New Exxon chief enters the market cautiously
Darren Woods, the new CEO of Exxon Mobil, is a veteran of the more cautious refining side of the oil business who is likely to focus relentlessly on controlling costs.
Woods may take a more hesitant approach to deal-making than his predecessor, Rex Tillerson, who hailed from the more swashbuckling exploration side and famously did business with Russian President Vladimir Putin.
It's unclear whether Woods will be any more successful than Tillerson in achieving peace with environmental critics. The early signals are mixed.
Woods was little known outside the company even after emerging as Tillerson's heir apparent. Two months after taking over, Woods is making his first public rounds, meeting with investors last week and speaking Monday at a major energy conference in Houston.
Woods, 52, joined Exxon in 1992 and has spent most of his career in chemicals and refining, the so-called downstream part of the business.
"There is a different psychology in downstream than there is in oil and gas wildcatting," said Cowen analyst Sam Margolin. "Downstream is very much about managing costs and trying to get the most out of the least effort."
Tillerson left Woods plenty to work on. Exxon Mobil Corp earned a record US$45.2 billion in 2008 and nearly matched that in 2012. With oil prices slumping, profit has tumbled, falling to US$7.8 billion last year - the company's smallest gain since 1998.
Along the way, Exxon lost its coveted AAA credit rating. Lower oil prices forced it to write down assets. At Exxon's size, replacing oil reserves is always challenging.
Woods also faces pressure from shareholders to protect the dividend and revive share buybacks. At last week's investor event in New York, he vowed to grow dividends and buy back stock when possible.
Woods detailed a growth plan that relies heavily on drilling in the Permian Basin of Texas and New Mexico and the Bakken shale formation in North Dakota, balancing that with big, long-term projects around the world.
After spending US$19 billion in 2016, Exxon plans to invest US$22 billion in the business this year and raise that to an average of US$25 billion a year from 2018 through 2020. Still, those budgets look disciplined in comparison to the freewheeling years of 2010 through 2015, when spending topped US$30 billion every year.
Woods spoke to investors only briefly about the company's Russian operations, which became a controversy for Tillerson during his cabinet-confirmation process. Woods indicated that Exxon is confident about the prospects for its huge Sakhalin project on Russia's eastern coast. Other work, which was stopped by sanctions imposed after Russia annexed Crimea, will be re-examined if sanctions are lifted, he said.
It's difficult to judge the style of a new CEO right away. Most grow into the role over time. In New York, Woods was careful and scripted. He looked down as he read a long speech, remembering occasionally to look up at the audience.
Wolfe Research analyst Paul Sankey contrasted Woods' "owlish" demeanour with the "imperial and intimidating" force of Lee Raymond, the long-time CEO who preceded Tillerson.
Raymond could be gruff and abrasive. He would seem dismissive of analysts, reporters or shareholders who asked questions that he considered ill-informed or combative. In contrast, Woods answered a range of questions in a soothing, matter-of-fact tone, which was easier because none of the questioners were particularly critical or sceptical of the company's actions.
That won't be true in May, when Woods presides over the annual shareholder meeting that is often notable for activists who denounce Exxon for, as they see it, obstructing action against climate change. The activists say they're still trying to figure out the new CEO.
"He is an Exxon Mobil lifer who flew under the radar, but he seems to be following in the footsteps of Rex Tillerson," said Kathy Mulvey, an official at the Union of Concerned Scientists. "His line on climate change seems pretty similar."
In a blog last month, Woods acknowledged that climate change poses risks and that business, governments and consumers should address them, and he has repeated Exxon's support for a carbon tax. Then in an interview with Forbes, he said that fossil fuels bring great benefits and are needed to raise living standards for poor people around the world.
Mulvey, whose group is aiding state investigations into Exxon, said Woods is perpetuating a false choice - we can either continue burning fossil fuels or leave many people in poverty. "That's not true if we develop alternatives," she said.
State officials in New York and Massachusetts are investigating whether Exxon hid its knowledge of climate change for financial gain. The company denies the accusations, which it says are politically motivated, and it has fought back aggressively in the courts.
Environmentalists credit the company for adding a climate scientist to its board in January - activist shareholders had pushed for the move. That was offset, however, when a human-rights scholar resigned last month from an Exxon advisory panel - she was angered by Exxon's tactics against critics after Woods became CEO.