I was just going through the Exxon conference transcript which is old news by now but well worth a re-read in context of the Falcon project and it does remind us of Exxon’s stance on the project and specially the comment on re-evaluation of projects in the Q&A session. I have highlighted the relevant sections to us and apologies to some members if you know this by heart J

Source : http://seekingalpha.com/article/1030...

Exxon Mobil, Q3 2008 Earnings Call Transcript – 30 Oct 2008

…….In exploration we added to our global portfolio of outstanding deepwater exploration opportunities. In the recent Gulf of Mexico lease sale 207, we were the high bidder for 130 blocks totaling 83,000 acres and water depths ranging from 2,100 feet to almost 10,000 feet.

In Brazil the deepwater drilling rig West Polaris arrived in Brazilian waters in late September and after concluding the required inspections and clearances has begun drilling the Azula well (ph 00:08:46) in Block BM-S-22. Plans to drill a second well on the block are underway and will follow immediately upon completion of the first well. Exxon Mobil is pleased to be participating in this exciting new subsalt play and will leverage all of our global experience and industry leading technologies in the exploration program.

Also in exploration we continue to progress our high potential unconventional natural gas opportunities in Europe and North America. In both the lower Saxony Basin in Germany and the Mako Trough in southeast Hungary we began drilling operations and will conduct production tests over the next several months.

Question and answers

Neil McMahon – Sanford C. Bernstein & Company, Inc.

And it’s hardly extreme to say so given the size of it. And just looking at the amount of cash, you’ve got nearly $37 billion on the balance sheet. What should we be thinking about your buy back level going forward? Neither the value of the stock has fallen and also how do you think about acquisitions given current prices for stocks which have fallen dramatically the last few months?

David Rosenthal

Well, let’s talk about the cash that we have on the balance sheet and let me just step back a second and say, of course, the utilization of that cash in whatever avenue is designed to increase shareholder value over the long-term. As we look forward, of course our first priority is to fund our very robust investment program and as we’ve mentioned we expect to spend in the league of $25 to $35 billion a year in CapEx over the next five years. And we have no change to those plans at this time. The projects are progressing as we expected.

The next thing we fund, of course, is the dividend and we have a history of growing the dividend. And that is, of course, one of the avenues of distributing cash to the shareholders. The last means of distributing cash to the shareholders is through the share buyback but I would -- we do that ratably over a long period of time and we don’t speculate on the price. We’re buying everyday across the time and you know, that program has continued.

Neil McMahon – Sanford C. Bernstein & Company, Inc.

Okay, thank you.

David Rosenthal

If we just come back to your follow up question related to M&A activity. I’d like to say that, of course M&A activity, our opportunities are just one of many opportunities that we look at on a continuing basis. I’ll tell you that was true at $140 a barrel and it’s true at $70 a barrel. We are monitoring what’s going on in the market but again, M&A is just one opportunity amongst many that we have and in particular, on a global basis that we’re monitoring and looking at it and evaluating on a constant basis.

Robert Kessler – Simmons & Company International

Good. This might be more of a nuance question but you mentioned a couple of times now that the inflationary trends that you’re seeing in the capital investment side of things and then you’ve reiterated this $25 to $30 billion per year spending for the next five years. I’m assuming that was calibrated giving consideration to the inflationary environment we witnessing at the time. So, just as you think about that program in the new environment, should we expect you to perhaps to spend less with the same activity to the extend deflation occurs or would you sort of pick up your activity to take advantage of the lower costs and then fill the gap and spend the same amount?

David Rosenthal

Well, that’s a good question and if you look at our major projects that are underway or in the early stages, these are very long-term large scale projects. And as I mentioned earlier, when we’re analyzing and evaluating those projects, we do look at them over a fairly broad range of prices and they are robust again across that range. As we look out into the future, we’re just going to need to just see what the impact is of these costs and how quickly they come through and what impact they have on the projects. But I would like to say overall, that we pursue investment opportunities, we don’t have spend target, if we mention the $25 to $30 billion a year going forward, that’s not a target that’s an outcome or an expectation that’s generated from the project portfolio that we’re pursuing. And as we continue to pursue that portfolio of projects, whatever impact, or help we get on prices will be realized in that. But again, we will be pursing all investment opportunities that we view as being robust and generate long term shareholder value.