Exxon Mobil heads for worst annual performance since 1981

Bloomberg

Things haven’t been this bad for the world’s biggest oil stock since Ronald Reagan became president. But brace yourself, 2019 may not be much better.
Exxon Mobil Corp, down 22 percent for the year 2018, is headed for worst annual performance since 1981, when US was in recession and a 20-year crude glut was just beginning. The decline comes as Exxon pursues one of the largest restructurings in its modern history, a seven-year, $200 billion push for oil in South America and natural gas in Mozambique and Papua New Guinea.
Exxon’s problems largely stem from flag-planting deals made at the peak of commodity prices over the past decade. Exxon spent $35 billion on US shale gas producer XTO Energy Inc in 2010 when the real money was to be found in shale oil. It invested $16 billion in Canadian oil sands since 2009, only to de-book much of the reserves. Meanwhile, former CEO Rex Tillerson’s 2013 exploration pact signed with Russia was caught behind a wall of sanctions and later abandoned.
With one of corporate America’s strongest balance sheets, the concern isn’t whether Exxon can fund the rebuild. The question from investors: What can you do for me in the meantime? The awkward answer may be “not much,” at a time when oil prices are plummeting.
As rivals restrain growth and buy back stock, Exxon is the one “with the bull’s-eye on their back,” said Mark Stoeckle, who manages $2.6 billion including Exxon shares at Adams Express Co.
That may be more difficult with Venezuela making aggressive naval maneuvers targeting the company’s ships in Guyana, where Exxon is pursuing one of its much-needed sources of new oil production.
It’s a double-edged sword for the architect of the restructuring, Chief Executive Officer Darren Woods.
On one side, it validates his strategy to build lower-cost oil and gas assets abroad that can withstand the uncertainties that come with the shale boom, as well as the transition to cleaner energy sources. On the other, it puts him at odds with investors who, seeing the uncertainty, want companies to return as much profit to shareholders now as possible.