Exxon's Cash Hoard Fuels Biggest Stock-Price Drop in 27 Years

[AlphaCentauri]

Source: Bloomberg

Sept. 22 (Bloomberg) -- Exxon Mobil Corp., the world's most valuable company, has never been richer. Shareholders think its cash a sign of weakness. With petroleum output falling at the fastest pace in a decade and shares tumbling the most in 27 years, growth prospects are evaporating.

The world's biggest oil company is piling up cash faster than it can be spent, thanks to crude prices above $100 a barrel. Exxon Mobil's $39 billion in cash amounts to 15 percent of assets, almost six times the average of the company's 10 biggest peers, according to data compiled by Bloomberg.

That hasn't helped investors, as Exxon Mobil fell 15 percent in New York trading this year, heading for the worst drop since 1981. While Royal Dutch Shell Plc, BP Plc and ConocoPhillips boost spending to acquire reserves, Irving, Texas-based Exxon Mobil is shelling out more money to buy back stock than for drill bits, pipelines and related investments in its operations, said William Andrews of C.S. McKee & Co.

``They don't have much growth potential,'' said Andrews, who holds Shell shares among the $7.8 billion he helps manage at C.S. McKee in Pittsburgh. ``If you don't have enough growth opportunities, then you've got to do something else with the money, but buybacks don't necessarily add anything.''



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=avcCScMWfi1k&refer=us

[alcibiades_mystery]

1. If someone at Exxon was smart, they'd take $10 billion of that and go whole hog

for green energy development.

THAT'S their only growth potential, period. Instead, they persist in their stiff-arming of any attempts to change the way we produce and consume energy, locked into their old profit system which everybody knows has no fucking future.

You can't cure stupid.

[Johnnyheadstone]

2. You are 100% correct

Not only would that be their best chance to show "growth potential" but it would be an astounding PR move as well....invest the extra cash into renew-ables (and with that capital they would certainly come away with something viable) announce they are going to use a portion of that money to upgrade the stations they already have to serve the renewable market, announce this was the plan all along once the oil prices started going out of control and then hammer the other oil companies for not following suit....

[AlphaCentauri]

4. Great idea on how to accomplish the transition from gas to green energy n/t

[Old and In the Way]

9. Good point....I think their business model says as much about their political

ideological culture as anything else. A smart energy company would diversify their core business into various energy producing sectors, but it might be decades of oil politics that takes those options off the table.

[defendandprotect]

3. And ExxonMobil inherits the world ...

[Piewhacket]

5. Nationalize Exxon.

Republicans and Democrats agree, the nation and the world are in an emergency.
The abuses must cease, those responsible must be held to account.
First, we must act quickly to nationalize BIG OIL.
We must do it now, before the world economy collapses.

[NashVegas]

6. This Horrific Method of Doing Wall Street Business Is Killing Us All

Investors don't like companies that keep cash on hand instead of paying it out to stock-holders, so they sell and the price goes down, making it harder to get low interest rates for loans.

These people are hurting our country.

[dixiegrrrrl]

7. Pssssttt..Exxon...over here

Ya wanna buy a bank?

uhh. no, huh?


Hmmm..
Ok, how abut a bridge in Alaska.??

[olddad56]

8. or, if not a bank, or a bridge in Alaska, how about a politician in Alaska

Oh, you already own her, never mind.

[Blackhatjack]

10. Exxon is not stupid... they have plans for that $$ ....

Oil prices have fueled the cash hoard, but the future of energy needs are going to be met through a multitude of energy production venues.

They are 'staying liquid' until the coming financial disaster plays out and cash is king.

Then they will pick up all kinds of assets for pennies on the dollar.

Remember, if there are windfall taxes imposed or limits on placed on energy production prices, then Exxon may just turn all that cash into businesses which are closer to the end users which may be supported by government tax credits(ie. T. Boone Pickins' natural gas proposal).