Exxon defends dividend after posting first annual loss in many years

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Besieged by activist traders, lawmakers and climate-change campaigners, Exxon Mobil pledged to guard its huge dividend regardless of posting its first annual loss in at the very least 40 years.

Exxon Mobil Corp. pledged to safeguard its mammoth dividend after posting its first annual loss in at the very least 40 years, a present of defiance by an oil driller besieged by activist traders, lawmakers and climate-change campaigners.

Exxon assured traders of its monetary well being in a world of $50-a-barrel oil and promised that if crude had been to dip to $45 it will sacrifice spending within the title of dividends. The Western world’s largest oil explorer has thus far prevented the type of payout cuts adopted by rivals Royal Dutch Shell Plc and BP Plc.

The dividend pledge comes on the heels of a $19.3-billion writedown of U.S. pure gasoline and different property, and the bottom manufacturing for the reason that 1999 Mobil Corp. merger. Cash move from operations – a key gauge of company power – shrank by almost 9% throughout the closing three months of 2020 to $four billion. Investors seemed previous all that and boosted the inventory by 1.5% to $45.60 at 8:26 a.m. in New York.

“We remain focused on increasing long-term value for our shareholders,” Chief Executive Officer Darren Woods stated in an announcement. “The past year presented the most challenging market conditions ExxonMobil has ever experienced.” Exxon’s $15 billion-a-year payout is third-highest within the S&P 500 Index.

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Excluding the historic impairment, Exxon returned to revenue within the fourth quarter, incomes Three cents per share, and ending a run of three consecutive quarterly losses. That compares with the Bloomberg Consensus estimate for a 2-cent revenue.

Exxon is rising from the wreckage of 2020 going through the worst disaster in its fashionable historical past. In addition to rising criticism of its environmental report, monetary efficiency has deteriorated. Exxon hasn’t elevated payouts since early 2019.

Such was the stress exerted by final 12 months’s value collapse that Woods held preliminary talks along with his counterpart at Chevron Corp. a couple of megamerger, the Wall Street Journal reported Sunday.

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Before Tuesday’s reassurances, some traders had been worrying the oil titan would possibly resort to a lower to shore up its money place. As just lately as October, the corporate was nonetheless pledging to extend payouts, however that modified a month later when administration dropped the phrase “growing” from its dialogue of dividends.

Exxon isn’t alone in going through severe challenges at the same time as commodities are on a tear. Chevron dissatisfied traders on the finish of final weak with a shock loss grounded on weaker-than-expected refining margins. Earlier Tuesday, BP Plc squeezed out a small revenue that was a fraction of what the explorer earned in pre-pandemic days. ConocoPhillips posted a 3rd consecutive loss.

As he begins his fifth 12 months as CEO, Woods is taking an axe to capital spending and working prices, all however abandoning his circa 2018 blueprint for increasing output whereas drilling and development prices had been low. Exxon introduced 14,000 job cuts, delayed megaprojects from the Permian Basin to Mozambique, and has pledged to maintain a good rein on spending by means of the center of this decade.

The cutbacks helped flip Wall Street analysts extra constructive on the inventory, particularly with oil costs rebounding this 12 months, however traders are nonetheless nursing deep losses after a 41% plunge in 2020 and years of underperformance in contrast with friends.

Last week, activist investor Engine No. 1 formally took up the trigger for a change in technique, nominating 4 administrators to the board forward of Exxon’s annual assembly in May. The investor, which has the assist of the California State Teachers’ Retirement System, is looking on Exxon to take a position extra in clear power, decide to lowering emissions and enhance returns on capital.

–With help from Laura Hurst.

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