Posts filed under “Markets”

Exploration versus Share Buybacks ?

"Exxon Mobil spent more money in 2005 buying
back stock than it did on capital spending, exploration and research
and development."


I don’t believe in windfall profit taxes; No one subsidized my major integrated oil holdings when they did diddly for years other than pay a nice dividend.

Sheesh. When you read quotes like the above, you gotta think to yourself: "What the Hell were these idiots thinking?" They are just begging for Congress — and both sides of the aisle — to whack them, and good.

Goodbye oil subsidies, hello alternative energy tax cuts.

Lee Raymond has a good rap re: his stewardship of XOM — although it was kinda hard not to make money in the energy business the past few years.

Can we talk about having a tin ear for public sentiment and political realities . . .


Floyd Norris of the NYT reports:

in the wake of Exxon Mobil’s report last week that in 2005 it spent more money buying back stock than it did on capital spending, exploration and research and development.

If money is not invested in oil and alternative energies, then high oil prices are far more likely to continue as fewer resources become available. They are likely to continue in any case unless growth halts in India and China.

Exxon Mobil’s reluctance to invest may simply reflect its conviction that the current high oil prices cannot last, that they are sure to come down soon. If that happens, those who invest now may look foolish as projects that take years to complete become uneconomical before they begin producing.

But it may also reflect the way its chief executive’s compensation assures that he will become very wealthy so long as the company does not collapse. Rising share prices are nice, but not necessary.

Exxon Mobil has not yet released total 2005 compensation figures for Mr. Raymond, who stepped down as Exxon’s chief executive at the end of the year. But we know he earned $38.1 million in 2004, with 550,000 shares of stock accounting for 74 percent of that.

Instead of windfall profit taxes, expect to see some sort of tax penalty for when share buybacks or dividends exceeds  exploration and R&D.


Disclosure: Long BP, COP  (and for long enough that the ownership came via Amoco (BP took them over) and Phillips (Conoco took them over) 


Perhaps Exxon Really Needs Stock Options
Published: February 10, 2006

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