Energy
Wednesday, December 6th, 2023 3:53 pm EDT
Key Points
- Earnings Doubling by 2027: Exxon Mobil anticipates a significant increase in earnings through 2027, more than doubling relative to 2019. The company aims to achieve this growth by implementing cost-cutting measures, boosting production, and increasing sales in various sectors, including chemicals, lower emission fuels, and performance lubricants.
- Strategic Cost-Cutting Measures: Exxon plans to cut structural costs by an additional $6 billion through the end of 2027, totaling $15 billion in savings compared to 2019. The cost-cutting initiatives are part of the company’s broader strategy to enhance profitability and efficiency.
- Focus on Lower Carbon Emissions and Emerging Sectors: In response to the evolving energy landscape, Exxon is increasing investments in lower carbon emissions projects, allocating $20 billion through 2027, up from $17 billion. The company is concentrating on carbon capture, lithium for electric vehicle batteries, hydrogen, and biofuels. Investments in these areas are expected to generate returns of 15%. Exxon aims to reduce its own upstream greenhouse gas emissions by up to 50% by 2030, having already achieved half of this reduction. The company is particularly focused on lithium production in Arkansas, with plans to supply enough battery-grade lithium to support the manufacture of 1 million electric vehicles by 2030.
Exxon Mobil announced plans to more than double its earnings through 2027, projecting an increase of $14 billion over the next four years relative to 2019. The energy giant is implementing cost-cutting measures, including a reduction of structural costs by an additional $6 billion by the end of 2027, resulting in a total savings of $15 billion compared to 2019.
The company aims to achieve this growth by slashing costs, expanding production, and boosting sales in various sectors, including chemicals, lower emission fuels, and performance lubricants. Exxon is set to make its largest deal in decades by acquiring Pioneer Natural Resources for nearly $60 billion, with plans to close the merger in the first half of 2024. Following the merger, Exxon intends to increase its annual share repurchase program to $20 billion in 2024-2025, up from $17.5 billion in 2023.
Exxon forecasts capital expenditures ranging from $23 billion to $25 billion in 2024 and an annual range of $22 billion to $27 billion from 2025 through 2027. The company anticipates average returns of 30%, with over 90% of spending having payback periods of less than a decade.
CEO Darren Woods emphasized Exxon’s commitment to delivering energy and products worldwide while simultaneously developing a new business to reduce emissions in challenging-to-decarbonize sectors. The company expects oil and gas production to reach approximately 3.8 million oil equivalent barrels per day in 2024, rising to 4.2 million bpd by 2027, driven by growth in the Permian Basin and Guyana.
Exxon is increasing investments in lower carbon emissions projects to $20 billion through 2027, with a focus on carbon capture, lithium for electric vehicle batteries, hydrogen, and biofuels. The company plans to cut its own upstream greenhouse gas emissions by up to 50% by 2030, with half of that reduction already achieved.
In response to the struggling performance of Exxon Mobil shares in 2023, which dropped more than 9%, the company remains optimistic about significant opportunities for profitable growth in both traditional and emerging sectors. Exxon’s strategic investments in lithium drilling operations in Arkansas aim to produce battery-grade lithium for electric vehicles by 2027, supporting the manufacture of 1 million electric vehicles by 2030. Despite recent stock declines, Exxon is positioning itself for substantial growth and profitability over the coming years.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/06/exxon-sees-big-earnings-boost-from-cost-cuts-will-increase-share-buybacks-after-pioneer-deal-closes.html
