Feb 1, 2021 - Energy & Environment

The intense glare on Exxon

Illustration of cracking oil barrel with fists and megaphone.

Illustration: Eniola Odetunde/Axios

There's a lot of drama swirling around Exxon these days, which means their fourth quarter earnings report Tuesday will be even more closely watched than usual.

Driving the news: On Sunday, the Wall Street Journal and then Reuters reported that the CEOs of Exxon and Chevron last year discussed a blockbuster merger between companies whose combined market cap is currently over $350 billion.

  • Both outlets report that the pandemic's heavy toll on the sector spurred the talks. Both report they're no longer active.
  • The execs "envisioned achieving synergies through massive cost cuts to help weather the downturn in energy markets," Reuters notes.
  • The WSJ, citing people familiar with the talks, reports that they "could come back in the future."
  • Exxon declined comment, while a Chevron spokesman told Axios: "We do not comment on market rumors or speculation."

Meanwhile, the forces on Exxon to do more on global warming are expected to grow further.

  • A separate Reuters report states: "More than 135 investors managing more than $2 trillion are forming a coalition to push Exxon Mobil Corp into making sweeping changes including refreshing its board and focusing more on energy transition."
  • A source pointed me to this page that briefly describes plans by the shareholder advocacy group As You Sow "to help form a coalition of stakeholders to weigh in on the actual (and rumored) shareholder activism at ExxonMobil to promote capital disciple and address climate change."
  • It repeats the $2 trillion figure. As You Sow did not provide comment Sunday.

Catch up fast: The brewing effort comes as Exxon is already under pressure from activist investors to shake up its board — including via the addition of clean energy experts — and to do more to control spending.

The big picture: The storylines are indicative of huge and overlapping forces acting on the oil industry right now, and Exxon in particular.

  • The pandemic has sapped demand and hit prices, though there's been substantial recovery from the depths of the crisis.
  • And, pressure on Big Oil from activists and shareholders — and now the Biden administration — to do more on climate change is mounting.

Between the lines: Those two forces are especially relevant right now for Exxon. Its financial performance was already uneven before the pandemic, and it has been less aggressive on climate than its European-based peers.

What we're watching: How much (if anything) Exxon is willing to say tomorrow about any of this.

  • Last week Exxon said that in the "coming weeks" it would update shareholders on plans to create "sustainable value" and commercialize emissions-cutting tech.

The bottom line: The Energy Information Administration "estimates that the world consumed 92.2 million barrels per day (b/d) of petroleum and other liquid fuels in 2020, a 9% decline from the previous year and the largest decline in EIA’s series that dates back to 1980," they said in a summary.

Reproduced from EIA; Chart: Axios Visuals
Reproduced from EIA; Chart: Axios Visuals
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