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Why the Skeptics Are Wrong About ExxonMobil
For decades to come, the world will still need petroleum, Exxon may end up the last supermajor standing
No matter how you spin it, ExxonMobil has been humbled: It’s accumulated $2.3 billion in losses this year, the worst performance in the company’s 150-year history. Its share price has dropped 38% in 2020, and it’s laying off about 14,000 employees. In August, Exxon — the last original member of the Dow Jones Industrial — was kicked off the index. And, for a short time, its market cap even dropped below that of Chevron, the California oil company that it has always viewed as a lesser rival.
All of this has got the vultures circling: Exxon — heir to the original Standard Oil begun in 1870 by John D. Rockefeller — is being uncustomarily stalked by hostile shareholders out for blood. They’re demanding that Exxon slash costs, stop seeking growth, and instead reserve what’s left to deliver better profits.
The critics are in large part right. Exxon has made a series of abjectly bad investments: Spending $41 billion to acquire XTO and its prime U.S. shale assets in 2009, just before natural gas prices went into a long-term dive, and buying into Russia’s Kara Sea just before the Russian invasion of Crimea forced it to pull out. Meanwhile, the gusher of U.S…
