Monday, May 10, 2021

Exxon plans to cut capital spending and board reshuffle

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ExxonMobil is considering further cuts in capital spending, changes in its board of directors and more investments in sustainable technologies after meeting with activist investors engaged in a proxy battle to reshape America’s oil supermajor.

The changes could be announced as early as next week, when the company releases its fourth quarter results, people familiar with the talks said.

The potential changes surfaced hours after the No.1 engine, which launched a proxy battle with the group in December, announced that it had formally appointed four nominee independent directors to Exxon’s board of directors.

A person familiar with the thought of the No.1 Engine said he would evaluate Exxon’s upcoming announcements, “but given the company’s long history, it’s hard to believe any change will last or be the start. of a new direction without real change to the board of directors, and there is no reason to allow this board to choose its own new members ”.

Exxon’s investment in sustainable technologies is likely to focus on biofuels and carbon capture and storage, two areas of development the company has pursued for years.

Exxon already had reduce planned capital expenditure for 2021 in November, when he also announced he could write off up to $ 20 billion in assets by revising his portfolio following the coronavirus-induced drop in oil prices last year.

Engine No 1, a newly created fund, said its proposed directors would help Exxon “chart a new course of value creation, including better long-term capital discipline, strategic planning and management incentives.” Among its nominees are a former wind energy executive and strategist at Google’s “moonshot factory”.

Earlier Wednesday, the Wall Street Journal reported that DE Shaw, another activist investor, may support the potential changes. DE Shaw declined to comment.

In a statement responding to the No.1 engine’s nominations on Wednesday, Exxon said it would “brief shareholders in the coming weeks. . . company performance and actions to combat climate change, including initiatives to commercialize essential technologies to reduce emissions and achieve societal objectives consistent with the Paris Agreement ”.

In its statement, Engine No. 1 said it had backing from the California State Teachers’ Retirement System, which it said holds $ 300 million in stock, for its nominees and the expected backing from other investors.

In December, the Church Commissioners for England, which manages the Church Of England investment fund, supported Engine No 1’s effort to “revitalize ExxonMobil”.

BlackRock, a major shareholder in Exxon, said this week it would start pushing companies to commit to goals reach net zero emissions by 2050, adding that he would consider getting rid of companies from his actively traded funds if they don’t.

Exxon announced new methane reduction targets last month and began releasing more comprehensive emissions data after increased pressure from shareholders.

The supermajor, who recently resumed his position above Chevron as the largest oil company in the United States by market capitalization, believes that a strategy of continuing to increase oil and gas production will eventually pay off at as demand for fuels increases and prices recover.

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