Exxon plans to double profits and cash flow by 2027 while reducing emissions
An Exxon Mobil Corp logo is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil, September 24, 2018.
Sergio Moraes | Reuters
Exxon Mobil on Wednesday presented a corporate spending plan that it says will double profits and cash flow by 2027 from 2019 levels, while reducing emissions. The plan comes as the oil giant reassesses its long-term strategy in the wake of the pandemic and after a reshuffle of its boardroom.
The company said it plans to spend between $ 20 billion and $ 25 billion a year through 2027. That’s above the $ 16 billion to $ 19 billion range the company has set for spending in 2021, but significantly lower than the $ 30 billion to $ 35 billion the company plans to spend each year. before the pandemic sets in.
The company said the plan allows “flexibility to adapt to adverse market conditions.”
U.S. oil briefly fell into negative territory in April 2020 as the pandemic squeezed demand for petroleum products, forcing energy companies like Exxon to quickly cut costs. Investors now favor companies that focus on leaner operations and the return of capital, rather than those that focus solely on growth.
In October, Exxon announced its first dividend increase in more than two years and also announced plans to launch a stock buyback program of up to $ 10 billion over the next 12 to 24 months.
Looking ahead, the company said it was focusing on high quality assets. Exxon said more than 90% of its new upstream investment would return more than 10%, even if oil is trading at $ 35 a barrel or less.
US oil rose to $ 69.16 a barrel on Tuesday. Prices have been volatile recently – WTI fell rapidly after surging above $ 85 in October – underscoring uncertainty over the long-term path of oil prices.
“The restored strength of our balance sheet and improved financial outlook are supporting accelerated investment in our high return, industry-beneficial projects, as well as a growing list of low-emission and profitable business opportunities,” Darren Woods, CEO of Exxon, said in a statement. “Our strategy is designed to create shareholder value by leveraging our competitive advantages while retaining the flexibility to respond to future policy changes and technological advancements associated with the energy transition. “
Exxon also reiterated its intention to spend $ 15 billion on emissions reduction technologies. The company said the money would be used to reduce emissions from existing operations as well as for investments in areas such as carbon capture.
Exxon shares were up about 1.7% in pre-market trading, on the heels of a broader market comeback and this announcement.