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No. of Recommendations: 7
So XOM lost 3 board seats, turns out Engine 1 was a PR stunt for a former Blackrock/Blackstone alumnus, and 2 former oil execs and a Google X policy wonk are on the board. Larry Fink and Co voted their investors' shares, and while that is debatable in the spirit of the action, the reality is that ETFs now control western supply.

Ironically, I find these events even more bullish, as attacking supply further does nothing about demand, which by the way is just about 2.5 million barrels per day of consumption below the pre-Covid 100 million barrels per day. Add a year or two of growth in oil demand and all the supply, even Iran, has been tapped out, and then what? Oil prices must go higher to encourage more supply to come online. Unlike previous cycles, there is almost no price in which meaningful supply will be brought online by western majors as ESG rules the day.

Perhaps Exxon sells a low margin, high volume Iraqi oilfield stake, and then produces less, but more profitable, oil in Guyana. Less carbon emissions! Western oil majors run the risk of offloading their assets to nation states that couldn't care less about ESG, and XOM is still the last man standing as even Chevron now must report Scope 3 emissions.

The only real teacher of anything is pain.

Oil prices must rise high enough to create incentive for supply, specifically OPEC+ supply.

XOM in the meantime will pay down debt, increase the dividend, and buyback shares.

Thus begins the 30 year 'tobacco-fication'of Big Oil.

Free cash flows will be sent to shareholders, and society will scratch its head as the very entity so clearly hated provides the highest returns for that very reason.

Cheers!
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