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  1. #1
    Senior Member JohnDoe2's Avatar
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    Tillersonís Exxon wants a big favor from Washington

    Tillersonís Exxon wants a big favor from Washington



    Rick Newman
    Columnist
    Yahoo Finance December 11, 2016
    1,022 Comments


    Donald Trump wants to free the energy industry of burdensome regulations. If Exxon Mobil (XOM) CEO Rex Tillerson becomes Trumpís Secretary of State, heíll know just where to start.

    As an oil-and-gas drilling giant, Exxon may face more complex regulations around the world than nearly any other company. But one new idea has rankled the company in particular. The Securities and Exchange Commission is reportedly investigating whether Exxon and other oil companies appropriately account for climate change as a business risk that could directly affect the value of proven reservesóa key metric determining the companyís valueóalong with profitability. If the SEC were to pass a new rule or require new disclosures, it could wipe billions in dollars off the value of Exxon and other drillers.


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    All public companies are required to disclose known or anticipated business risks in their SEC filings, usually highlighting things such as unforeseen technological change, new foreign competition or an economic downturn. Exxon has mentioned climate change as a possible risk but without any detail or estimated impacts on its business.


    The SEC is reportedly investigating whether to require energy companies to account specifically for climate-change risk. This could be important because new caps on the use of carbon going into effect could put finite limits on the amount of oil produced and consumed. Trump has said heíll pull the United States out of the Paris Agreement, a breakthrough deal to cap emissions reached last year. But 194 other nations would still remain committed to the deal, and they account for a much larger portion of the worldís economy than the United States does.


    If thereís a de facto worldwide limit on carbon emissions, then energy companies may never be able to tap some of the oil and gas reserves they hold all around the world. Exxon declared proven oil reserves of 8.1 billion barrels at the end of 2015, but some of that could be moot if thereís a limit on the amount of carbon that can be burned. If Exxon were to write down its reserves to exclude oil that couldnít be realistically extracted, the companyís value and stock price would surely decline. The same goes for other big oil companies.


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    Exxon is unique among energy producers in that it doesnít write down the value of reserves when prices drop. The company says its estimates are so conservative it doesnít have to bother with write-downs. But it did indicate recently it might change that practice, given the plunge in oil prices since 2014. It now says it could write down proven reserves by as much as 20% to account for lower oil prices.


    Thatís different from the SECís examination of climate-change risks, though the effect might be similar if the agency required new risk disclosures.

    Exxonís stock has sharply underperformed as the controversy over climate-change risks has intensified.

    Its shares are down by more than 6% since mid July, even as oil prices have been recovering. The broader market has risen 5% since then.


    The State Department doesnít oversee the SEC, so if Tillerson became the nationís top diplomat, he wouldnít have the authority to order the agency to drop its climate-change inquiry. But heíd obviously have direct access to the president, who appoints SEC commissioners in line with his viewpoint. And Tillerson is hardly the only energy executive advising Trump on energy. Other influential members of Trumpís kitchen cabinet include oil tycoon T. Boone Pickens and fracking pioneer Harold Hamm, who have both long pleaded for relief from government oversight.


    Climate change and its effect on oil companies isnít just a political issue, though. Some big shareholder groups and activist investors favor more disclosure on the issue by oil companies, since it could affect their ability to drill and make money no matter what the leanings of the current administration in Washington.

    The attorneys general of New York and Massachusetts are suing Exxon for fraud, claiming it deceived investors for years by withholding in-house research showing a link between fossil fuels and climate change; in other words, it knew before most others that a changing climate could impede demand for its product.

    That suit alone could change practices at oil firms and create an incentive to disclose risks more fully. And if other sources of energy displace carbon, as some experts think is inevitable, it may be plain old economic risk that weakens demand for oil and keeps proven reserves in the ground.

    https://www.yahoo.com/news/tillerson...200808913.html
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    Senior Member JohnDoe2's Avatar
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    Rex Tillerson: Climate change is manageable. We just need to adapt.


    Remember the times when there was a common belief in the idea that the polluter pays? Why is it that the oil companies arenít held responsible for the damage they cause?
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    Senior Member JohnDoe2's Avatar
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    Senior Member JohnDoe2's Avatar
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    If Rex Tillerson becomes secretary of State, he'll get $180-million Exxon retirement package

    Los Angeles Times - ‎1 hour ago‎

    Rex Tillerson will get a $180-million retirement package from Exxon Mobil Corp. if he is confirmed as President-elect Donald Trump's secretary of State.
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