Engine No. 1 Activist Presentation Deck
Lack of capital allocation discipline unlikely to work any
better going forward given long-term uncertainty
the tra
"Capital markets are driving the transformation of the energy industry... driving a bifurcating cost
of capital, up to 20% for long-term oil projects and down to 3-5% for renewables, we estimate."
Goldman Sachs, Sept. 1, 2020
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
ExxonMobil Return on Capital vs. WACC
2001 2002 2003 2004 2005 2006 2007 2008
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 E 2022E 2023E
Company ROCE
Value Destruction Zone
Est. Cost of Capital %*
Quote Source: Michele Della Vigna et. al. (Sep. 1, 2020). Carbonomics: Re-imagining Big Oils - The Age of Transformation. Goldman Sachs.
Chart Source: Company ROIC from Company filings and JP Morgan estimates. * Est. Cost. Of Capital % (WACC) increases given higher debt risk premium and dividend yield;
also in line with investor surveys conducted by Redburn and highlighted in its September 2019 report Oil Majors: Lost in Transition.
REENERGIZE
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