Needs a lot more oil (not gas) production to prevent them from continued to under-perform their peer oil and gas group. So I don't understand why it does not buy the remaining shares of IMO?? Anyone understand why they are happy keeping only about a 69% ownership in IMO? It seems that making direct investments in a 100% owned sub in Canada (IMO) would be much better than a 100% owned XOM Canada sub making JV investment with IMO a 69% owned sub??? I like IMO but I do not understand the purpose of it's current structure. Any thoughts??
First, CAnada prefers to have it largest oil compnay somewhat independent, as oppsed to a lost in XOM subsidiary. Secodn, IMO's oil is all tar sands. Liberals and envirmentalists HATE it. So XOM keeps them at bay by holding their tar sand thru IMO, a seperate company. Third, XOM doesn't own IMO to make any money in the stock (like us). All XOM cares about is that IMO books more oil RESERVES. That is what XOM needs, reserves on the books. IMO should be trading higher. It is undervalued. But XOM controls IMO, and XOM is not out for us shareholders, but only for IMO to book reserves - for XOM, and owning 70% of IMO, XOM books 70% of IMO's reserves on THEIR books.
Good insight on the XOM relationship with IMO. As an Imo shareholder I always feel like my shareholders needs are totally subsistent to XOM's desires. Not sure if anti-fair trade laws or Canada (it's citizens also) would ever let XOM buy up the remaining 31%. I note that XOM has Mobil Canada as a 100% subsidiary to operate in Canada. So given the bias by Canada to not lose it to XOM I doubt XOM will every buy out the remainder IMO shares, I wish they would and it seems like it would simplify the XOM accounting for IMO but probably won't happen. There could be some other financial restructuring that could benefit the independent shareholders like a one time dividend pay out of IMO tenders to buy back shares from public and XOM in proportion so the entire share base shrinks..maybe tanders to buy back 20% of shares at $60.oo a share, but it would all depend on what benefits XOM. I think the current structure will continue on for a long time so you just have to be satisfied knowing the share price does not reflect true value. I beleive you'll still see decent share price appreciation in IMO regardless, eventually the share price must reflect true value.