Oil fell to below $60 a barrel today and below $59 in after hours trading, sending shockwaves throughout an industry that has seen its returns plummet in recent months. In response, Exxon-Mobil Corporation of Houston announced it would seek a bailout from the recently-announced Troubled Asset Relief Program (TARP).
Exxon-Mobil CFO, Larson E. Whipsnade, speaking to reporters today, announced the bold move even though the company has had the highest profits for any company ever over the last several quarters:
We foresee that profits may be negatively affected in the near term such that we may earn less than $9 billion for the last quarter of this year. Should that happen, our ability to pay dividends at the rate to which our investors have become accustomed is in serious jeopardy. We believe that we must be proactive, and feel it is appropriate to seek assistance through TARP before any of our stockholders are forced to forego any serious privations.
Mr. Whipsnade pointed to the recent bankruptcy filing by the Yellowstone Club as a harbinger of the devastation that could befall the country unless Exxon-Mobil receives "bridge funding" to ensure that dividends continue to be paid at their current levels.
This is only the first of what could be a serious problem for the country clubs and marinas of our nation. These people need their unearned income to pay for the places to get away and recharge their batteries so that they can continue the important work they are doing at the largest investment banks and insurance companies and continue to set the standard for excellence in business that the U.S. has set around the world.
White House Deputy Press Secretary Tony Fratto indicated that the President would do what he could to intercede with Chairman Bernanke and Secretary Paulson to make sure that the Exxon-Mobil received a fair consideration through the TARP program. As an emergency measure, he announced that the President and Vice President would be meeting in high-level talks with the Fed Chairman, the Treasury Secretary and representatives from Exxon-Mobil at the Yelowstone Club until all the details are worked out.
While it may provide only temporary assistance to the Yellowstone Club, we believe that it will send a strong message to the business community that we are serious in our intentions, and we will stay there until January 20, if that's what it takes.
Representatives from Chevron, BP, Amoco, and Aramco, the Arabian-American Oil Company owned by the Saudi Arabian Government, said those companies were studying the situation, and would wait to see what transpires at the Yellowstone Club talks in the first week before deciding whether to join in. Eggbert Sousé, Press Secretary of Amoco noted:
We believe that 2-party talks with Exxon-Mobil will be the most productive in the early stages, and further, we anticipate a cold front will be moving in at the beginning of the week and should bring 18-24 inches of fresh powder to the area.
Market watchers say there appears to be intense interest in the Exxon-Mobil intitiative by the nations health insurance companies, pawnshop operators, defense contractors and WalMart. When questioned by reporters whether the company would seek a bailout, an unnamed source at Haliburton responded:
Why wouldn't we?