RPT-FOCUS-Exxon CEO struggles to reverse Tillerson's legacy of failed bets

By Ernest Scheyder

HOUSTON, March 7 (Reuters) - Exxon Mobil Corp's $200million write-down last month on abandoned ventures in Russia -once its next big frontier - points to challenges facing ChiefExecutive Darren Woods in his second year leading the world'slargest publicly traded oil producer.

Some of the biggest bets taken by his predecessor RexTillerson, now the U.S. secretary of state, have resulted inbillions of dollars in write-downs amid falling production and astock price that has long lagged peers.

That leaves Woods facing the prospect of slow growth andbillions of dollars in new spending that could weigh on resultsfor years. In 2018, the company plans capital spending of about$24 billion - up about a quarter since 2016 - suggesting returnon capital will get worse before it gets better as the firmwaits for a payoff from new exploration under Woods.

Rivals including Royal Dutch Shell and Chevron, by contrast, have capped or cut their spending afterfinishing expansion projects. Exxon shares are down 18 percentsince Woods took over in January 2017. Shell is up 2 percent andChevron is down about 3 percent during the same period.

Woods is feeling the heat from investors who could have mademore if they held shares in Exxon's rivals, as well as activistinvestors who want to see the company take renewable energy moreseriously. Analysts are pushing for more transparency onoperations, and some have called for Woods to sell assets.

Exxon declined to comment. A State Department spokespersonsaid Tillerson would have no comment on Exxon matters andreferred questions to the company.

Exxon is set to host its annual analyst meeting in New Yorkon Wednesday.

The firm took the $200 million after-tax charge to walk awayfrom its Russia Kara and Black sea ventures with Rosneft. Five years ago, Exxon touted plans to spend more than$3 billion in Russia, but the firm halted operations in late2014 when the U.S. sanctioned the country over its militaryoperations in Ukraine.

Exxon also took $1.3 billion in charges against Tillerson'sbets on natural gas in Mexico and Canada this year. Last year,it took a $2.13 billion write-down a year earlier - mostly onRocky Mountain properties tied to Tillerson's 2010 purchase ofnatural gas producer XTO Energy Inc. - and disclosed it hadreduced estimates of Canadian oil reserves by 3.5 billionbarrels.

"There's no question that, over the past handful of years,Exxon has been a relative underperformer," said Hank Smith,co-chief investment officer of the Haverford Trust, which hasheld Exxon's shares for two decades and recently added RoyalDutch Shell to its portfolio. "It's been frustrating."

'EPIC FAIL'

Weak results from production have this year cost Exxon itsstanding as the oil major generating the most cash, adistinction that now goes to Shell.

Now, Exxon is spending more cash on projects that will taketime to produce.

In Guyana, where the company is leading development of anoffshore field estimated to hold at least 3.2 billion barrels ofoil, Exxon and partners have said they must spend more than $4billion on developing a project not expected to deliver oiluntil at least late 2019.

More spending awaits Exxon in Qatar, Mozambique and PapuaNew Guinea for liquefied natural gas projects, and for oildevelopments in Brazil, Ghana and Mauritania, the company hassaid.

Exxon paid more than $6 billion last year to double itsacreage in the Permian Basin of Texas and New Mexico, thelargest U.S. oilfield. Exxon's production there so far isrelatively low compared to peers, about 200,000 barrels of oilequivalent per day. Exxon says it plans to triple output therethrough 2025.

With all Woods' development plans, it seems unlikely Exxon'scapital spending will decline after this year, said Simmons & Coanalyst Guy Baber.

The company did reverse some of the write-downs it took onreserves as oil prices rose. But the company's inability totranslate those gains into robust profits in the final quarterof 2017 was an "epic fail," said Raymond James oil analyst PavelMolchanov.

LITTLE DATA FOR INVESTORS

Some investors say it's too soon to evaluate Woods' tenuredespite Exxon's lagging returns.

"There are few decisions that any one person, let aloneWoods, could make in the first 12 to 13 months that would beable to really affect the company," said Mark Stoeckle,portfolio manager of Adams Natural Resources Fund Inc,which holds Exxon's shares.

Exxon retains supporters on Wall Street. Its shares arerecommended for purchase by 29 percent of the 24 analysts thatcover the company, according to Thomson Reuters data. Half ratethe shares as a "hold" and five advise "sell."

Analysts recommending the stock cite the strength of Exxon'sassets.

Others, however, want more information on Exxon'soperations. Of the world's five largest publicly traded oilproducers, Exxon ranks last for providing detailed data toinvestors, while BP Plc is the best, according to ananalysis of quarterly earnings regulatory filings by investmentresearcher Redburn Ltd.

BP and Shell, for example, offer more than twice as muchdata as Exxon on each segment of operations, Redburn found.

"Exxon Mobil's greatest challenge for 2018 might not itsvaluation, assets or growth, but opening up to investors," saidRedburn oil and gas analyst Rob West.

(Reporting by Ernest ScheyderEditing by Gary McWilliams, Simon Webb and Brian Thevenot)