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Exxon Mobil's Three Crises: 'It Never Rains But It Pours'

Mar. 11, 2020 9:25 AM ETExxon Mobil Corporation (XOM)147 Comments
Keith Williams profile picture
Keith Williams


  • Coronavirus, Brent crude chaos and a not so pretty climate beauty competition means the stock is down dramatically.
  • COVID-19 starts to bite and Brent crude tanks due to Russia, Saudi Arabia disagreement.
  • Things heat up on emissions reductions as Exxon Mobil CEO Darren Woods taunts European rivals.
  • Exxon Mobil acknowledges that its dividend is not covered by earnings, instead asserts that debt is cheap and so the dividend is not under threat. Recent developments may have changed that.
  • Lots of articles on Seeking Alpha saying “buy” XOM; these rely on all of this being “just” a cyclical issue. Long-term structural issues still ignored.

You know that something is up when the Exxon Mobil (NYSE:NYSE:XOM) CEO Darren Woods taunts his rivals that he isn’t going to participate in a beauty competition. This happens all of the time in the school yard, but within a group of the global oil and gas majors? Be in no doubt, this is deadly serious as Darren Woods reveals his dismissal of the need to rapidly decarbonise, while his European counterparts Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) and BP (NYSE:BP) announce their intention to get serious about rapid decarbonisation. The share price of XOM fell by ~9% to $47.69 after Darren Woods statement, and while COVID-19 fears are biting, my take is that dismissing climate issues is a serious misunderstanding by him concerning his role in the fossil fuel industry. And then came disaster with the stability of oil pricing going out the window, with XOM share price down a further 12% to $41.86! Yesterday the market recovered somewhat, with XOM rising 3.7% to close at $43.41. It might be noteworthy that both BP (closed at $26.79, up 5.97%) and Shell (closed at RDS.A :$36.96 up 6.57%/RDS.B : $36.03 up 4.68%) showed stronger gains than XOM. Investors who have XOM in their portfolio, or those contemplating investing as XOM touches unprecedented lows might reflect on where the XOM share price and indeed the company is headed. Here I make some comments about how the different issues raised by oil pricing havoc, COVID-19 and finally climate change are going to impact XOM. The apocryphal statement “it never rains but it pours” is apposite for Exxon Mobil currently.

Russia, Saudi Arabia throw away the rules as COVID-19 affects demand

In some respects the current chaos in setting a price for oil, while bringing to head a number of simmering issues, is sort of business

This article was written by

Keith Williams profile picture
Keith began his career as a research scientist (developmental biology, biochemistry, molecular biology) at the Australian National University, University of Oxford (UK), the Max Planck Institute for Biochemistry (Munich, Germany) and finally Macquarie University (Sydney) where he held a Chair in Biology and established the Centre for Analytical Biotechnology. Pioneering the area of proteomics (with Marc Wilkins in his group coining the term), Keith established the world’s first government-funded Major National Proteomics Facility (Australian Proteome Analysis Facility) which was involved with industrialising protein science. Keith left academe with his team to found Proteome Systems Ltd in 1999 to commercialise proteomics. The company had a strong focus on intellectual property, engineering/technology and bioinformatics. As CEO he led the company to ASX listing in 2004. Since 2005 Keith has been involved in new business development in biotech, e-health and other emerging technologies. Keith sees climate change and sustainable development as a major issue for humankind and also a major business disruptor/risk and opportunity. Keith holds a Bachelor Agr Science from the University of Melbourne and a PhD from the Australian National University. He is a Fellow of the Australian Academy of Technological Sciences & Engineering and received an AM (Member of the Order of Australia) for services to the Biotechnology Industry. He has received various industry awards including an Innovation Hero Medal from the Warren Centre for Advanced Engineering. With 300 scientific papers and many patents written, Keith has a clear view of innovation in the Biotechnology and Climate/Renewable Energy space. He is not a financial advisor but his perspective adds relevance to decision-making concerning feasibility and investment in technology innovation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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