ExxonMobil (XOM), 

Pertamina Progress on CCS Hub 

in Indonesia

Zacks Equity Research

Mon, May 20, 2024, 

Exxon Mobil Corporation XOM, in partnership with Indonesian state-owned oil company Pertamina, has embarked on an appraisal drilling project for a carbon capture and storage (CCS) hub in Indonesia.

The initiative, announced during the Indonesia Petroleum Association (IPA) annual conference, marks a pivotal step in utilizing the nation's depleted oil and gas reservoirs, and saline aquifers for carbon dioxide storage.

The project, known as the Asri Basin Project CCS hub, is located in Pertamina’s Offshore South East Sumatra block. Per a joint study by Pertamina and ExxonMobil, the basin could store up to three gigatons of carbon dioxide, potentially requiring an investment of $2 billion.

The venture aligns with Indonesia's strategy to combat climate change by repurposing its geological formations to sequester carbon effectively. In a legislative move supportive of this environmental strategy, Indonesia has recently permitted CCS operators to reserve 30% of their storage capacity for imported carbon, further bolstering the country's commitment to global carbon reduction efforts.

In addition to the technical advancements in the Asri Basin, Pertamina and ExxonMobil have entered a framework agreement with South Korea’s Korea National Oil Corporation (“KNOC”). This partnership allows KNOC to participate in the project and contribute to the injection of emissions into the facility.

Simultaneously, ExxonMobil continues to bolster its oil exploration efforts globally. The company recently announced an oil discovery off the coast of Angola in Block 15. The discovery at the Likembe-01 well, which was drilled to a depth of 3,013 meters, encountered Miocene-age reservoirs. The well is part of the Kizomba B development area and is operated by ExxonMobil alongside partners Azule Energy, Equinor and Sonangol.

The developments underscore ExxonMobil's dual commitment to enhancing energy production and mitigating environmental impacts through innovative carbon storage solutions. The ongoing projects in Indonesia and Angola represent strategic moves by XOM to lead in sustainable energy advancements, while continuing to meet global energy demands.

WORKERS CAPITAL

 Calpers Opposes All Exxon Directors 

Amid Shareholder Dispute

Kevin Crowley and Eliyahu Kamisher

Mon, May 20, 2024,       

(Bloomberg) -- Calpers, the largest state public pension fund in the US, will vote against all Exxon Mobil Corp. directors, saying the oil giant is undermining shareholder rights.

Exxon sued two climate-focused investors earlier this year, accusing them of abusing the shareholder-proposal process. When the investors withdrew their proposals, Exxon opted to continue legal proceedings, asking the courts to provide more clarity on how the Securities and Exchange Commission interprets its own rules.

“This is a real problem for a shareholder like Calpers, where we believe that our voice matters,” Chief Executive Officer Marcie Frost said during a press conference Monday. Calpers has a long history of fighting for shareholder rights “and that’s why we can’t just sit idly by.”

Calpers and other environmentally minded shareholders believe Exxon’s suits will have a chilling effect on investors looking to raise legitimate concerns about climate change and corporate governance. But Exxon says allowing proposals that have repeatedly failed undermines the process. The oil giant said the sponsors of such proposals are activists seeking publicity.

“It’s unclear why Calpers is spending their time and energy defending the abuse of a shareholder process by proponents who have publicly stated they have no interest in creating shareholder value,” Exxon said in a statement. Those proponents are attempting “to silence the voices of up to 90% of our voting shareholders who have rejected the proposal twice.”

The row with Calpers adds to an already incendiary proxy season. Earlier this month, Glass Lewis & Co. recommended investors vote against Exxon Lead Director Joseph Holley due to the company’s “aggressive” tactics in the shareholder suit. Exxon fired back with accusations that Glass Lewis failed to disclose its relationship with a group that sponsors many of the same proposals.

Calpers manages roughly $490 billion of assets and owns about 0.2% of Exxon stock, according to data compiled by Bloomberg.

Exxon faces opposition from CalPERS after ‘devastating’ anti-ESG activist suit

PUBLISHED MON, MAY 20 2024
Rohan Goswami@IN/ROHANGOSWAMICNBC/@ROGOSWAMI

KEY POINTS

CalPERS said it wouldn’t support Exxon Mobil’s full director slate and CEO Darren Woods because the company is continuing with a lawsuit against two activist investors.

The activists submitted a shareholder proposal around environmental disclosures and targets that Exxon sued to block.

Arjuna Capital and Follow This have withdrawn the proposal, but Exxon refuses to drop the suit.



ExxonMobil CEO Darren Woods speaks during the APEC CEO Summit at Moscone West on November 15, 2023 in San Francisco, California.
Justin Sullivan | Getty Images

Exxon Mobil’s monthslong battle with two environmentally focused activist investors has cost the company the support of the California Public Employees’ Retirement System.

CalPERS, a $484 billion pension fund manager, said in an open letter Monday it would vote in opposition to all of Exxon’s 12 director nominees and its CEO, Darren Woods, at the shareholder meeting next week as a result of the company’s potentially “devastating” effort to quash the two activists, Arjuna Capital and Follow This. CalPERS has a $1 billion stake in Exxon.

The two activists submitted a shareholder proposal that would have forced the company to reduce direct emissions and set a target for lowering emissions at suppliers and customers. Exxon sued the investors in Texas federal court in January, prompting them to withdraw the proposal.

Even with the activists backing off, Exxon has continued its lawsuit to prevent the activists from ever again submitting such a proposal. The company said in a statement to CNBC that Arjuna and Follow This are attempting to “silence the voices of up to 90% of our voting shareholders who have rejected the proposal twice.”

CalPERS said in its letter that Exxon’s “reckless” lawsuit threatened shareholder activism efforts on any issue.

“If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits?” CalPERS CEO Marcie Frost and board President Theresa Taylor said in the letter. “Worker safety? Excessive executive compensation?”

CalPERS said it’s urging other shareholders to follow its lead “to send a message that our voices will not be silenced.”

An Exxon spokesperson said the company had engaged with the pension fund and did “not understand how they can make such a poor fiduciary decision,” pointing to the board’s role in creating “industry-leading shareholder value.”

Exxon could have potentially prevented the shareholder proposal from going public without a lawsuit by asking the Securities and Exchange Commission for an exclusion, which is a common practice. But Exxon went ahead with litigation, and said it’s seeking “clarity on a process that has become ripe for abuse.”

“We believe activists with minimal or even no shares should not be permitted to re-submit proposals that do not grow long-term shareholder value,” the company said in a post on its website.

Exxon has faced down activist investors in the past.

In 2021, Engine No.1 ran a campaign that landed the firm three board seats. Engine No. 1 had a 0.02% stake, compared with CalPERS’ current ownership of about 0.2%.

That campaign garnered support from a number of institutional investors, including CalPERS, in its effort to overhaul Exxon’s disclosure standards and reconsider the company’s place in a zero-carbon world.

CalPERS is now opposing those same three directors, Greg Goff, Kaisa Hietala and Andy Karsner, that it helped elect. Another activist investor, Inclusive Capital founder Jeff Ubben, is also on Exxon’s board.

“We hope ExxonMobil’s directors will reconsider the lawsuit, an effort that seems more suited to schoolyard bullying than corporate leadership,” CalPERS wrote in its letter.

Column: In a major rebuke to Exxon Mobil, CalPERS will vote against its entire board

Michael Hiltzik
Mon, May 20, 2024


Exxon Mobil Chairman & CEO Darren Woods, under fire for pursuing a lawsuit against shareholders even though they've withdrawn the proxy proposal the company opposed. (Mark Schiefelbein/AP)

Exxon Mobil can't say it wasn't warned.

Having opted to continue its lawsuit against two activist investor groups even after they withdrew a shareholder proposal the company management opposed, the giant oil company had gotten flayed by shareholder advocates for its bullying.

Now the big shoe has dropped: CalPERS, the largest public pension fund in the nation, announced Monday that it will vote against all 12 Exxon Mobil board members, including CEO Darren Woods, at the May 29 annual meeting.

'If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits? Worker safety? Excessive executive compensation?'

CalPERS CEO Marcie Frost

CalPERS says it's acting because it judges the company's campaign against the two investor groups to be "designed to punish" investors who "dared to speak truth to power."

The pension fund says, "the repercussions of the lawsuit could be devastating....If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits? Worker safety? Excessive executive compensation?"

The announcement is a major step up from the pension fund's earlier comments about its intentions. Michael Cohen, the CalPERS chief operating investment officer, had earlier said only that the fund was considering voting against Woods.

Voting against the entire board and publicly urging other investors "to do the same," appreciably raises the stakes for Exxon, at least theoretically. CalPERS — the California Public Employees' Retirement System — is an institutional investor to be reckoned with. The $496-billion fund owns about $1 billion in Exxon Mobil shares.

Exxon Mobil's lawsuit "is a real problem for us as share owners," CalPERS CEO Marcie Frost said during a press conference Monday. "We believe that our voice matters, that we should be able to provide proxy solicitations asking the company to be more transparent in certain areas."

Exxon called CalPERS' action "a poor fiduciary decision." The company said through a spokesperson, "It’s unclear why CalPERS is spending their time and energy defending the abuse of a shareholder process...Far from having a chilling effect on shareholder proposals, our efforts are intended to get clarity on the rules to foster an environment for open and meaningful shareholder dialogue. If anything, CalPERS’ vote against our entire board appears to be an attempt to 'chill' shareholder voices."

As I reported last week, in February Exxon Mobil sued the U.S. investment firm Arjuna Capital and Netherlands-based green shareholder firm Follow This to keep a shareholder resolution they sponsored from appearing on the agenda of its annual meeting. The resolution was a plain-vanilla environmental proposal urging the company to work harder to reduce the greenhouse gas emissions of its products and to be more transparent about the impact of its business on the climate.

Days after the company sued, the shareholders, calculating their relative strength against the oil behemoth, withdrew the proposal and pledged not to refile it in the future. That rendered the lawsuit moot — but the company has refused to drop it.

What makes the lawsuit seem especially cynical is that the investors' proposal, like all such proposals, are not binding on management — they're advisory only. Moreover, as Frost pointed out, similar proposals in 2022 and 2023 failed to garner majority support from shareholders, winning only 10.5% of votes in 2022 and 27% last year.

Read more: Column: Exxon Mobil is suing its shareholders to silence them about global warming

"Exxon won," Frost said.

It's unlikely that CalPERS' action will result in the board's ouster. As CalPERS CEO Marcie Frost noted during a press conference Monday, no alternative slate of directors has been named for the upcoming annual meeting, so it would be "very difficult to say we're turning over this board."

But she said the fund's vote is "more than symbolic" — it's more about "sending the appropriate messages to this about their responsibilities in governance; if they don't want to deal with governance they should step aside."

Although CalPERS supported a slate of activist board members nominated in 2021— three of the four nominees won board seats — the fund said it is voting against the entire board because it is "allowing Chief Executive Officer Darren Woods to pursue a reckless and destructive effort."

Frost said CalPERS isn't contemplating taking a more aggressive action against Exxon Mobil, such as divesting its shares. "The problem with divestment when you're CalPERS is that you completely lose your voice. The moment you don't own shares, you can't sign on to other owners' proposals, you can't take action to say we don't believe that executive compensation is commensurate with the performance of the company."

Exxon Mobil asserts in its lawsuit that the investment funds’ proposed resolution breached standards set forth by the Securities and Exchange Commission governing the propriety of such resolutions — it was related to “the company’s ordinary business operations” and closely resembled resolutions on similar topics that had failed to exceed threshold votes at the 2022 and 2023 annual meetings. Both standards allow a company to block a resolution from the meeting agenda, or proxy.

That may be so, but the conventional practice is for managements to seek approval from the SEC to exclude such resolutions by requesting what’s known as an agency “no action” letter.

CalPERS says that would have been "the better option" than a lawsuit. It's not as though the SEC had set a high bar to issuing "no action" letters — the pension fund observes that the agency has approved two-thirds of those requests so far this year. Frost conjectured that, given the poor showing of similar proposals in the recent past, the SEC probably would have allowed the company to exclude the latest proposal from the annual meeting proxy.

Exxon Mobil's rationale for continuing the lawsuit is that the proposal rules "must be enforced or the abuse by activists masquerading as shareholders will continue threatening the system.”

Frost questioned the company's position. She described Exxon Mobil's goal in the lawsuit as obtaining "clarity around the ordinary business" standard. But "to me it doesn't feel like 'clarity'; it feels like diminishment" of shareholder voices. As for the company's insinuation that the system is broken, she said, "the system is working, if you use the system."

 Michael Hiltzik
Commentary on economics and more from a Pulitzer Prize winner.

This story originally appeared in Los Angeles Times.

WORKERS CAPITAL
Broken planning system makes investing in UK too risky, warns pension fund giant

Szu Ping Chan
Mon, May 20, 2024



Britain’s broken planning system has made UK projects too risky to invest in, the head of the country’s biggest local government pension scheme has warned.

Rachel Elwell, chief executive of Border to Coast, said Rishi Sunak’s failure to slash red tape meant investors were demanding a Nimby premium to plough money into the UK.

The pensions giant, which is responsible for managing £60bn of assets, urged the Prime Minister to do more to reduce lengthy delays.

Ms Elwell said: “The fact that it takes a decade to be able to link a new renewable energy source to the grid is just not good for the UK. And the amount of construction risk that brings to asset owners isn’t something that we typically would have in our risk appetite.”

Mark Lyon, Border to Coast’s deputy chief investment officer, also warned that the FTSE 100 would struggle to shake its reputation as a “stale index” as a growing number of companies threaten to delist from Britain’s blue-chip group.

While Border to Coast has £4.5bn invested in UK equities, Mr Lyon said it would be “difficult” to see the FTSE 100 “returning to [its] former glory”.

In an interview with The Telegraph, Ms Elwell said the risks extended well beyond big energy projects.

“More generally we have underinvested in our capabilities to be able to process planning,” she said.

“If things get caught in planning for several years, then you’ve got that construction risk and planning risk.”

Mark Lyon, deputy chief investment officer, added: “When you have a lack of visibility on when your returns are going to be generated, you effectively have to think about that in the return. You want to be able to compensate for that additional risk.”

Border to Coast has just launched a UK opportunities fund worth half a billion pounds.

While this represents a bet on Britain with investments planned in housing, transport and renewable energy that will benefit local communities, Ms Elwell warned that long planning delays were acting as a barrier to investment. “We’re building a portfolio that has a certain level of risk in it. And so if you are able to reduce that element of risk, we could do more.”

While Ms Elwell said maintaining a diverse portfolio was the imperative of her investment team, she added: “I think you would get more capital wanting to go in, which then could reduce the cost to the UK.”

Mr Lyon added: “Investors are [then] likely to require a lower return because the risk has been reduced.”

Britain’s stock market has been hit by a string of delistings in recent years. Oil giant Shell, the second-biggest company in the FTSE by market value, has also warned it is considering leaving London in favour of New York because of valuation concerns.

Mr Lyon said: “Some will argue it’s a stale index given that it’s ‘old economy’. It’s mining. It’s oil and gas. It’s financials. It doesn’t have a tech sector which has driven the US equity market and by default the global equity market.

“The positive points are the current valuations are significantly below where they have been long term and at a big discount to global equity markets.

“Is there a catalyst that we can see that sees the UK returning to former glory? [That’s] difficult at the moment. But there’s a lot of value within the market.”

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