Exxon Mobil in the "Green," But Not Investing Green

• The Company: Exxon Mobil, the largest US oil company.
• The Filing: FORM 8-K filed with the SEC on October 30, 2008.
• The Finding: In Exxon Mobil’s 2007 Corporate Responsibility Report, the energy giant admits that the risks to society and ecosystems from increases in CO2 emissions could prove to be significant, and the company is committed to developing and and implementing strategies that address the risks, while balancing the central importance of energy to the economies of the world. Albeit Exxon reduced GreenHouse Gas emissions by about 5 million metric tons in 2007 — equivalent to removing about one million cars from roads in the United States — it is clear from a read of the company’s third-quarter 2008 earnings report that policy options seriously being pursued by the company do not involve a commitment to developing renewable fuel alternatives.

The Upshot: Capital and exploration expenditures were $6.9 billion in the third quarter ended September 30, up 26 percent from the third quarter of 2007. In addition, the company re-purchased $8 billion in common stock, reducing shares outstanding by two percent.

Exxon spent $11 million on other non-core energy initiatives in its third quarter — less than 0.2 percent of its development budget on renewable fuel initiatives. Further proof that management remains exclusively committed to staking its future on hydrocarbons.

As fields mature and state-owned companies opt for a bigger cut of new finds, it is getting more difficult to increase production. On an oil-equivalent basis, production decreased eight percent from the third quarter of 2007.

The Question: Is Exxon Mobil being myopic in neglecting development of recurring revenue streams from renewable energy sources?