October 27, 2016 Read More →

ExxonMobil: ‘A Much Smaller Company in the Future’

Alexander C. Kaufman for the Huffington Post:

Exxon Mobil Corp. may be facing “irreversible decline” as the oil giant fails to cope with low oil prices and mounting debt, a report released Wednesday found.

The Texas-based company, scheduled to report its third-quarter earnings on Friday, has suffered a 45 percent drop in revenue over the past five years as it bet big on drilling in oil sands, the Arctic and deep-sea sites decisions that proved expensive, environmentally risky and politically controversial.

Combined with a two-year plunge in oil prices, ballooning long-term debt to cover dividend payments to shareholders and an evaporating pool of cash, Exxon Mobil’s finances show “signs of significant deterioration,” according to new research from the Institute for Energy Economics and Financial Analysis, a nonprofit based in Cleveland.

“Investors right now are getting less cash from Exxon than they have historically, and are likely to get less cash in the future,” Tom Sanzillo, director of finance at the IEEFA, told The Huffington Post on Wednesday. “This is going to be a much smaller company in the future, and the oil industry is going to be much smaller in the future.”

In April, Exxon Mobil was stripped of Standard & Poor’s top credit rating for the first time since the 1930s. The rating agency said it worried Exxon took on billions in debt to fund new drilling projects at a time when oil prices were high. Now, with the price of crude below $50 per barrel, that debt looks risky. Despite S&P specifically citing such payments in its downgrade, Exxon Mobil actually increased its dividend by 2 cents the next day.

Full article: Exxon Mobil Could Be On The Brink Of ‘Irreversible Decline’

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