ExxonMobil, one of the largest and most profitable oil and gas companies in the world, has a complicated history when it comes to climate change. The company has been accused of knowingly downplaying the dangers of climate change for decades, even though Exxon had made accurate predictions about the impacts of fossil fuel use on the environment.
In the 1970s and 1980s, ExxonMobil’s own scientists conducted research on the potential impacts of carbon dioxide emissions on the climate. These studies, which were not made public at the time, concluded that burning fossil fuels would lead to warming of the planet and rising sea levels. Despite this knowledge, the company continued to invest heavily in fossil fuel assets, and actively worked to undermine efforts to address climate change.
In recent years, as the issue of climate change has become increasingly pressing, ExxonMobil has come under intense scrutiny for its past actions. The company even went to trial for a lawsuit claiming that Exxon was misleading investors about the risks of climate change. Despite this, the company has continued to operate its fossil fuel assets, and has even sold some of these assets to private equity firms.
One recent example of this is ExxonMobil’s sale of its Barnett Shale assets in Texas to a private equity firm BKV Corporation for $750 million in 2022. These assets, which include natural gas wells and pipelines, are known for their high carbon emissions, and will likely continue to operate for many years to come.
Another example occurred in 2017 when HitecVision-backed oil company Point Resources bought some of ExxonMobil’s Norway assets. This deal was concluded with the goal of unlocking the value of the assets, but it also means that these assets will continue to operate and emit carbon while operating with less scrutiny due to its private ownership. The Wall Street Journal reported that Point Resources would “increase its production from 60,000 barrels a day…to 80,000 barrels a day” and that most of the increase was a result of the purchase of ExxonMobil’s assets.
ExxonMobil’s decision to sell its fossil fuel assets to private equity firms, rather than responsibly decommissioning them and transitioning to cleaner forms of energy, is a clear indication of the company’s ongoing commitment to fossil fuels. While it’s true that ExxonMobil made accurate predictions about the impacts of climate change decades ago, the company’s continued operation and sale of high-carbon emissions assets suggests that it will continue to look past the gravity of the problem.
Exxon’s sale of its fossil assets into private equity hands documents a larger trend where oil and gas assets are transferred from public markets into the private markets, thereby masking emissions data and their negative effects away from public view. In a recent PESP analysis, PE firms were shown to have bought at least $25 billion in fossil fuel assets from public markets in the past two years alone. As publicly listed oil majors (such as ExxonMobil) succumb to public pressures regarding climate change, they are offloading less productive assets to claim reductions to their carbon footprint. However, this public-to-private trend is exacerbating the crisis as fossil fuel assets taken into the private markets tend to be at risk of weaker climate stewardship.