# Exxon Mgmt faces Shareholder Rebellion



## woodgeek (Jun 3, 2017)

Phew, what an exciting week in climate news!

Background:
As has been discussed in some other threads, the oil majors are in a bind.  Many analyses of future markets suggest a peak and slow decline in future global oil demand, which is rather different than the forever growing demand they have been projecting for decades.  As in their shiny 'World Energy Outlook' reports.

It seems plausible this will, in the long term, affect their profits, investment strategy, dividends and perhaps viability.

And the SEC rules require, that if they perceive such a threat to their business model, they need to share the results of such an analysis with shareholders.

Several oil majors like Total and Shell have made public statements to the effect that they expect global oil demand to peak in the next _five or ten years_, due to increases in usage efficiency and the rise of affordable electric vehicles, EVs.  Much of the majors projected future growth was in gasoline autos in the developing world. Obviously, climate policies around the world will promote and speed this tech disruption of the oil economy.

And then there's Exxon.

Exxon mgmt has flatly denied that there is any risk of demand disruption in the forseeable future, for any reason (efficiency, EVs or climate concerns).  Last year Exxon CEO Rex Tillerson asserted that 'There is no alternative to oil'.  So oil demand is secure.  Period.  

In a CYA move, they put the decision to do a 'peak demand' analysis to the shareholders at their annual meeting, in Dallas.  At last years meeting (and previously), the motion was voted down...no analysis.

Of course, it seems possible that **someone** in the company would have performed an analysis that many of Exxon's peers have performed, probably years ago.  If the results were unfavorable (and deemed possible) then not sharing it with shareholders is a legal violation.  This is the basis of a lawsuit by NY AG Schneiderman, which seeks to discover if/when Exxon performed this analysis already....discussed ad nauseum in a different thread.

The NEWS:
Exxon had its shareholder meeting this past Wednesday, and the resolution was passed: to perform a peak demand scenario analysis, and to report it publicly in 2018, and update it annually thereafter.
https://www.bloomberg.com/gadfly/articles/2017-06-01/funds-fire-up-real-climate-change

The text of the resolution is here:
https://www.osc.state.ny.us/press/docs/exxon-mobil-corporation-shareholder-proposal.pdf

WaPo is reporting that the crowd with torches and pitchforks included three big investment firms, BlackRock, Vanguard and StateStreet.  
https://www.washingtonpost.com/news...n-over-climate-change/?utm_term=.6656b5e190a4

Either those three firms, managing $12 _trillion_ together have been taken over by a bunch of dirty hippies OR perhaps they are concerned that a coming, um, Carbon Bubble, might put a trillion or two dollars of their customers money at risk.

I'm voting hippies myself.  

And then on Thursday some other chit happened.


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## begreen (Jun 3, 2017)

ad nauseum https://www.hearth.com/talk/threads/exxonmobil-rico-case-a-slam-dunk.148775


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## woodgeek (Sep 17, 2017)

A nice update with a business/financial focus of the current situation is here:

https://seekingalpha.com/article/4106436-exxon-mobil-overly-optimistic-oil-market

The article is well-referenced from a variety of sources, but was clearly inspired by a recent analysis for CarbonTracker.org. 

The author makes a specific point that Exxon is worse positioned than its peers to weather a climate reg OR lower for longer oil price environment.  How badly positioned....the CarbonTracker analysis says* 40-50%* of capex (capital expenditure) is going to projects that are deemed uneconomic in a 2°C scenario (due to sub-$80/barrel oil prices forever).  Point of reference...Exxon wrote down 20% of their assets last year in response to demands from the SEC.

The CarbonTracker report is here:
http://2degreeseparation.com/

It actually lists the oil and gas companies according to their Carbon Risk exposure.  Exxon is near the top, Saudi Aramco is at the bottom.  Interestingly, the US frackers are nearer the bottom than the oil majors.

(I have been of the mind that cost reductions by the frackers are overstated, and that the reserve sizes are not sufficient to maintain current output more than a few more years.  This analysis assumes otherwise...I may have to adjust my thinking.)

AS for this thread.....it implies that the 2018 report that shareholders forced XOM to write....might not be a pretty thing. More important than a negative hypothetical outcome (that they are free to downtalk the possibility of), will be the obvious negative compare and contrast with the other oil majors.  XOM's competition has been analyzing and reporting these 'stranded asset' risks for years now, and (if the new CT analysis is correct) acting on it for awhile, leaving XOM in an uncompetitive (and hidden from shareholders) position.

Even if you were an 'Oil Bull' and wanted to stay invested in the sector...would you want to be overweight in XOM?


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## jebatty (Sep 18, 2017)

... and that's not the only threat that Big Oil faces: 
*Sachs: Big Oil will have to pay up, like Big Tobacco*
http://www.cnn.com/2017/09/15/opinions/climate-justice-is-coming-sachs/index.html


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## vinny11950 (Sep 22, 2017)

Always look for the big, institutional investors to be ahead of the trends before the general public becomes aware of the issues.  Usually they sell their positions to the unsuspecting average investors (general market traders) long before the you-know-what hits the fan.

Mortgage lenders and insurance companies are also modeling these risks and taking appropriate action.


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## vinny11950 (Oct 6, 2017)

Here is a good Vox article on carbon subsidies.  This much transfer of wealth to carbon producers helps to guarantee oil producers are profitable.  A lot of the costs of production are transferred from the private sector to the public sector, yet renewable energy is always made to apologize for the subsidies it gets. 

https://www.vox.com/energy-and-environment/2017/10/6/16428458/us-energy-subsidies


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## WoodyIsGoody (Oct 7, 2017)

Good article (and good summary).


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## begreen (Dec 14, 2017)

Shareholder pressure appears to be working
http://money.cnn.com/2017/12/12/investing/exxon-climate-change-risk/index.html


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## begreen (Apr 10, 2018)

And now it appears that Shell also knew according to internal documents from the 1980s.
https://insideclimatenews.org/news/...arming-company-documents-netherlands-lawsuits


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## ihookem (May 27, 2018)

.... And one year later we are using more oil than ever and shortage on the way. Here is the best thing we can do if we want  solar and wind to compete, or even come close to competing. Solar and Wind companies need to find a way to compete or die trying. If ya give them a subsidy , they will blow the money cause they see it as free. I would be for solar if it was worth it. I am  one of these scum bags on Hearth. I invest in what makes the most sense. I have British Petroleum, Exxon Mobil, Oxydental  and an energy ETF. I make money on oil stocks and they are good to me. If I could make money on electric cars I 'd invest, and also solar.  I can't invest in Tesla  , there is a several dollar per share  loss per share.  I think small  power plants are needed in cities so we dont loose power 100 miles from the turbine to the city. We need  wait for it, , , , yes , we need to burn garbage in a gasifier  to make electricity. The only other thing that makes sense is burning methane coming from the land fills.  If we ever get off oil it will be something like this, not wind power. I have windmills all around my house. Much of the power goes back in the ground cause what is not needed is waste. Many dont know this when we drive by a windmill farm and the blades are spinning. We think it is going to good use but much is wasted.


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