CEO Darren Woods of Exxon failing to deliver on his promise of reviving the company’s earnings

on Jan 28, 2020
Updated: Mar 11, 2020
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  • CEO Darren Woods of Exxon failing to deliver on his promise of reviving the company’s earnings.
  • At -13%, Exxon lags significantly behind its competitors in terms of shareholder returns.
  • Capital expenditures climbed to $35 billion for the company in 2019.
  • Woods had anticipated $25 billion in earnings for Exxon in 2019.
  • Exxon was seen trading at around a decade-low of $65 per share in the stock market on Monday .

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Exxon Mobil Corp’s CEO, Darren Woods, had previously expressed confidence in reviving the company’s earnings. As per the latest report, however, two of his best-known units, chemicals and refining, have stood in his way of delivering on his promise.

As per the analysts, weaker outlook on annual profit front in 2019 now requires the oil and gas company to reassess its previously announced bold spending plans if it wishes to strive through the next wave of falling oil prices. In order to cover the shareholder dividends, the experts added, Exxon will now have to resort to selling a few of its assets.

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Exxon Is The Second Largest Publicly Traded Oil Company

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In the league of publicly traded oil companies, Exxon is second only to Saudi Arabian Oil Co. Thanks to its size and management, Exxon previously held a reputation of a company with the largest potential to cope with the volatility in oil prices.

Following a consistent drop in the chemicals unit, however, the reputation is quickly slipping out of Exxon’s hands as it continues to post poor than expected profit on an annual basis. According to Refinitiv, Exxon’s competitors like Chevron Corp and British Petroleum have posted a 25% and 82% increase respectively in terms of shareholder returns. Exxon, on the other hand, lags significantly behind at -13%.

Woods took over Exxon as the CEO in 2017. As of 2016, Exxon’s capital expenditures were capped at $19 billion. Following Woods’ strategy to push the chemicals, refining, and oil output higher, directed at improving the annual earnings, however, capital expenditures touched a record $35 billion for the company in 2019.

Woods had Anticipated $25 Billion In Earnings For Exxon In 2019

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In March 2019, Woods had anticipated $25 billion in earnings for Exxon in 2019. The forecast for 2021, on the other hand, was at a much higher $31 billion. Before a collapse in the oil prices, Exxon had printed its annual earnings at $32.5 billion in 2014.

Further details of the company’s quarterly performance are to be revealed on Friday in its earnings report, ahead of which, Exxon refused to comment. The oil and gas company, however, cited a global oversupply of chemicals, U.S – China trade complications, and contracting margins in fuels for the poor performance. The refining unit, on the other hand, remained under pressure due to the equipment outages.

Exxon was seen trading at around $65 per share in the stock market on Monday that marks a level closer to that of a decade ago.

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