WSJ: Exxon's comeback attempt so far proving unpopular with investors

Jul. 13, 2018 11:27 AM ETExxon Mobil Corporation (XOM)XOMBy: Carl Surran, SA News Editor41 Comments
  • Exxon Mobil (XOM +0.9%), "once a 'perfect machine,' is running dry," according to a WSJ profile, "struggling as the energy business shifts and investors look elsewhere for profits."
  • XOM's oil and gas output of ~4M bbl/day is no higher today than it was after its merger with Mobil in 1999, and even if it succeeds in doubling last year’s $15B in earnings by 2025, the company still would be making far less than in 2008, when it set a record for annual profits by a U.S. corporation at $45B.
  • CEO Darren Woods has taken several steps to shake up the company's insularity and dump less profitable areas, and WSJ says XOM is weighing reducing its exposure to Canada, where it has operated for 130 years, and is developing a more robust trading operation.
  • But the centerpiece of Woods’s turnaround effort is a major increase in spending - next year, XOM is set to spend $28B, 45% more than in 2016 - a plan that so far has been unpopular with investors: The price of crude has surged ~60% in the past year but XOM shares are up less than 5%.
  • "Most investors like Exxon, but they like other companies better,” says Mark Stoeckle of Adams Funds. “The market is not willing to reward Exxon for spending today in hopes that it will bring good returns tomorrow.”

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