As Exxon Mobil Corp. What sets it apart from the rest is its ability to invest counter-cyclically – to “be greedy only when others are fearful,” in the words of Warren Buffett.
Under Lee Raymond, who combined Exxon and Mobil 25 years ago in the industry’s largest merger, this was the company’s sacred principle. But that doctrine lost its luster under Rex Tillerson, who took over from Raymond in 2006 and led Exxon for a decade. Tillerson was greedy while everyone else was greedy; under the executive who became Donald Trump’s first secretary of state, returns on invested capital plummeted, net debt rose and bought rivals at the height of the cycle.
As a result, Exxon was too financially weak to invest countercyclically by the time current CEO Darren Woods took over in 2017. When oil and natural gas prices plummeted during the pandemic, Exxon had to pull out, along with everyone else in the industry, because its balance sheet was overextended. Exxon was no longer different: it was just another giant oil company.
It took Woods almost a decade to restore its former grandeur. But the job is almost done now. Exxon announced this on Wednesday at its new headquarters near Houston its strategy for the next five yearsIt reported it would continue to spend more on oil and gas projects even if rivals pull out. “Compared to our competitors, we’re in a different league,” Woods said. He’s not wrong.
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