Exxon Mobil plans to deliver around $14 billion of further earnings and cash flow growth between 2024-27 anchored by production growth of at least 11% amid a continued focus on high-return, low-cost-of-supply, value-accretive investments.
Exxon plans to continue to cut “structural costs and improve the mix of its business by growing production from low-cost-of-supply, advantaged assets and increasing sales of high-value performance chemicals, lower-emission fuels, and performance lubricants,” the company said Dec. 6 in a press release and accompanying investor presentation.
The Spring, Texas-based energy giant also plans to deliver $6 billion in additional structural cost savings by the end of 2027, which would constitute a combined structural cost savings of $15 billion compared to 2019.
Exxon’s product solutions business, which the company says is leveraging scale and technology advantages, will potentially triple earnings potential by 2027 compared to 2019.
Earnings from Exxon’s upstream sector are expected to more than double by 2027 compared to 2019 under its said investment strategy. Over the next five years, Exxon sees 90% of its planned upstream capex focused on new oil and flowing gas production generating expected returns of over 10% using a Brent price of $35/bbl.
In terms of share repurchases, Exxon expects them to reach $17.5 billion in 2023 as part of the $35 billion repurchase plan previously announced for 2023 and 2024. After the $60 billion all-stock deal with Pioneer Natural Resources closes, “the go-forward pace of the program in 2024 will be increased to $20 billion annually through 2025, assuming reasonable market conditions,” Exxon said.
Capex and production growth
Exxon expects capex and exploration expenditures of between $23 billion and $25 billion in 2024. Between 2025 and 2027, capex will range from $22 billion to$27 billion annually, “driven by the growth in value-accretive low carbon solutions opportunities to reduce emissions,” Exxon said.
The planned expenditures are expected to generate an average 30% return, according to Exxon, which said that over 90% of the Capex has payback periods that are less than 10 years.
Under Exxon’s four-year strategy, the company expects production to reach 4.2 MMboe/d by 2027 compared to around 3.8 MMboe/d in 2024, driven primarily by higher volumes in the Permian Basin and offshore Guyana in the prolific Stabroek Block in northern South America.
In the Permian, Exxon expects to reach net-zero emissions for unconventional operations by 2030, and also plans to accelerate Pioneer’s net-zero ambition by 15 years, to 2035 from 2050.
Low carbon opportunities
In the low-carbon space Exxon is eyeing over $20 billion in lower-emissions opportunities through 2027, which represents the third increase over the last three years from an initial $3 billion in projects identified in early 2021. This, in addition to Exxon’s recent $5 billion all-stock deal to acquire Denbury.
Exxon is also eyeing opportunities in lithium, hydrogen, biofuels, and carbon capture and storage (CCS) that in aggregate could generate returns of 15% and could reduce third-party emissions by more than 50 million tonnes per annum by 2030, according to the energy giant.
In the lithium space, the first phase of production in southwest Arkansas is expected in 2027. By 2030, Exxon expects to produce enough lithium to “supply the manufacturing needs of approximately 1 million electric vehicles per year,” the company said.