The recent overhaul of Exxon Mobil Corp‘s board of directors could shift billions of dollars in spending and strategy over several years, but any changes likely will take time, analysts and investors say.
A quarter of directors last month lost their seats to outsiders, and the March appointment of activist Jeff Ubben puts a third of the 12-member board in new and more cost-conscious hands. Investors who rejected Exxon’s view of a slow transition to lower-carbon fuels also want spending to be revisited, they said.
The Exxon boardroom contest shocked the energy industry and came after years of weak financial returns at the largest U.S. oil producer. Shares are up by about 50% this year as oil prices have recovered from pandemic lows.
Exxon’s board has been a prestige post for former CEOs, typically without any energy experience. Critics said the practice led Exxon to miss industry shifts and play catch-up at the expense of its balance sheet. Exxon bought in to natural gas near its peak, leading it to reduce the value of properties in the United States, Canada and Argentina by more than $19 billion last year, and paid up to arrive late to the shale oil party.
New directors with energy experience likely will address Exxon’s spending “far more vigorously,” said Anne Simpson, investment director at shareholder California Public Employees’ Retirement System.
Investors want a “fundamental rethink on strategy,” she said, with “the big measure” being its $16 billion-$19 billion annual project spending. The shakeup puts in play billions of dollars in shale, liquefied natural gas, refining and chemical projects.
Asked to comment on its new board and strategy, Exxon said only that it welcomed the new directors. “We look forward to working with them collectively to benefit all of our shareholders.”
STRATEGY REVIEW
Exxon needs “a real review of its strategy” in the wake of last month’s International Energy Agency report that challenges the need for new projects if the world wants to reach net-zero emissions by mid-century, said Bess Joffe, head of responsible investment at the Church Commissioners for England.
“The board is going to have to adapt” by giving investors more information on projects and environmental, social, and governance issues, or ESG, said David Larcker, director of the Corporate Governance Research Initiative at Stanford Graduate School of Business.
“It’s just not a company that can turn on a dime,” Larcker cautioned, adding that this year’s budget is set. It is midway into big outlays in Guyana, Brazil, U.S. shale and chemicals, analysts said.
Existing directors believe coupling oil and gas investment with a gradual shift to alternative energy is Exxon’s best path forward, long-time director Ursula Burns said at a virtual event hosted by the Federal Reserve Bank of Dallas last week.
Exxon failed to communicate the importance of that phase-in to investors, she said.
“It has not been well done by Exxon Mobil for sure and that’s one of the things that we have to work on is how do we tell the story,” said Burns, who has served in many roles including as former chairman and CEO of Xerox Corp.
She said Exxon did not pay attention early enough to public frustration over global warming and ESG. Investors, she said, “wanted a direct, in some cases, (and) in some ways, an impossible message to be given.” Burns added that “most of the board” thinks an energy transition is needed and that companies like Exxon need to be engaged in how that happens.
LOCKED-IN PROJECTS
Energy analysts do not see Exxon slashing its biggest ventures – offshore oil in Guyana and Brazil, or liquefied natural gas (LNG) in Asia and the United States – due to long-term commitments. It already has cut spending in the United States and could lower further, they said.
Guyana and Brazil’s offshore fields will be prioritized, said Ruaraidh Montgomery at researcher Welligence. LNG projects that supplant oil production also can help Exxon reduce emissions, said Tom Ellacott, at consultants Wood Mackenzie.
In the United States, Exxon has sharply cut drilling and reduced its shale output goals to 700,000 barrels per day from 1 million. But even there, Exxon’s multi-year projects “are hard to undo,” said Peter McNally, an analyst with investment research firm Third Bridge Group.
However, investors are not buying the poor-messaging explanation or belief that spending decisions cannot be revisited.
“This is a call to reassess fundamentals of supply and demand for energy in the long term, and to question whether Exxon’s current thinking around renewables gaining market share is too modest,” said Stewart Glickman, analyst at CFRA Research, in a client note.
(Reporting by Jennifer Hiller in Houston; Editing by Gary McWilliams and Matthew Lewis)
PORT ALBERNI, B.C. – RCMP say the body of a second person has been found inside their vehicle after a road washed away amid pouring rain on the west coast of Vancouver Island.
Police say two vehicles went into the Sarita River when Bamfield Road washed out on Saturday as an atmospheric river hammered southern B.C.
The body of the other driver was found Sunday.
More coming.
The Canadian Press. All rights reserved.
The B.C. Greens say Sonia Furstenau will be staying on as party leader, despite losing her seat in the legislature in Saturday’s provincial election.
The party says in a statement that its two newly elected MLAs, Jeremy Valeriote and Rob Botterell, support Furstenau’s leadership as they “navigate the prospect of having the balance of power in the legislature.”
Neither the NDP led by Premier David Eby nor the B.C. Conservatives led by John Rustad secured a majority in the election, with two recounts set to take place from Oct. 26 to 28.
Eby says in a news conference that while the election outcome is uncertain, it’s “very likely” that the NDP would need the support of others to pass legislation.
He says he reached out to Furstenau on election night to congratulate her on the Greens’ showing.
But he says the Green party has told the NDP they are “not ready yet” for a conversation about a minority government deal.
The Conservatives went from taking less than two per cent of the vote in 2020 to being elected or leading in 45 ridings, two short of a majority and only one behind the NDP.
This report by The Canadian Press was first published Oct. 22, 2024.
The Canadian Press. All rights reserved.
Toronto FC captain Jonathan Osorio is making a difference, 4,175 kilometres away from home.
The 32-year-old Canadian international midfielder, whose parents hail from Colombia, has been working with the Canadian Colombian Children’s Organization, a charity whose goal is to help disadvantaged youth in the South American country.
Osorio has worked behind the scenes, with no fanfare.
Until now, with his benevolence resulting in becoming Toronto FC’s nominee for the Audi Goals Drive Progress Impact Award, which honours an MLS player “who showed outstanding dedication to charitable efforts and serving the community” during the 2024 season.”
Other nominees include Vancouver Whitecaps midfielder Sebastian Berhalter and CF Montreal goalkeeper Jonathan Sirois.
The winner will be announced in late November.
The Canadian Colombian Children’s Organization (CCCO) is run entirely by volunteers like Monica Figueredo and Claudia Soler. Founded in 1991, it received charitable status in 2005.
The charity currently has four projects on the go: two in Medellin and one each in Armenia and Barranquilla.
They include a school, a home for young girls whose parents are addicted to drugs, after-school and weekend programs for children in a disadvantaged neighbourhood, and nutrition and education help for underprivileged youth.
The organization heard about Osorio and was put in contact with him via an intermediary, which led to a lunch meeting. Osorio did his due diligence and soon got back to the charity with his decision.
“It was something that I wanted to be a part of right away,” said Osorio, whose lone regret is that he didn’t get involved sooner.
“I’m fortunate now that to help more now that I could have back then,” he added. “The timing actually worked out for everybody. For the last three years I have donated to their cause and we’ve built a couple of (football) fields in different cities over there in the schools.”
His father visited one of the sites in Armenia close to his hometown.
“He said it was amazing, the kids, how grateful they are to be able to play on any pitch, really,” said Osorio. “But to be playing on a new pitch, they’re just so grateful and so humble.
“It really makes it worth it being part of this organization.”
The collaboration has also made Osorio take stock.
“We’re very fortunate here in Canada, I think, for the most part. Kids get to go to school and have a roof over their head and things like that. In Colombia, it’s not really the same case. My father and his family grew up in tough conditions, so giving back is like giving back to my father.”
Osorio’s help has been a godsend to the charity.
“We were so surprised with how willing he was,” said Soler.
The TFC skipper has helped pay for a football field in Armenia as well as an ambitious sports complex under construction in Barranquilla.
“It’s been great for them,” Figueredo said of the pitch in Armenia. “Because when they go to school, now they have a proper place to train.”
Osorio has also sent videos encouraging the kids to stay active — as well as shipping soccer balls and signed jerseys their way.
“They know more about Jonathan than the other players in Colombia,” Figueredo said. “That’s the funny part. Even though he’s far away, they’ve connected with him.”
“They feel that they have a future, that they can do more,” she added. “Seeing that was really, really great.”
The kids also followed Osorio through the 2022 World Cup and this summer’s Copa America.
Back home, Osorio has also attended the charity’s annual golf tournament, helping raise funds.
A Toronto native, he has long donated four tickets for every TFC home game to the Hospital for Sick Children.
Vancouver’s Berhalter was nominated for his involvement in the Whitecaps’ partnership with B.C. Children’s Hospital while Montreal’s Sirois was chosen for his work with the Montreal Impact Foundation.
—
Follow @NeilMDavidson on X platform, formerly known as Twitter
This report by The Canadian Press was first published Oct. 21, 2024.
Sentencing hearing continues for University of Waterloo gender studies class stabber
Toronto FC captain Jonathan Osorio making a difference off the pitch as well as on it
Inequality has broad impacts on the health of Montreal children, report finds
Liberal majority victory shifts political landscape in New Brunswick
Thomson Reuters acquires AI accounting assistant developer Materia
Ontario aiming to become energy superpower, Energy Minister Stephen Lecce says
Sonia Furstenau staying on as B.C. Greens leader in wake of indecisive election
Thousands of international students miss fall semester amid uncertainty, visa delays
