Oil exploration costs

[widebody911]

Interesting tidbit I found today http://cleantechnica.com/2008/06/08/mistake-by-interior-department-may-cost-taxpayers-billions-in-lost-royalty-payments/

According to ExxonMobil’s summary annual report for 2007 it has spent $118 Billion during the years 2003-2007 simply purchasing its own stock. Its capital investment program for new drilling, tankers, pipelines, etc. was less than $90 billion during the same period.

[Mule]

Let me guess, give the reigns to Maxine Waters?

[sammyg2]

Originally Posted by widebody911

Interesting tidbit I found today http://cleantechnica.com/2008/06/08/mistake-by-interior-department-may-cost-taxpayers-billions-in-lost-royalty-payments/

According to ExxonMobil’s summary annual report for 2007 it has spent $118 Billion during the years 2003-2007 simply purchasing its own stock. Its capital investment program for new drilling, tankers, pipelines, etc. was less than $90 billion during the same period.

Their JOB is to maximize shareholder return on investment. If they don't do that they get fired.
Buying back stock increases the value of the stock and company, so the people who buy shares of that company get what they want.

They spend money on exploration when it makes business sense and when it is the right thing to do.
If they don't have rights to drill, they don't drill. If they have the opportunity to explore for oil, they do it. I'd say that $90 billion is a pretty good chunk of change but they would have spent more if they had the opportunity to go after potential oil reserves.
How much did they lose in a certain south american country that starts with a V that took away their rights to drill on land they had purchased during that period?
How many promising opportunities that were open to them did they pass up? I'd say none.

How much of that $90 billion resulted in a dry well?
The bottom line is, their job is to take care of the company and the owners of that company (shareholders) and not John Q. Public.

it's not like they can explore anywhere they want, they have to have rights and permission.

[widebody911]

I found 118B spent on their own stock to be an interesting counterpoint to the common 'defense' of "it's expensive to drill for oil"

[Mule]

Whip all 'em brain cells into a frenzy and let me know if you think Legalizing exploration in the Eastern GOM, Atlantic Ocean, Pacific Ocean & Alaska might bump that number up a bit!

[VincentVega]

I wonder who else spends $90 billion on drilling, pipeline...

[carnutzzz]

Originally Posted by Chris Martin

I wonder who else spends $90 billion on drilling, pipeline...

I spent a lot of money laying pipe when i was in my heavy dating phase after college. Felt like $90 billion.

[mikester]

I read an article yesterday (I'm looking for it but can't recall where I read it), it was an opinion piece or editorial. It expounded upon what you're mentioning here where Exxon is putting more money into buying it own stock than oil exploration.

The author surmised a couple of destinations for Exxon based on this behavior with the primary reason for it being the goal of raising share holder revenue.

In a nut shell the three destinations were:

1) They are betting that oil prices will fall drastically in the near term so investing in extremely expensive exploration now during this bubble is not an optimum use of their resources. It is better to wait, let others spend on the exploration and when the bubble bursts they can swoop in and buy the exploration hardware for cheap to continue the process. This actually does sound somewhat logical to me. Exxon is being conservative and who can blame them.

2) Exxon is making a mistake because oil will never fall.

3) Exxon, unable to continue increasing shareholder profits will eventually dissolve themselves over the coming decades.

I'm still looking for the article...

Edit: Found it - it's actually not a new article and not by someone I generally would call credible but it was an interesting article just the same.

http://articles.moneycentral.msn.com/Investing/JubaksJournal/IsExxonMobilsFutureRunningDry.aspx

[matt4hand]

Originally Posted by carnutzzz

I spent a lot of money laying pipe when i was in my heavy dating phase after college. Felt like $90 billion.

lol