Engine No. 1 Activist Presentation Deck
Gradually repositioning for the future can enhance returns
for long-term investors
PRICE
"Shrinking discipline and rising leverage make what was once the smartest oil major [ExxonMobil]
a risky play on crude prices." - Bloomberg, Dec. 1, 2020
"O
• ExxonMobil is solely reliant on the hope of consistently high oil and gas prices well
into the future to generate long-term returns
• Better capital management can boost profitability in a wider range of demand
scenarios and protect shareholder value, while enabling investment in the future
Gradually and pragmatically repositioning for the future can also help maximize
long-term value by slowly bending the curve on other factors, including:
Pd
Earnings volatility - The risk of a systematic decline in earnings and free
cash flow for undiversified companies increases as prices fluctuate dramatically
and future demand & price shocks potentially grow more severe
Cost of Capital - ExxonMobil's cost of capital will likely continue to increase
given the market's view of medium to long-term systematic risks to the
industry, and debt pricing may increase if its credit rating continues to fall
Market Sentiment - Even if ExxonMobil is successful in boosting
free cash flow for some period of time, this is unlikely to create
long-term value for investors given the low probability that the
market ascribes a growth multiple to such cash flows
Quote Source: Liam Denning (Dec. 1 2020). ExxonMobil Has Become the Thing It Wasn't Supposed to Be. Bloomberg.
REENERGIZE
EXXON//
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