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Exxon Plans Higher Earnings And Dividend Through 2025

ExxonMobil expects its investments to generate returns of over 30 percent as it focuses on high-return and cash-generating projects that would allow it to grow its dividend, the U.S. supermajor said ahead of its Investor Day on Wednesday.  

Last month, ExxonMobil booked its first annual loss since the 1999 merger of Exxon and Mobil, and the first annual loss in at least 40 years after the pandemic crushed oil demand and prices and led to a huge domestic gas asset impairment.

Exxon plans this year’s capital spending in the range of $16 billion-$19 billion, the company said on its investor day today. Between 2022 and 2025, annual capital expenditure (capex) is currently set at $20 billion-$25 billion, but could change in view of the prevailing market conditions at the time.

One of the world’s biggest oil firms also expects permanent structural savings of $6 billion a year by the end of 2023 compared to 2019.

“Our investments are expected to generate returns of greater than 30 percent,” Darren Woods, chairman and chief executive officer, said in a statement ahead of the annual investor day.

“And 90 percent of our upstream investments in resource additions, including in Guyana, Brazil and the U.S. Permian Basin, generate a 10 percent return at $35 per barrel or less,” Woods noted.

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Exxon has been facing increased shareholder pressure to start thinking of its business in the energy transition. Engine No. 1, the new activist investor firm seeking long-term policy changes, sent a letter to Exxon in December demanding that the supermajor reinvent itself for “much-needed change.” 

In response to investor pressure, Exxon has said it plans to reduce the intensity of the greenhouse gas emissions from its operated upstream assets by 15 to 20 percent by 2025, in support of the Paris Agreement. 

At the Investor Day presentation today, Exxon also outlined plans to boost its development of carbon capture and hydrogen technologies, saying it is “positioned to succeed” in those two areas.

Still, the supermajor said that investment in new oil and gas supply will continue to be needed even in the long term in order to offset depletion of existing reservoirs.

By Tsvetana Paraskova for Oilprice.com

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