Exxon Mobil (XOM) announced on Wednesday a strategic five-year plan aimed at increasing its oil and gas output by 18%. The company plans to escalate annual project spending to between $28 billion and $33 billion from 2026 to 2030, with an objective to enhance earnings by $20 billion over the projected $34.2 billion for this year.
Key Highlights:
Financial Goals:
Exxon’s CEO, Darren Woods, emphasized that the increased spending is expected to yield returns exceeding 30% over the investments’ lifespan. The company is capitalizing on its operations in Guyana and its U.S. shale business, which is set to double production this year due to the acquisition of Pioneer Natural Resources.
Market Reaction:
Following the announcement, Exxon shares dipped 0.7% to $111.92. Analysts were surprised by the higher spending, which exceeds previous capital spending forecasts of $22 billion to $27 billion annually through 2027.
Earnings Outlook:
RBC Capital Markets analyst Biraj Borkhataria noted that while production plans align with expectations, market skepticism remains until tangible results are observed. Exxon’s cost-reduction target has also been raised to $18 billion by 2030, up from an earlier $15 billion target by 2027.
Production Targets:
Exxon aims to significantly ramp up production in the Permian Basin to 2.3 million barrels per day (bpd) by 2030, alongside 1.3 million bpd from its Guyana operations. Overall output is projected to reach 5.4 million bpd.
Comparison with Competitors:
Exxon’s ambitious targets stand in contrast to Chevron’s plans, which include reducing next year’s project spending and slowing shale production growth.
Carbon Management Initiatives:
The company is investing in carbon capture and sequestration, with contracts to collect 7 million tons of carbon annually. Earnings from this low-carbon solutions segment are expected to rise by $2 billion by 2030.
Hydrogen Project Considerations:
Exxon is delaying approval of a significant hydrogen project in Texas, pending revisions to U.S. incentives for such initiatives. Woods indicated that investment decisions will depend on government policies.