Thursday, March 05, 2009

ExxonMobil holds analysts' meeting online, discusses financial crisis, pensions, energy outlook

ExxonMobil held its 2009 Analysts meeting today at the New York Stock Exchange. The main link for the slides is here. The meeting was open to the public through a broadband link on its website.

The three hour meeting was made to sound very optimistic, with reports of great efficiencies in exploration and a rosy picture for long term growth. The downturn was sometimes seen as an “opportunity.” Even so, XOM shares were falling Thursday morning as oil prices fell after China failed to come through with its economic stimulus plan.

The company discussed selling some of its retail outlets, refineries and pipelines to other “branded” companies.

The company believes that demand for oil will recover very strongly, particularly in Asia, by 2012, and suggests that prices may rise again sharply in about three years.

The presentation discussed the increase in domestic and international use of natural gas, as with the Pickens Plan. Natural gas demand will grow much faster than coal and demand, and can affect share price, a concept not yet well understood in the stock market.

The defined benefit pension deficit was addressed, and the company’s answers were a bit nebulous. The speaker discussed the Pension Protection Act of 2006 and said that the company would have to do more funding this year. He did not make specific comments on changing allocations, but obviously equities may have performed very poorly, and retirees may be living longer and drawing pensions longer than had been originally expected.

The company said that it has changed its cash placement quickly because of the global financial crisis, and the “counterparty risk”. It also discussed the credit risk, and said that it has experienced few credit defaults. It says it started paying attention to credit default swaps as long as 18 months ago.

The company also said that it is looking for major business partnerships around the world, and will boost production (Wall Street Journal analytical story, by subscription, is here).

Rex Tillerson dismissed negative and pessimistic behavior in the stock market, however, saying it would increase capital spending, according to a Forbes story here.

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