For Exxon, the shareholder is and will remain sacred

That 2022 went down in the history books as a mediocre stock market year for almost all sectors? That must have shrugged their shoulders in the ExxonMobil boardroom. Ahead of the fourth-quarter results it will present on Tuesday, the American oil company announced that it can add a record profit of about $ 58 billion over the past year. Shareholders also have little reason to complain. The stock price rose by 80 percent in 2022. This made it the fourth best performing stock in the US stock market indicator S&P 500.

There are complaints on the other side of the ocean. Exxon is under a magnifying glass because of opposition to an extra profit tax that the European Commission wants to levy, precisely because of those extraordinarily high profits. The proceeds should compensate families and companies with extremely high energy costs. Exxon calls the double taxation “undermining investor confidence” and is fighting the case in court. The Texas company was also under fire early this year over research showing the oil company has been undermining climate science since the late 1970s. Exxon would have known in detail that fossil fuels lead to global warming – although the company itself denies that it knew this.

But Exxon is a company that cares little about its public image. “It is the prototype old-fashioned, hardcore oil company,” says Cyril Widdershoven, energy analyst at consultancy Strategy International. “Their attitude is: I was founded to produce oil and gas, I do, and I will continue to do so as long as there is a demand for it. No matter what people say.” According to him, the company has not yet made the ‘cognitive blow’ like competitors Shell, BP and Equinor, which – albeit under pressure from governments, shareholders and media – are slowly focusing on cleaner energy sources. Widdershoven: “Exxon is not that far yet. But that is not necessary in America, because the government or the state in question does not enforce it. There people say: why is the price of petrol so high? Produce more.”

What ExxonMobil does care about: its shareholders. They also benefit from Exxon buying back its own shares (because less available shares means more profit per share, which often gives the price an extra boost). And, in addition to the impressive price increase in 2022, they received a dividend payment of $ 3.55 per share, which was in line with previous years. It drew criticism from President Biden, just before the midterm elections a tweet pointed out that passing on profits to shareholders “is not the same as lowering prices for American households.” Biden responded to what may be called a typical Exxon statement from CEO Darren Woods. “There has been discussion in the US about whether our industry should return a portion of its profits directly to the American people. That is exactly what we do with our quarterly dividend.”

But what does this unconditionally choose the shareholder for the energy transition mean? Exxon announced in December that it will invest approximately $17 billion over the next five years in “lower carbon initiatives₂emissions”, with an emphasis on CO capture and storage₂, biofuels and hydrogen. “You can certainly say that Exxon is not ahead of the pack,” says Aad Correljé, energy expert at TU Delft. “Although there are also people who think that companies such as Exxon and Shell should be taken seriously in the energy transition. Even if they invest only a small part of their investments in green energy, these are still projects of a size that many smaller parties cannot match.”