has been no acknowledgment from Exxon’s executive suite. “Despite the current volatility and near-term uncertainty, the long-term fundamentals that drive our business remain strong and unchanged,” Darren W. Woods, the company’s chairmanandchief executive, said at a recent meeting.