Exxon Mobilâ€™s thrifty culture keeps it out of oil-bust quagmire

So far, the giant oil company based in the Dallas suburb of Irving has escaped the worst of the downturn, watching from behind a fortress of cash as its rivals scrap major drilling projects and cut deep into budgets and payrolls.

It isn't corporate voodoo that has kept Exxon Mobil levitating above financial pain in the broader industry. The company's structure and culture help it ride out price busts, which almost always follow times of plenty in the global oil market.

Exxon Mobil has avoided mass layoffs this year, even as its rivals Chevron, Shell and BP plan for more than 18,500 job cuts combined this year. And while it has cut its capital budget by a few billion dollars, relative to its size, it has taken a scalpel where smaller peers have swung an ax, finding more to cut from operational costs than capital investment plans.

And excerpted from the related Houston Chronicle article:

Exxon Mobil’s history gives it an edge in downturn
http://www.houstonchronicle.com/business/article/Exxon-Mobil-s-history-gives-it-an-edge-in-downturn-6616518.php

...Exxon Mobil’s more conservative strategy - the company is never the first to chase the industry’s latest gee-whiz idea - has helped keep it focused on bringing large projects into production without running over budget, Cassidy said.

The company’s slow, deliberate way of expanding its business is part of the company’s genetic code, dating back to the days of Standard Oil, its 19th century corporate ancestor. Founder John D. Rockefeller made his way to the wild and woolly oil patch by stretching out from his refining empire.

Refining is a closely controlled business, driven by margins and nothing like the high-stakes Texas wildcatting later practiced by H.L. Hunt and others. Now, the U.S. oil patch is populated by hundreds of Hunts and one Rockefeller.

The latest oil price-crash could be a chance for Exxon Mobil - which declined comment for this story - to show Wall Street how its business model isn’t as ancient or outmoded as critics claim. Exxon Mobil’s share price has slid 18 percent since crude prices peaked last year - not nearly as far as Chevron, Shell and BP shares have fallen. And unlike the vast majority in the oil patch, Exxon Mobil this year raised its dividend and continued to buy back shares, albeit much at a much-reduced rate.

In terms of stock market value, Exxon Mobil’s strategy of constantly fine-tuning the efficiency of its operations had dominated the oil industry in the decades before 2000, when crude prices tended to be flatter and lower than in recent years.

In the last decade, economic growth and oil demand in emerging markets, along with crude prices, began surging, prompting Wall Street to reward growth in crude production and reserves more than cost management.

If an investor had bought shares in Big Oil stocks in 1972 and reinvested dividends until selling them off in 2001, returns from Exxon Mobil would be nearly double the returns from Chevron, the second-best performer.

But if the investor bought the shares in 2001, reinvested dividends and sold them in 2012, returns from Chevron and ConocoPhillips would have beaten Exxon Mobil, with Royal Dutch Shell and France’s Total close on Exxon Mobil’s tail.

Its Big Oil rivals - the handful of other publicly traded international oil companies that take the product from the well to retail sales - in recent years have caught up to the lumbering oil giant by increasing reserves and production quickly.

“Exxon’s cost-management emphasis didn’t translate very well into aggressively growing reserves,” said Praveen Kumar, a finance professor at the University of Houston.....

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