Objective comments appreciated.
24 replies (most recent on top)
S&P Global (NYSE: SPGI) has cut the credit rating of oil giant ExxonMobil (NYSE: XOM) from AA+ to AA. The credit rating agency also maintained its negative outlook on Exxon's credit, with it warning of another downgrade if the company doesn't address its financial issues in the next 12-24 months. Exxon lost its long-held AAA rating in 2016 due to lower oil prices. S&P downgraded Exxon's credit because of its higher leverage metrics, weaker 2020 outlook, and large deficit between cash flow and outflows to fund its dividend...
https://www.nasdaq.com/articles/exxon-mobils-credit-rating-downgraded-a-notch-by-sp-2020-03-16
@2udy+16znsqyA - that sounds just like the XOM “leadership” that I’ve experienced. Step 1 - wait to see what CVX and RDS do next. Step 2 - waste a ton of money with a shotgun approach, trying to catch up and flood the market (relying XOM’s size and arrogance - “of course customers will prefer us”). Step 3 - conduct a post-mortem study to see why the strategy didn’t work. Step 4 - blame R&D Product Development for not running a program that they weren’t funded for in the first place.
A few years back I discovered that ExxonMobil has no strategy. We were looking to get permission to get in some EV related activities. Went all the way to Dallas to find out there was no guidance, no direction. Presidents aren't allowed to decide, and get slapped on the wrist if they do, but Dallas has nothing to offer either. Granted, tee Jay has been slowly concentrating power , but it feels like too little too late.
That’s a joke
The dividend is the real issue. Senior execs make more from the dividends on their RSUs than their base salary. Willing to bankrupt the future to line their own pockets. The absurd payout ratio (dividend not covered by free cash flow) is not a shareholder friendly policy - it is bankrupting the future of our company and that’s why our stock continues to go down. No sign that we are positioning the company to survive a low price future....we will see who is the real Enron of American IOCs...(who Doesn’t do write downs? Who pays dividends they can’t afford? Who makes false financial projections / targets?)
Employees are all suffering because the board of directors just simply refuse to take a “pay cut” through the slashing of the dividend. At every employee forum it gets raised. And the textbook answer is simply they need to keep paying the people who rely on these pay outs. Total bull.
Who wants me back as CEO?
“Superb leader”. L M A O
https://www.bloomberg.com/news/articles/2019-06-05/ex-exxon-ceo-says-he-probably-paid-too-much-for-xto-energy?utm_source=url_link
Eyelashes!
@1xaf+16znsqyA
Your comment is probably one of the more ignorant comments I’ve seen here. A poster child for what the company is becoming. You will probably be back here in a few months spewing negativity about how shocked you are. Maybe if you had sense you would know it is not the people here bankrupting the company but the poor unethical leadership along with bad decisions and investments. I’m sure your another manager in the inbreeding club here to ensure your tracks stay clean but every dog has his day. Best of luck in next round!
Ok, for all of the cost accountants reading. Here's how I came up with the original 20bbl cost:
Source: https://www.rystadenergy.com/
BBL cost breakdown:
Taxes: 26%
Capital spending 33%
Production costs 25%
Overhead / Admin 15%
Plenty to optimize on capex and overhead. Icing on the cake = better tech on prod
Easy as that. LMFAO
But it bubbles right out the ground!
Don't you know that's the secret of this great company?
You dig a bit on land you lease from other people - and it just pops right out.
So simple, yeah.
EM doesn’t make ANY money $30 bbl. Fact from Q2 earnings. There is no “fortune” to be made. Unconventional is high cost - save your $20
Bbl lies for your EADS not this message board where we are trying to be honest for the first time in our lives
I say there is a fortune to be made if EM manages cost better (unnecessary AFEs, etc).
As long as crude oil is trading on NYMEX, there is a fortune to be made.
Conventional, no problem. At $10bbl cost, plenty of cash to be made there.
Unconventional, challenges. Cost must go down. The $100s prices might not return. But, as long as it is traded, there is money to be made. $20bbl unconventional will put XOM in a very good place
Cost is the key (question every AFE!)
EM doesn’t have a “Business Strategy”. Paying a reliable and growing dividend that you can’t afford (haven’t been able to since 2015), is NOT a business plan. The way we are headed, absent an immediate dividend cut, is a massively cut workforce, gutted project pipeline, and destroyed balance sheet. All of these financial targets are a joke, haven’t delivered on a single one. Looks just like GE when Immelt stepped down and the stock and dividend collapsed. “Success Theater” is a dangerous culture indeed...
Oil price needed for EM to break even with current cost structure and dividend is $60 (public info). It won't be that this year or next. The only other option is reducing dividend and reducing costs even more....I am starting to think XOM will not recover and will look at lot differently in the near future. It should have started shifting strategies years ago.
https://www.educationworld.in/ew-india-higher-education-rankings-2020-21-top-300-universities/
Repair a balance that has been bad for years. Ain’t turning around that fast. On top, Xom is not involved in green energy much
In case all the office people on here have forgotten, EM still makes and sells products. There may be some dramatic decisions in the coming years (think Dividend Cuts or a even COP/P66 style breakup) but the individual business units will survive in one form or another. I’d be less confident about the uncompetitive service functions, though.
It depends on managements decisions and the price environment the coming years. The company is heading to uncomfortable debt levels, so if prices stay low expect major changes to our cost structure and shareholder distribution policies. I don’t get the sense most employees understand how deep the financial issues are after 10 years of very poor investments (unconventional gas and heavy oil). It will take a generation to get out of the current assets, and if O&G experiences low prices for quite awhile (think 80s to late 90s, but even worse if there an energy transition) then we may not have generate the money needed to rebuild from our operations - and since we can’t raise much more debt - the we would be forced to do major divestments (potentially entire business units). We really bet the farm the last couple of years With all our spending and there doesn’t seem anything to show for it.
Been living on borrowed dough to pay dividends.. what do you think?
Serious trouble. Go read the 2q earnings documents.
- Zero dollars made from operating.
- Negative free cash flows.
- All cash on hand represents remaining credit card limit.
- Biggest project in South America is in trouble...typical developing world politics.
- Not doing any proactive maint. at sites
- Needed to stop 401k match for employees as a quick lever for cash aka there are no ideas on the near term to make any money
Anyways yes XOM is in a very tight spot. As a shareholder you should be concerned. As an American you should be concerned.
And this isn’t a potential problem...this is an ongoing problem. Without a good rise in oil prices this company will be changed forever. The days of easily raising money for oil and gas projects may be behind us...no money = tough life.