Exxon Sees Earnings Rising By Over $4B Through 2020

ExxonMobil expects its earnings to grow by more than US$4 billion from 2019 to 2020, the U.S. supermajor said in its Investor Day presentation on Wednesday.

In 2018, Exxon booked earnings of US$20.8 billion, up by 6 percent compared to 2017. Despite weaker margins in the downstream and the drop in oil prices in Q4, Exxon’s full-year 2018 cash flow from operating activities jumped to US$36 billion from US$30 billion for 2017. The 2018 cash flow from operations was the highest since 2014, the company said.  

According to today’s presentation, Exxon expects its earnings, cash flow, and return profile to grow in coming years even in a flat price environment. Cash flow is expected to also continue to increase, by more than US$5 billion from 2019 to 2020, the company says.

In the upstream, Exxon will focus on five “outstanding” developments—the Permian in the shale business, Guyana and Brazil in deepwater, and Papua New Guinea and Mozambique in liquefied natural gas (LNG).

For the Permian specifically, Exxon expects robust earnings growth, even with oil prices at $40 a barrel.

A day before the Investor Day presentation, Exxon said on Tuesday that it had revised up its Permian growth plans, expecting to produce more than 1 million oil-equivalent barrels per day by as early as 2024, which would be an increase of almost 80 percent. The doubling of Exxon’s Permian production in 2018 has increased the company’s confidence in its growth plans, it said.

Exxon expects its investments in the Permian to produce double-digit returns, even at low oil prices. At oil price at $35 a barrel, for example, Permian production will have an average return of more than 10 percent, Exxon said, noting that it is also building infrastructure to support production growth and takeaway capacity.

“These investments support growth plans and ensure that as production levels continue to rise, we are well positioned in processing and transportation capacity,” Neil Chapman, ExxonMobil senior vice president, said in a statement.  

By Tsvetana Paraskova for Oilprice.com

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