As Exxon Mobil (XOM) shares slide again today, albeit only fractionally, one has to wonder what "activist" hedge fund Engine No. 1 thinks it has accomplished. The value of its "massive" 0.02% stake in XOM has declined since it won election of two of its slate of candidates to Exxon's 12-member Board. One Engine No. 1 candidate lost and the third seat is still apparently too close to call. With self-styled activist Jeff Ubben already on Exxon's board, that means that, at most, the "woke" contingent on Exxon's Board of Directors is four out of 12 seats. My guess is that it actually ends up being 3 out of 12 when the proxy solicitation firm is finished reporting results next week.
So, the stock has gone down, and the non-woke contingent on XOM's Board is still either a two-thirds or three-quarter majority. I think these people actually believe they are saving the 4.5 billion year old planet by making the value of their investment decline. They are self-righteous, and they will never run any major oil company out of business. That said, XOM's management's proposed ideas for carbon capture facilities deep in the Gulf of Mexico, and are indeed foolish enough to pacify those who claim to be climate activists. I am guessing it never happens.
There will be massive pressure on the oil majors to remediate carbon emissions through such harebrained schemes, however. The issue is, though, politics. The global energy industry is EXTREMELY tied up with national interests. I would love to get a piece of Qatar's natural gas output and Malaysia's abundant oil supplies, but I can't. Both countries, and many others, have nationalized oil industries. Saudi's public floating of Aramco was certainly a step in the right direction, but those shares trade only on Riyadh's Tadawul stock exchange (symbol 2222) and you might have difficulty day-trading them on Robinhood.
As I mentioned yesterday, there are now a few very unsafe places for companies engaged in the production of hydrocarbons. That is any U.S. state other than Texas (no disrespect meant to Alaska and South Dakota, but Texas' infrastructure is light years ahead) and all of Western Europe, including the incredibly productive North Sea fields.
But that leaves so many other parts of the world, where non-woke governments are increasing production of hydrocarbons in an attempt to lift the masses of the world's population (I believe it is at least a billion people) out of the crushing woes caused by energy poverty. That production will be shipped, often to China, and I have trumpeted the values of the oil shipping stocks in my RM column many times. My firm's largest holding now is DHT (DHT) and we also own Euronav (EURN) , Navios Maritime (NNA) , Nordic American Tankers (NAT) and preferreds issued by International Seaways (INSW) .
But to keep one's Eyes On The Prize, to reference Daniel Yergin's seminal book on the global energy industry, one must look outside the U.S. Platt's has an excellent ranking of global energy companies here, and it is very enlightening. Aramco is number one, followed by three separate Russian entities, and then the global majors Exxon, Royal Dutch Shell (RDS.A) (RDS.B) and Total (TOT) , followed by several Chinese entities sprinkled with a few U.S. non-majors like Chevron (CVX) and Phillips (PSX) and then down to Brazil's Petrobras (PBR) at number 17.
I spent yesterday firing up the laptop and deciding which of the ETFs based on non-U.S. oil-based oil companies I would buy. Then I realized that THERE AREN'T ANY. It is an epic fail by the ETF industry, and the closest thing to that, iShares Global Energy ETF (IXC) , will give you a bunch of Exxon, Chevron, Shell and BP (BP) , and the horrible blackmail of Western governments on their profitable and highly-employing energy companies is what I was trying to avoid in this exercise. Guess Not!
If you want a diversified portfolio of energy names you will have to look outside the U.S. exchanges. That means dealing with exchange rates, local elections, and all manner of other externalities.
