Exxon Keeps Up $35 Billion Annual Spending Despite Oil Rout
U.S. supermajor ExxonMobil maintains its strategy for capital expenditures between US$30 billion and US$35 billion each year through 2025, chairman and CEO Darren Woods said at the company’s annual investor day on Thursday, even though oil prices have tumbled by 25 percent since the start of the year.
This year, Exxon sees its investments at around US$33 billion, depending on the progress of individual projects, Woods told analysts at the New York Stock Exchange today.
Exxon has been one of the few international oil majors that have ramped up spending levels over the past two years, aiming to grow production and shareholder value.
Most other supermajors continue to stick to tight capital discipline after the 2014 oil price crash put an end to the enormous capital budgets in the oil industry.
Exxon is focusing on several key growth areas to boost oil and gas production over the next few years. These are increasing shale production in the Permian basin, further developing oil production offshore Guyana, boosting exploration and production offshore Brazil, and developing liquefied natural gas (LNG) projects in Papua New Guinea and Mozambique.
In the Permian, Exxon’s production volumes jumped by around 80 percent in 2019, the company said in its presentation. The company’s production in the key U.S. shale basin remains on track to exceed 1 million oil equivalent barrels per day by 2024.
Yet, the in short term in the Permian, Exxon “emphasized it is evaluating the pace of near-term development activities in response to market conditions, and can do so while preserving value.”
In Guyana, production is expected to exceed 750,000 gross barrels of oil per day by 2025, while Exxon also plans to increase exploration offshore Brazil this year and next.
“The strength of our portfolio and our financial capacity enable us to continuously evaluate our priorities and the pace of investments while preserving value, which is critical in current market conditions and near decade-low commodity prices and margins,” CEO Woods said.
Exxon also had a word about climate change in its investor day presentation, with Woods saying that the “long-term growth plans are rooted in the company’s efforts to meet the world’s increasing demand for reliable and affordable energy, while reducing emissions and risks associated with climate change.”
Earlier this week, the other U.S. supermajor, Chevron, couldn’t leave out the energy transition theme either, although the two U.S. majors haven’t been as vocal about cutting emissions as their European rivals.
Chevron said in its annual analyst meeting on Tuesday that it has the capacity to distribute US$75 billion-US$80 billion in cash to shareholders over the next five years, thanks to careful spending in lower-risk projects with solid returns.