Wouldn't a dividend cut only crash the share price if it's a surprise? At this point I don't think it should be a surprise that XOM could the dividend.
XOM
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Last: 21 days ago by MsDoubleD81
Just wait till they cut the divy - it's going to be a bloodbath. Energy in general is a dead cat bouncing into the gutter. No one destroys value better or faster than O&G companies.
They create a product that's out of favor and against the times while trying to convince people they won't miss the next big thing when they've missed it everytime or really don't care about it because they're empire builders in it for their ego and for no one else.
They create a product that's out of favor and against the times while trying to convince people they won't miss the next big thing when they've missed it everytime or really don't care about it because they're empire builders in it for their ego and for no one else.
It's also the Gordon growth model - when a dividend is assumed to grow consistently with no cuts as part of the intrinsic value, it doesn't matter the degree (it does but factor analysis shows it's not the driving factor) any cut kills the value because the perpetual cash flows are then drastically less. It's compounding. It's like not investing in a young child's Roth IRA one year if they technically have the earned income. Yes, it's sequentially the same as the years around it, however those years across time represent a larger window to maximize exponential growth. Thus, if you skip even 1 year before 18, it will have a massive effect on the total value at 67. Thats why they will borrow to pay it. Look at kinder Morgan, you cut and you're out. Wall st won't trust you unless it's systematic and not a leadership issue.
Oil may not be fashionable like tech companies and Tesla, but it literally moves the world and will for decades to come.
And at current dividend yield, I gotta figure a cut is already factored into the price pretty well. Where else can you get 8%?
And at current dividend yield, I gotta figure a cut is already factored into the price pretty well. Where else can you get 8%?
That's not a good analogy. The proper analogy would be contributing to IRA vs. investing the amount in skills or material to earn more at a later date.JustPanda said:
It's also the Gordon growth model - when a dividend is assumed to grow consistently with no cuts as part of the intrinsic value, it doesn't matter the degree (it does but factor analysis shows it's not the driving factor) any cut kills the value because the perpetual cash flows are then drastically less. It's compounding. It's like not investing in a young child's Roth IRA one year if they technically have the earned income. Yes, it's sequentially the same as the years around it, however those years across time represent a larger window to maximize exponential growth. Thus, if you skip even 1 year before 18, it will have a massive effect on the total value at 67. Thats why they will borrow to pay it. Look at kinder Morgan, you cut and you're out. Wall st won't trust you unless it's systematic and not a leadership issue.
No it's not, mgmt just came out not 3 months ago and said it was safe. That's KMI 2.0
The company themselves came out and declared the dividend safe not 3 months ago. That's it. That's all. That's the end of the road if they cut it. If they cut, the stock will go into the **** tank and take years to retrace.
I sold out at $52 and I wouldn't touch it with a 30ft pole. So many better options to deploy capital.
"Exxon Senior Vice President Neil Chapman said on the company's late-July earnings call that the energy giant is planning to reduce operating costs further and defer expenses where it can, and by doing so that 'will enable us to maintain the dividend and hold debt at its current level.'"
I sold out at $52 and I wouldn't touch it with a 30ft pole. So many better options to deploy capital.
"Exxon Senior Vice President Neil Chapman said on the company's late-July earnings call that the energy giant is planning to reduce operating costs further and defer expenses where it can, and by doing so that 'will enable us to maintain the dividend and hold debt at its current level.'"
They also said they weren't doing layoffs and prior to that said they weren't cutting capex. I think XOM mgmt has lost credibility.
If investors thought the dividend was certain, the price would be much higher. If they cut the dividend, the price will fall more, probably more than it should. How much they cut it will say alot.
KMI 2.0
Just got notice of dividend payment.
This dividend wasn't in question, it's the 4Q and the 2021 that's speculative on the amount.
JustPanda said:
The company themselves came out and declared the dividend safe not 3 months ago. That's it. That's all. That's the end of the road if they cut it. If they cut, the stock will go into the **** tank and take years to retrace.
I sold out at $52 and I wouldn't touch it with a 30ft pole. So many better options to deploy capital.
"Exxon Senior Vice President Neil Chapman said on the company's late-July earnings call that the energy giant is planning to reduce operating costs further and defer expenses where it can, and by doing so that 'will enable us to maintain the dividend and hold debt at its current level.'"
Go back and see what COP said about their dividend a couple of months before they cut it. I call BS.
Sold out yesterday. Better investments out there for dividends.
This is my biggest loss position right now and I am going to slowly starting reducing sone of it I think. If they cut the dividend look out below. My only doubt is that all of these production cuts are going to have to squeeze supply at some point (next summer?) and crude prices maybe shoot up due to lack of supply.
AgAE said:
Sold out yesterday. Better investments out there for dividends.
Where?
FOgre09 said:AgAE said:
Sold out yesterday. Better investments out there for dividends.
Where?
Sweet 8.57% dividend right now
Double your money if you park your Exxon investment and forget about it
Green energy is not going to replace oil.
The world will get back on its feet, soon after the American election.
Exxon is not Enron
Green energy is not going to replace oil.
The world will get back on its feet, soon after the American election.
Exxon is not Enron
I hate to say you're wrong, but that's 1980s thinking. O&G is on a decline. US and China are past peak oil. It's a fact not a theory.
These are claims that would have to be based on evidence. What evidence do you have?JustPanda said:
I hate to say you're wrong, but that's 1980s thinking. O&G is on a decline. US and China are past peak oil. It's a fact not a theory.
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JustPanda said:
I hate to say you're wrong, but that's 1980s thinking. O&G is on a decline. US and China are past peak oil. It's a fact not a theory.
In the 1980's they were saying peak oil had already occurred. In the 1990's they were predicting peak oil before 2010. Now 30 years later we still have the same flawed thinking. Peak oil will only come after a viable alternative to generate and store energy is found. To date we haven't found either with the necessary efficiency or scalability. Once that happens then oil will slowly be replaced. Until then people need energy and will continue figuring out how to to find and produce enough to meet global needs.
Just an FYI - according to the EIA "the highest level of US oil demand to date was registered all the way back in 2005 at 20.8m b/d.
Despite the US population growing by 20m people over 2005-19, and vehicle miles travelled (VMT) increasing by nearly 10 per cent from 8.2bn miles a day in 2005 to 9bn miles a day in 2019, US oil consumption in 2019 was still below the 2005 level. The increases in population and VMT were outweighed by greater vehicle efficiency."
That's before auto and air along w most corporate travel evaporated.
EV tech will only continue to improve putting combustion engines at an even greater disadvantage.
Despite the US population growing by 20m people over 2005-19, and vehicle miles travelled (VMT) increasing by nearly 10 per cent from 8.2bn miles a day in 2005 to 9bn miles a day in 2019, US oil consumption in 2019 was still below the 2005 level. The increases in population and VMT were outweighed by greater vehicle efficiency."
That's before auto and air along w most corporate travel evaporated.
EV tech will only continue to improve putting combustion engines at an even greater disadvantage.
That's a mogas centered view and fair, but air, marine, and derivatives (chem, plastics) will buoy crude demand, especially in developing economies. Likely that we see more refinery closures/conversions in US to get more/different use out of uneconomical molecules.
I don't see XOM just rolling over and dying even if the div cut is necessary, but they need to get out in front of a plan. Others (Phillips, Marathon) are already going public with liquid renewable fuel operation intentions - where is XOM?
I don't see XOM just rolling over and dying even if the div cut is necessary, but they need to get out in front of a plan. Others (Phillips, Marathon) are already going public with liquid renewable fuel operation intentions - where is XOM?
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Global oil demand has continued rising steadily each year through that time period until 2020. We may he in for a permanent shift due to the happenings this year, but painting the picture of a dying oil industry is completely dependent on improvements to the current alternative technology. Energy needs aren't going away, you would have to be replacing oil with something else. You mentioned EV, with current technology that isn't scalable - i.e. you can't make enough batteries for everyone to be driving electrical vehicles. Also there's the question of what would be generating the electricity to power the vehicles - with current technology we can't make enough with solar, wind, hydroelectric, etc. We need more efficient electric production and storage as well better technology for generation. I have no doubt that will eventually happen, but to suppose it already has is just not correct.
How are you proposing to power motor vehicles?JustPanda said:
I hate to say you're wrong, but that's 1980s thinking. O&G is on a decline. US and China are past peak oil. It's a fact not a theory.
Demand dropped across the last recession for two years straight. No doubt this year and likely next will be down years as well. If you read through the current case studies, it doesn't look like commercial air traffic or business travel will be picking up anytime soon.
The paradigm shift was accelerated by Covid and it's likely going not back. You have millions of people who will no longer be traveling for work. That's huge.
Also, you have policy initiatives that will create BTE for new projects. The world isn't the 1970/1980's. The wind the tide and everything else is against big oil and Exxon seems to be the largest with little to no plan for long term sustainability. If Exxon had a plan they wouldn't have sunk hundreds of millions into projects that never paid off over the last decade. They have crushed shareholder value on an egregious scale, yet everyone always defends them as the golden child that does no wrong. It's a dog. It's been a dog and when they write down their asset values and cut the dividend, god bless you if you still hold it. I like pain but not that kind.
The paradigm shift was accelerated by Covid and it's likely going not back. You have millions of people who will no longer be traveling for work. That's huge.
Also, you have policy initiatives that will create BTE for new projects. The world isn't the 1970/1980's. The wind the tide and everything else is against big oil and Exxon seems to be the largest with little to no plan for long term sustainability. If Exxon had a plan they wouldn't have sunk hundreds of millions into projects that never paid off over the last decade. They have crushed shareholder value on an egregious scale, yet everyone always defends them as the golden child that does no wrong. It's a dog. It's been a dog and when they write down their asset values and cut the dividend, god bless you if you still hold it. I like pain but not that kind.
Ubitag said:
Double your money if you park your Exxon investment and forget about it
Green energy is not going to replace oil.
The world will get back on its feet, soon after the American election.
Exxon is not Enron
Then why has Exxon been such a dog for the last decade?
Aside from air travel, most automobile manufacturers are moving heavily towards an all electric fleet. I think it'll be 30 years before we see a country where 90% of the cars on the road are electric, but I think within 20 years we'll probably have at least 50% of vehicles on the road be all electric or some sort of hybrid.YouBet said:How are you proposing to power motor vehicles?JustPanda said:
I hate to say you're wrong, but that's 1980s thinking. O&G is on a decline. US and China are past peak oil. It's a fact not a theory.
That being said, I think XOM has a good amount of upside potential over the next few years. I just don't think they'll be having any record values without investing in alternative fuels, and renewable energy sources.
Ignore the climate change argument in this video, but think about the rest:
cjsag94 said:Ubitag said:
Double your money if you park your Exxon investment and forget about it
Green energy is not going to replace oil.
The world will get back on its feet, soon after the American election.
Exxon is not Enron
Then why has Exxon been such a dog for the last decade?
Lots of reasons but not because of slowing oil demand. Oil demand has consistently grown by about 2% every year this decade.
Exxon has made investments that have bit them in the butt. They bought XTO for $41B thinking Natural Gas had bottomed around 5. At the time it was a good gamble, nay gas prices were cut in half and the world was looking towards clean burning natural gas rather than coal. It also got XOM more involved in shale which they missed. We ended up producing a ton of natural gas and prices have averaged $2-3. I think XTO has still generated 0 income in 10 years.
The Russian investment was total loss because of the sanctions. XOM basically had exclusivity among to explore with Russian oil company.
When Saudis tried to maintain market share in 2014 by flooding the market, that made their expensive Canadian oil less profitable and they wrote down the reserves. At the same time major projects where CVX was the operator like Gorgon and Kazakhstan have gone way over budget.
Then XOM got punished more investing counter-cynically with the idea that while prices low, invest and by the time projects done, prices rise because nobody else is investing. Wallstreet wanted more stock buybacks like CVX, RDS, and COP had announced.
And then you had COVID.
Anything that could go wrong has gone wrong. It's not because of oil demand slowing, except until recently with COVID.
Actually feel bad for Darren Woods. You can't prepare for a pandemic and price war occurring at the same time.
Cant disagree but when you're XOM you don't get swing and miss luxury. The shale miss remains disastrous.
In regards to demand, what % of the US workforce will viably remain work from home long term because of this even past the pandemic?
If productivity is equivalent without needing larger office spaces and resources, what's the point?
If productivity is equivalent without needing larger office spaces and resources, what's the point?
tv1113 said:
In regards to demand, what % of the US workforce will viably remain work from home long term because of this even past the pandemic?
If productivity is equivalent without needing larger office spaces and resources, what's the point?
Productivity won't be equivalent....that's why you saw several large corporations call everyone back to the office last week.....majority don't have the self discipline to work unsupervised.
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