ExxonMobil Corp. investors have been a little antsy about all of the capital investments over the past five years with seemingly little to show for it, CEO Rex Tillerson said last week. He acknowledged that a lot of money has been invested in projects yet to bear fruit and said the company’s forecast on U.S. natural gas prices didn’t hit the mark.

Capital expenditures (capex) have been at “extraordinarily high levels” since 2008, including the $40 billion takeover of XTO Energy Inc., which gave ExxonMobil ownership of the North American natural gas franchise. It’s also been spending massive amounts on various unconventional projects, including the Kearl oilsands development in Western Canada, as well as global liquefied natural gas (LNG) and a renewed focus on the deepwater Gulf of Mexico (GOM).

At the same time, ExxonMobil was pressured by low, sustained natural gas prices “for longer than we expected,” Tillerson acknowledged to shareholders at the annual meeting in Dallas. “We have had pent up capacity, and the ability of smaller producers to keep more capacity coming online longer than we thought industry could sustain…Industry missed slightly on capacity.” On its near-term outlook, ExxonMobil was off “maybe a year or two.”

However, XTO and other gas projects were “undertaken for a 30- to 40-year view. We’re not too concerned about that. The market has looked at the huge capex, and the market is now waiting to see how it’s going to turn out. Throughout all of that though, we had our second highest earnings ever last year…We had industry-leading safety results…And we’re still investing…The market will recognize that ExxonMobil didn’t go anywhere. We’re right where we’ve always been.

“We make the same pitch today. We meet with the buy-side analysts, those who own the stock, and make sure they understand where we’re going…We’ve been investing heavily, and we’ve got to deliver on the massive investment” at Kearl, in the Russia exploration endeavor, in the LNG projects. “We’ve got to deliver.”

The operator also is making a big splash back into the GOM. Capex in the U.S. offshore began ramping up last year after languishing for close to five years on high costs and few discoveries. The reason to reenter the GOM now is the same reason that ExxonMobil found to pour money into the U.S. onshore: breakthrough technology.

ExxonMobil since 2008 has directed a lot of its capex to natural gas, and it will continue to do so to prepare for what it still sees as a 65% growth in gas use by 2040. However, the deepwater is becoming a bigger draw because of technology’s ability to view potential prospects. Seismic imaging has enabled the operator’s geologists and engineers to more thoroughly assess subsea deposits that had escaped their views in the deepest trenches of the deepwater, Tillerson said.

“We’ve reentered in a very active way the Gulf of Mexico,” and expects to see “the most significant gains from global deepwater…” The company also is counting on “important growth” from global oilsands and tight oil resources. Global natural gas resources, meanwhile, will continue to increase with gas demand “met increasingly by unconventional supplies.”

Last year ExxonMobil spent a near record $40 billion on capital projects, with a big chunk directed to the GOM (see NGI, Feb. 4). This year is no different. The deepwater Phobos-1 prospect, south of ExxonMobil’s touted Hadrian prospects (one gas, one oil) was spud in April (see NGI, April 29). In May ExxonMobil and Statoil ASA also pulled the trigger on the Julia field in the Walker Ridge blocks (see NGI, May 13).

At the annual meeting Tillerson sparred a bit with shareholder activists who claim that the company’s management team cares more about profits than people. Some of those speaking said ExxonMobil should do more as the world’s largest energy company to move the planet from fossil fuels to renewable fuel sources.

Tillerson shot back that there is no quick fix to replace fossil fuels, and those who would suffer most are already suffering. Sharply reducing oil and gas use simply to reduce greenhouse gas emissions would make it much more difficult to lift the estimated 2 billion in poverty to a decent standard of living, he said.

“What good is it to save the planet if humanity suffers?” Tillerson asked and the audience applauded.

In the proxy voting, most shareholders answered by siding with Tillerson and the board on every resolution. Rejected for the fourth year in a row by a solid majority was a proposal to adopt “a more visible commitment” to measure the risks of drilling for unconventional gas. The resolution was defeated by a margin of about 30-70%.

Chevron Corp., which also held its annual meeting last week, also had the full support from its investors with all of the proxy measures endorsed by the board approved and all those opposed defeated, including one that mirrored the shale extraction measure at ExxonMobil. As at ExxonMobil, it was the fourth year in a row for the shale measure to be defeated, with 69% of Chevron’s shareholders voting it down. In 2012, ExxonMobil’s shareholders turned down the measure by a vote of 70.4%, while at Chevron about 73% had voted with management (see NGI, June 4, 2012).

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