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The hedge fund that won ExxonMobil says it will have to cut oil production


Activist investors pointing to the dangers of climate change win a convincing shocking battle Against ExxonMobil this week, it announced that the superpower should stop producing oil, noting that they would continue to pressure the management to change its strategy in response to the shareholder vote.

“They have to be positioned for success,” said Charlie Pennner, who ran hedge fund engine No. 1 campaign against the company. “You would certainly believe that it would mean less oil and gas production.”

In December, the No. 1 engine, named after a fireplace sign in San Francisco, made a bold effort to nominate four directors to the Exxon board, warning of the “existential risk” of fossil fuels due to its commitment.

Chutzpah’s show was stopped by the hedge fund, which was founded last year against the world’s most famous oil company with a huge geopolitical and financial impact.

One from Wall Street the most expensive proxy battles The climax came at an unusual annual meeting on Wednesday when ExxonMobil tested what critics described as a senatorial filibuster version of the company, delaying the closing of the vote, while holding an impromptu hour break while CEO Darren Woods inquired about the company. :

It was the first time Exxon had to do with the voting of such a controversial shareholder.

“Like so much of what we saw in this campaign, the way they conducted the meeting was under such a symbolic company,” Chris James Ames, founder of No. 1 engine, told the Financial Times.

“Watching that match yesterday was such a wonderful example of how they do not realize that the world has changed. It was all shown. ”

Finally, Exxon announced that it has shareholders selected: After the preliminary counting of the two nominated votes of the No. 1 engine. The foundation expects the third one to be announced when the official counting of votes begins, probably in the middle of next week.

Engine No. 1 will closely monitor management behavior, Pennner said. Some analysts speculate that Exxon’s management may simply ignore the fund’s new directors.

“I would not recommend it,” he said.

Exxon’s two largest shareholders, BlackRock և Vanguard, backed some of the No. 1 engine-nominated executives, a disgrace to the company’s management, which environmental advocates say signaled a new era for Wall Street to approach climate risk. :

But the No. 1 engine made it clear that its campaign was about Exxon’s financial underperformance in recent years, as well as the climate.

“Exxon thought this was ideological,” said James Ames. But the No. 1 engine was “a capitalist group, definitely not a commercial one,” he added. “Our idea was that it would have a positive effect on the share price,” he said.

The hedge fund does not require Exxon to replicate the renewable energy transfer option undertaken by BP.

“BP has spent $ 1 billion to buy half of the Equinor-powered wind farm. It’s not a great business model; it has been punished by the market,” Penner said, referring to Britain’s major oil companies. the last deal with a Norwegian company.

Penner said the No. 1 engine would give Exxon time to develop a new strategy, but as the world moved to reduce carbon emissions, the changes would still be profound. The energy transition, which was expected to be faster than it was, shattered Exxon’s speculation about long-term oil demand, Penn said.

“What we are saying is the following. Imagine a world where the world may not need you [oil] “Barrels,” he said.

It would be a drastic departure for a company that currently produces oil and gas at the equivalent of almost 4 million barrels per day, or more than 4% of the world’s total, and has long-term plans for large new raw materials. oil projects In the USA և off the coast of Guyana.

Exxon said it “welcomes the new directors”, “will share details of our plans with them, will listen to their prospects”.

The success of Engine No. 1 has led to speculation that a new era of shareholder activity may have begun. The fund has a $ 50 million stake in the $ 250 billion company, which less than a decade ago had the largest market capitalization in the world. Other companies are in his sights.

“Our ambitions are clearly wider than Exxon,” said James Ames.

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