Investor Agenda

ExxonMobil's Rex Tillerson Looks to Put Cash to Work

Exxon Mobile
Robert F. Bukaty

ExxonMobil is the largest company by market cap on S&P 500. Year-to-date the stock has been flat, outperforming S&P 500 which is down about 8%.

Maria Bartiromo interviewed Rex Tillerson, Chairman & CEO ExxonMobil at the “Washington Ideas Forum” hosted by the Atlantic today.

When asked about why oil prices are at today’s level of about $81 per barrel, Tillerson said, “demand has certainly been sluggish here in the United States. Gasoline demand is off about 2%, 2.5% relative to last year. Globally, demand is about where we expect it to be.”  

ExxonMobil is also the largest natural gas producer continues to grow in this area of the business. “Our move into the unconventional space with the purchase of XTO was recognition on our part of how significant the unconventional resources are going to be,” said Tillerson. In December 2009, ExxonMobil brought XTO for $30.4 billion with stock.

Loads of Cash

Currently, the company has $10.3 billion in cash and short-term investments (as of quarter that ended in June 2011) on its balance sheet. Tillerson points out “we generate a lot of cash because it takes a lot of cash to run our business. We spend about, just in operating costs, over a billion dollars a day…that's what it takes to run ExxonMobil. In terms of capital investment, we are investing over $37 billion this year.”

What does ExxonMobil do with all that cash? Tillerson maintains the company would do more in the U.S. “if we are given the opportunity” to do so. “We’ve said this many times…it’s all about access. You have two-thirds of the remaining conventional oil resource potential sits under federal lands, that we have no access to. 40% of natural gas resource potential sits under federal lands. If we don’t have access, we don’t invest. We can’t spend the money,” Tillerson said.  

“We currently do have, I think we are back to 19 or 20 deepwater rigs in the Gulf. But we are still below pre-incident levels. The rate that we can get back to work is measurably slower,” Tillerson added.  

ExxonMobil is looking all over the world the right opportunities. “In other countries, the government wants its natural resources developed. They want to see the activity. And they want it done properly. But their whole attitude toward resource development is ‘what can we do to get this to happen’. In this country, it’s very different. It’s almost, what do we do to make it as difficult for you as we can,” said Tillerson.

Sluggish Economic Outlook

Tillerson has become a bit more bearish on the economy. “I’m not as optimistic as I was 6 months ago. I’m afraid it will be a very sluggish economic environment in this country. I say the future we’ll have positive growth, but it won’t be as robust as everyone hoped,” said Tillerson.

Donna Burton contributed to this article



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