Natural gas, particularly unconventional resources, will continue to be a major focus for ExxonMobil in the coming decades, CEO Rex Tillerson told shareholders at the company's annual meeting in Dallas on Wednesday.

The company's diverse portfolio is concentrated in the Americas, where ExxonMobil has 57% of its resources. By resource base, conventional oil and gas still account for the majority at 41%, but unconventionals now account for 22% and continue to grow, said the CEO.

In an energy outlook report issued by the company, natural gas was projected to grow by about 60% between 2010 and 2040, a forecast that Tillerson said remains viable and a big reason for the company's decision to scoop up as much gas-rich unconventional acreage in North America as it has in the past few years.

"We have about 10 million unconventional acres," Tillerson said of ExxonMobil's North America holdings. When the oil major bought XTO Energy Inc. in 2010 it had about eight million unconventional acres. In addition, around 9% of its worldwide holdings are in liquefied natural gas -- an area likely to grow, he said.

The buying hasn't stopped, said Tillerson, but the company today is buying more liquids-rich land because of oil prices.

The company also is well positioned for more oil growth, with around 22% of its total resources in heavy oil/oilsands, most of it in Canada, and 6% of its total global resources in the deepwater.

"We are in strong operational and financial shape and well positioned to participate in unprecedented levels of investment in energy production in the coming decades," Tillerson said. The company's "competitive advantages" include a balanced portfolio and increased technology investments.

"These competitive advantages, combined with dedicated corporate citizenship, position the company well for the future," he said.

The CEO took some time to defend the Irving, TX-based major's efforts to reduce environmental impacts, noting that the company spent close to $5 billion last year on environmentally related expenditures. For the past five years the company has spent about $1.5 billion to improve energy efficiency and reduce greenhouse gas (GHG) emissions, he noted. Among other things ExxonMobil is on track to meet a 10-year goal set in 2002 to reduce energy use across facilities by 10%.

Most of the shareholders appeared to agree with the company's progress, rejecting all six shareholder initiatives on this year's proxy ballot, including a proposal to adopt goals to reduce total GHG emissions; for the board to be chaired by an independent member; for director nominees to be elected by a majority of shareholders; and for the company to explicitly prohibit discrimination based on sexual orientation and gender identity.

For the third year in a row shareholders also rejected a shareholder proposal to require the corporation to prepare a report on the risks associated with hydraulic fracturing (fracking).

The measure was rejected by 70.4% of those voting, despite impassioned statements by several audience members and a recommendation in favor of the proposal by influential proxy advisory firm Institutional Shareholder Services Inc. ExxonMobil had attempted to block the resolution earlier this year, a request denied by the Securities and Exchange Commission in March (see Daily GPI, April 5).

This year's results were roughly in line with the vote last year's ballot, which was defeated by 71.75% of those voting (see Daily GPI, May 27, 2011).

Chevron Corp. shareholders defeated a similar measure at their annual meeting on Wednesday, but fewer voted in favor than a year ago. At the Chevron annual meeting, 27% affirmed a shareholder resolution calling for more disclosure on fracking risks to operations and finances. Last year a similar measure had garnered 40% support.

The double-digit support last year moved ExxonMobil to launch a nationwide public relations campaign and Chevron to begin working more with industry groups to assure the public that drilling unconventional wells using fracking was safe.

Following the latest annual meetings, fracking detractors claimed that ExxonMobil and Chevron weren't doing enough to disclose risks associated with unconventional drilling.

"While other companies are becoming more transparent in how they are managing the risks associated with fracking, ExxonMobil and Chevron are industry laggards when it comes to disclosure," said As You Sow Senior Strategist Michael Passoff. The shareholder advocacy group had filed the ExxonMobil resolution on behalf of the Park Foundation. "It is time for these major oil and gas companies to take a hard look at how they are going to manage the inherent financial and environmental risks of their fracking practices."

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