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Exxon Mobil Corporation XOM has revealed plans for increased earnings and production expansion.
Earnings
ExxonMobil expects a substantial rise in its earnings potential through 2027, with upstream earnings projected to more than double from the 2019 reported level. The outlook is underpinned by robust production growth in the Permian Basin and Guyana.
XOM mentioned that effective implementation of its strategic initiatives since 2019 enhanced its earnings capacity, contributing about $10 billion to its annual earnings and cash flow at a real Brent price of $60 per barrel. The company is progressing toward achieving an additional $14 billion in earnings and cash flow growth potential over the next four years.
Capital Spending
ExxonMobil expects an annual total of $23-$25 billion in capital expenditure and exploration expenses. The company aims to allocate $22-$27 billion annually to project spending through 2027. Additionally, there are plans to increase spending on emerging lithium and low-carbon ventures by 18% over this period.
The expenditure forecast involves a heightened commitment to its energy transition division, known as Low Carbon Solutions. The budget for Low Carbon Solutions is set to increase from $17 billion to $20 billion from 2022 to 2027. However, it is important to note that this increased spending will be contingent on government support.
Share Buyback
ExxonMobil plans to raise its annual share buybacks to $20 billion through 2025, up from the current $17.5 billion, following the completion of the Pioneer merger. The company will also persist in its ongoing divestment strategy for its refining operations.
Production
The company predicts a production increase to 3.8 million barrels of oil equivalent per day (Boe/d) in 2024, up from this year’s 3.7 million Boe/d, as it places its confidence in growth from the Permian shale basin and Guyana.
XOM indicated that it anticipates maintaining a flat production until the end of this year, standing at 3.7 million Boe/d primarily due to its withdrawal from Russia.
Emission Targets
ExxonMobil has reported progress in its efforts to achieve a 40-50% reduction in upstream-operated greenhouse gas emissions intensity by 2030 from the 2016 reported level. The company has already accomplished half of this reduction target.
Additionally, ExxonMobil is pursuing more than $20 billion worth of lower-emission opportunities until 2027. These opportunities encompass various areas, such as lithium, hydrogen, biofuels, and carbon capture and storage.
Zacks Rank & Stocks to Consider
ExxonMobil currently carries a Zack Rank #3 (Hold).