Page 5 - NorthAmOil Week 50 2022

NorthAmOil COMMENTARY NorthAmOil

investor returns. Indeed, Bloomberg reported Including dividends payments, the com-
that Chevron is currently spending around pany will have spent $30bn on shareholder
$26bn per year on dividends and share buy- returns this year. Like Chevron, this represents
backs, placing those expenditures well ahead of more than ExxonMobil is investing in new
its capex budget. production.
“Our five-year plan is expected to drive lead-
ExxonMobil ing business outcomes and is a continuation of
ExxonMobil, for its part, unveiled its corporate the path that has delivered industry-leading
plan for the next five years a day after Chevron results in 2022,” stated ExxonMobil’s chairman
announced its 2023 budget. Under the 2023-27 and CEO, Darren Woods. “We view our success
corporate plan, ExxonMobil intends to raise as an ‘and’ equation, one in which we can pro-
capex by about 10% to $23-25bn next year and duce the energy and products society needs –
maintain annual spending at $20-25bn up to and – be a leader in reducing greenhouse gas
2027. The higher range allocated for next year [GHG] emissions from our own operations and
represents a move to help meet growing global also those from other companies.”
demand, according to the announcement.
Like Chevron, ExxonMobil talked up its low- What next?
er-emissions investments, saying it would raise Both companies’ plans reflect a similar response
these by around 15% to $17bn by 2027. It also to broader industry trends and an attempt to bal-
made mention of the Permian Basin, which ance investments in production growth with a
remains one of its key focus areas alongside continued focus on shareholder returns.
offshore Guyana and Brazil and global LNG While they are both intensifying their focus
projects. By 2027, the company expects its on lower-carbon investments, their plans While they are
upstream production to grow by 500,000 barrels still stand in contrast to those of European
of oil equivalent per day to 4.2mn boepd, with super-majors, which are focusing on cutting both intensifying
more than 50% of the total coming from these oil output and pivoting to renewables over the their focus on
key growth areas. longer term.
ExxonMobil described its approach as prior- ExxonMobil’s output will actually remain flat lower-carbon
itising “high-return, low-cost-of-supply” assets in 2022 at 3.7mn boepd, down from a previous
across its upstream and product solutions seg- target of 3.8mn boepd. However, this can be investments, their
ments. The focus on the Permian represents a attributed to its withdrawal from Russia in the
move away from mega-projects in an effort to wake of the war in Ukraine, which resulted in plans still stand
generate faster returns – for both ExxonMobil a hit of around 100,000 boepd. The super-ma- in contrast to
and Chevron. jor’s announcement illustrates that it intends
Under the corporate plan, ExxonMobil antic- to bounce back from this, and that it contin- those of European
ipates that its earnings and cash flow growth ues to take a different focus from its European
will double by 2027 compared with 2019 levels. counterparts. super-majors.
The super-major also highlighted shareholder For both ExxonMobil and Chevron, the
returns as being among its strategic priorities. Biden administration’s desire for more spend-
As part of this, it is boosting share buybacks to ing on domestic production allows for some
up to $50bn by 2024, including the $15bn it has breathing space to continue focusing on oil and
spent on these in 2022. Over the next two years, gas operations. However, if oil prices fall again
ExxonMobil anticipates that share buybacks will in the future, pressure to pivot to renewables
average $17.5bn per year. could once again ramp up.™

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