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 Wednesday.

Capital expenditures (capex) have been at “extraordinarily high levels” since 2008. Investments have included the $40 billion takeover of XTO Energy Inc., which gave it ownership of the North American natural gas franchise. It’s also been spending massive amounts on various unconventional oil and gas projects, including the Kearl oilsands development in Western Canada, global liquefied natural gas (LNG) developments 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, he said. Capex in the U.S. offshore began ramping up last year after languishing for close to five years because of 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,” he said. ExxonMobil sees “the most significant gains from global deepwater…” It also sees “important growth” from global oilsands and tight oil resources.” Global natural gas resources also are expected to increase, with gas demand “expected to be 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 Daily GPI, Feb. 4). Included was spending for the deepwater Phobos-1 prospect, spud in April (see Daily GPI, April 26). Phobos is south of ExxonMobil’s highly touted Hadrian prospects (one gas, one oil) now under development (see Daily GPI, Feb. 21; Nov. 2, 2012). ExxonMobil and Statoil ASA also pulled the trigger on the Julia field in the Walker Ridge blocks (see Daily GPI, May 9).

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%, similar to past votes (see Daily GPI, May 31, 2012).

A say-on-pay resolution regarding executives compensation was defeated, but by a smaller margin than a year ago. Tillerson’s annual compensation package is worth about $40 million, about 15% more than a year ago. Shareholders voted to approve the executive compensation by a 71% majority, versus 78% in 2012. By a 25-75% ratio, shareholders also turned back a repeat resolution that would explicitly ban discrimination against gays. The board has argued that ExxonMobil already bans discrimination of any kind and does not need to add language for one group.

There reportedly was only one protester carrying a sign outside at ExxonMobil’s annual meeting, but at its headquarters in San Ramon, CA, where Chevron Corp. held its annual meeting also on Wednesday, dozens carried signs and shouted for CEO John Watson and the board to resign.

Chevron, the second largest U.S.-based producer after ExxonMobil, is considering an exploration campaign in Alaska’s offshore, Watson said. “Most of the concerns are around costs.”

The proxy votes all went Chevron’s way. Shareholders mirrored ExxonMobil in also rejecting for the fourth time a proposal to disclose more information about shale gas production. About 31% supported the resolution, up from 27% in 2012.

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