One On One With Rex Tillerson Chairman & CEO, ExxonMobil
Wednesday, March 08, 2006
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SUSIE GHARIB: Meanwhile, the new chairman and CEO of ExxonMobil was here at the NYSE today, telling analysts he plans to spend as much as $20 billion next year to find and produce more oil and natural gas. Afterwords, I sat down with Rex Tillerson and he gave me his perspective on the oil market but said he does not have a specific outlook on prices.
REX TILLERSON, CHAIRMAN & CEO, EXXONMOBIL: We look at the long-term fundamentals of supply and demand, recognize that there are going to be a lot of ups and downs in that price, often times due to events that aren`t related to supply and demand. I think that`s the situation we find ourselves in today.
GHARIB: Mr. Tillerson, your predecessor, Lee Raymond (ph) told me many times that he did not believe that it justified for oil prices to be above $30 a barrel. Do you share his view?
TILLERSON: I do agree with that observation. I think this notion that some have put forward that the days of easy oil are over, I don`t agree with it. I`ve been in this business for more than 30 years now. I don`t ever remember any easy days for oil and that`s because we`ve always been on the edge of the technology advances, finding the way to access the next new resource opportunity, deeper water, arctic conditions, harsher environments, new cultures, whatever the challenge may be. There`s never been anything easy about it, and that`s not any different than we find ourselves today.
GHARIB: What is your view of President Bush`s comments that Americans are addicted to oil and that we must become energy independent? Is that realistic? Is that achievable?
TILLERSON: Well, we`ve said for some time that energy independence is not only unrealistic and unachievable, I guess I would add I`m not sure it`s even desirable. From the standpoint of we live a global community, our economies are interdependent and since energy is such a part of the economic growth, it`s only natural that some of the energy supply demand is going to be interdependent as well.
GHARIB: The perception in Washington and by the average American consumer is that it`s the big oil companies that are responsible for high oil prices and high gasoline prices. I understand that you`re going to be testifying in Washington next week on this very issue. What would you say to those who say it`s the oil companies that are gouging the consumer?
TILLERSON: Obviously we`re not gouging the consumer. Our response to that is to do the things that we know how to do well and that`s to continue to look for new sources of energy around the world, take the risk, huge amounts of capital required to develop new sources of energy, continue to develop technology that`s going to open new resources that can become available to meet that energy demand. Those are the things that we can do. That`s what we can do about it and that`s what we are doing about it.
GHARIB: You are now taking over at Exxon, you`re the new CEO. What changes are you going to make? What`s going to be different?
TILLERSON: Well, I don`t think people should look for much to be different. ExxonMobil has been operating under a business model that has proven quite successful now for really the last couple of decades we`ve been operating under this model. So we need to stay focused on being disciplined in our investments, stay focused on being disciplined in the way we execute projects, our cost structure. Maintain our high standards of operating around the world, both from a safety and environmental standpoint and not lose your focus in this high-priced environment.
GHARIB: Everybody is talking about the fact that Exxon has something like $33 billion in cash and what are you going to do with it? Does it make sense to make a major acquisition?
TILLERSON: Well, I`m not sure it makes sense in this environment to make a major acquisition. When we look at some of the transactions that have occurred, they seem rather pricy to me. But I think, you know, we`re going to continue to manage that cash situation for the long term. And you have to consider that in a very long-term context, because in our business it takes years for these things to play out. And as this business cycle ebbs and flows, sometimes opportunities present themselves because of a change in the business cycle. We want to make sure we`ve got the flexibility to seize any of those that might come along.
GHARIB: Mr. Tillerson, what`s going on with ExxonMobil stock? It`s about at the same level it was at your analyst meeting last year at this time. What do you think needs to happen for it to move higher?
TILLERSON: I think one of the things that as you look at the past seems to happen is any time we get into a high-price environment like this, a lot of the analysts and others look at that situation and say, well, it can only go one way. And so even though we`re extracting enormous value for our shareholders today and we expect to continue to be able to do that in the future across any business cycle, I think that`s just something people have a hard time getting their arms around.
GHARIB: Mr. Tillerson, thank you very much for talking to NIGHTLY BUSINESS REPORT. We appreciate your time.
TILLERSON: My pleasure, nice to be with you.
