Is ExxonMobil (XOM) Not Walking The Climate Change Talk?

The world's largest publicly traded oil company, ExxonMobil Corporation (NYSE:XOM) , was recently criticized by environmental scientists. The company has been accused of publicly downplaying climate change facts stated by its own scientists.

Background

In 2015, investigations conducted by different sources claimed that the oil giant internally admitted that climate change is man-made and grave. However, publicly, the company has raised doubts about the science. The company replied that the findings were biased and it opened doors for people to study all the documents produced by the company so far and to decide without any prejudice.

Present Scenario

Recently, Geoffrey Supran and Naomi Oreskes -- experts in the history of science at Harvard -- published an article, Assessing ExxonMobil’s Climate Change Communications (1977–2014), in academic journal, Environmental Research Letters. It stated the gap between the company's internal findings and external advertorials.

In the available documents, the experts found inconsistency between the company's academic findings and public presentations. ExxonMobil always acknowledged the climate change problems and its threats along with the uncertainties related to the topic as noted by the climate scientists. However, the gap became prominent when the company's advertorials in the New York Times highlighted only the uncertainties, but not the threats.

The study found that 83% of ExxonMobil's peer-reviewed papers and 80% of its internal reports recognize climate change as a real man-made problem. However, only 12% of its advertorials do the same. The experts compared ExxonMobil’s misleading actions with Scientific Certainty Argumentation Method (SCAM).

What Lies Ahead?

In 2016, the U.S. Securities and Exchange Commission launched a federal investigation against ExxonMobil. State Attorney Generals of 17 states of the country decided to investigate whether the company broke racketeering, consumer protection and investor protection laws through its climate protection acts. Attorneys General of Massachusetts, New York and Virgin Islands led three separate investigations. These investigations have encouraged class-action lawsuits.

ExxonMobil has yet comment on the new findings.

About the Company

Irving, TX-based ExxonMobil is engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacturing and other energy-related businesses. Approximately 83% of Exxon’s earnings come from its operations outside the United States. The company divides its operations mainly into three segments: Upstream, Downstream and Chemicals.

ExxonMobil is the world’s best-run integrated oil company, given its track record of high return on capital. It has collaborated with Russia for exploring potential commercial reserves in the country. However, tensions between the U.S. and Russia might affect Exxon’s efforts to generate shareholders value by exploiting Russian oil and gas reserves.

Estimate Revision

For the full year, we have seen nine estimates moving down in the past 60 days, compared with just one upward revision. This trend has caused the consensus estimate to trend lower, going from $3.85 a share a month ago to its current level of $3.44.

For the current quarter, ExxonMobil has seen five downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 84 cents a share from $1.05 over the past 60 days.

Price Performance

ExxonMobil has lost 15.1% of its value year to date compared with the 6.7% fall of its industry.

Zacks Rank and Stocks to Consider

ExxonMobil has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks from the oil and energy sector include Range Resources Corporation (NYSE:RRC) , Canadian Solar Inc. (NASDAQ:CSIQ) and Subsea 7 SA (OTC:SUBCY) . All sport a Zacks Rank #1.

Range Resources’ sales for 2017 are expected to increase 122.8% year over year. The company delivered a four-quarter average positive earnings surprise of 51.8%.

Canadian Solar’s sales for the third quarter of 2017 are expected to increase 24.7% year over year. The partnership delivered a positive earnings surprise of 6.25% in the second quarter of 2017.

Subsea’s sales for 2017 are expected to increase 11.6% year over year. The company delivered a positive average earnings surprise of 83.8% in the last four quarters.

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