News March 3, 2021
ExxonMobil outlines plans to grow long-term shareholder value in lower carbon future
IRVING, Texas – ExxonMobil today outlined its plans through 2025 to increase earnings and cash flow to sustain and grow its dividend, reduce debt and fund advantaged projects, while working to commercialize lower emission technologies in support of the goals of the Paris Agreement.
News March 3, 2021
ExxonMobil outlines plans to grow long-term shareholder value in lower carbon future
- Industry-leading investment portfolio profitable at low prices and flexible to market conditions
- Plans through 2025 increase earnings, cash flow to sustain and grow dividend, reduce debt and advance advantaged projects
- Technology leadership to develop lower carbon solutions and create future value
“Our investment portfolio is the best we’ve had in over 20 years, and will grow earnings and cash flow in the near term while remaining flexible to market conditions and benefiting from ongoing cost-reduction efforts. Looking ahead, we’re working to reduce our emissions and develop solutions, such as carbon capture and low-carbon hydrogen, needed to de-carbonize the highest emitting sectors of the economy – a critical requirement for society to achieve its net zero ambition.”
ExxonMobil plans capital spending of $16-$19 billion in 2021 and $20-$25 billion per year through 2025 on high-return, cash-accretive projects. Spending plans can be modified to reflect market conditions, as illustrated by successful efforts to preserve the value of investment opportunities while reducing capital spending by more than 30 percent in 2020 as a result of the pandemic. The company also reduced cash operating expenses by 15 percent in 2020 and expects permanent structural savings of $6 billion a year by the end of 2023 versus 2019.
Future spending plans take into account potential market volatility as the economy recovers from the pandemic.
“Our investments are expected to generate returns of greater than 30 percent,” said Woods. “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. Downstream investments improve net cash margin by 30 percent and our Chemical investments grow high-value performance products by 60 percent.”
To grow shareholder value through the transition to a lower carbon economy, ExxonMobil has focused its extensive research and development portfolio on technologies to address hard to de-carbonize sectors of the economy responsible for approximately 80 percent of energy-related emissions -- commercial transportation, power generation and heavy industry.
The company’s newly created business, ExxonMobil Low Carbon Solutions, was established to commercialize low-emission technologies, and will initially focus on carbon capture and storage (CCS), the process of capturing CO2 that would otherwise be released into the atmosphere from industrial activity, and injecting it into deep geologic formations for safe, secure and permanent storage.
ExxonMobil is the industry leader in CCS technology and has more than 30 years of experience capturing carbon. The company has an equity share in about one-fifth of global CO2 capture capacity and has captured approximately 40 percent of all the captured anthropogenic CO2 in the world. ExxonMobil also produces about 1.3 million tonnes of hydrogen per year and is developing technology that could significantly lower the cost of both CCS and low-carbon hydrogen.
The International Energy Agency projects that CCS could mitigate up to 15 percent of global emissions by 2040 and the authoritative U.N. Intergovernmental Panel on Climate Change (IPCC) estimates that global de-carbonization efforts could be twice as costly without CCS.
Using estimates and demand projections, including from IPCC Lower 2 degree Celsius scenarios, the market for CCS and other low-emission technologies and products is expected to grow significantly by 2040.
“Our development of next-generation technologies and existing businesses positions us well to capitalize on the growing demand for de-carbonization and market opportunities that are increasingly coming together to support lower-carbon energy solutions,” said Woods.
ExxonMobil met its 2020 emission reduction goals that included 15 percent reduction in methane emissions versus 2016 levels, and a 25 percent reduction in flaring versus 2016 levels.
The company’s 2025 emission reduction plans include a 15 to 20 percent reduction in upstream greenhouse gas intensity versus 2016 levels, supported by a 40 to 50 percent reduction in methane intensity and 35 to 45 percent reduction in flaring intensity.
The plans are expected to reduce absolute greenhouse gas emissions by an estimated 30 percent for the Upstream business. Absolute flaring and methane emissions are expected to decrease by 40 to 50 percent under the plans. The company also aims for industry-leading greenhouse gas performance and to eliminate routine flaring in line with the World Bank initiative by 2030.
The company’s investor day presentations are available on its Investor Relations site at exxonmobil.com.
ExxonMobil, one of the largest publicly traded international energy companies, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is one of the largest refiners and marketers of petroleum products, and its chemical company is one of the largest in the world. To learn more, visit exxonmobil.com and the Energy Factor.
Outlooks; projections; goals; estimates; descriptions of strategic plans and objectives; planned capital and cash operating expense reductions and the ability to meet or exceed announced reduction objectives; plans to reduce future emissions intensity and the expected resulting absolute emissions reductions; emission profiles of future developments; carbon capture results and the impact of operational and technology efforts; future business markets like carbon capture or hydrogen; the impacts of the COVID-19 pandemic and corresponding market impacts on ExxonMobil’s businesses and results; price and market recoveries; energy market evolution; recovery and production rates; rates of return; development plans; future distributions and debt levels; product mix and sales growth; and other statements of future events or conditions in this release are forward-looking statements. Actual future results could differ materially due to a number of factors. These include global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil, gas, petroleum, petrochemicals and feedstocks; company actions to protect the health and safety of employees, vendors, customers, and communities; the ability to access short- and long-term debt markets on a timely and affordable basis; the severity, length and ultimate impact of COVID-19 and government responses on people and economies; global population and economic growth; reservoir performance and depletion rates; the outcome of exploration projects and the timely completion of development and construction projects; regional differences in product concentration and demand; war, trade agreements, shipping blockades or harassment and other political, public health or security concerns; changes in law, taxes or regulation, including environmental regulations, taxes, political sanctions and international treaties; the timely granting or freeze, suspension or revocation of government permits; the impact of fiscal and commercial terms and the outcome of commercial negotiations; feasibility and timing for regulatory approval of potential investments or divestments; the actions of competitors and preferences of customers; the capture of efficiencies within and between business lines; unexpected technological developments; general economic conditions, including the occurrence and duration of economic recessions; unforeseen technical or operating difficulties; the ability to bring new technologies to commercial scale on a cost-competitive basis, including large-scale hydraulic fracturing projects and carbon capture projects; and other factors discussed here, in Item 1A. Risk Factors in our Form 10-K for the year ended December 31, 2020 and under the heading "Factors Affecting Future Results" on the Investors page of our website at www.exxonmobil.com under the heading News & Resources. The forward-looking statements in this release are based on management’s good faith estimates, plans and objectives as of the March 3, 2021 date of this release. We assume no duty to update these statements as of any future date.
Forward-looking statements contained in this release regarding the potential for future earnings, cash flow, margins, returns, rate of return, future market sizes, cash operating expenses, and net cash margin are not forecasts of actual future results. These figures are provided to help quantify the potential future results and goals of currently-contemplated management plans and objectives including new project investments, plans to replace natural decline in Upstream production with low-cost volumes, plans to increase sales in our Downstream and Chemical segments and to shift our Downstream and Chemical product mix toward higher-value products, continued high-grading of ExxonMobil’s portfolio through our ongoing asset management program, announced and continuous initiatives to improve efficiencies and reduce costs, capital expenditures and cash management, and other efforts within management’s control to impact future results as discussed in this release. These figures are intended to quantify for illustrative purposes management’s view of the potentials for these efforts over the time periods shown, calculated on a basis consistent with our internal modelling assumptions for factors such as working capital, as well as factors management does not control, such as interest, differentials, and exchange rates. Price points referred to in this release are not intended to reflect ExxonMobil’s forecasts for future prices or the prices we use for internal planning purposes.
ExxonMobil-operated emissions, reductions and avoidance performance data are based on a combination of measured and estimated data using best available information. Calculations are based on industry standards and best practices, including guidance from the American Petroleum Institute (API) and IPIECA. The uncertainty associated with the emissions, reductions and avoidance performance data depends on variation in the processes and operations, the availability of sufficient data, the quality of those data and methodology used for measurement and estimation. Changes to the performance data may be reported as updated data and/or emission methodologies become available. ExxonMobil works with industry, including API and IPIECA, to improve emission factors and methodologies. Emissions, reductions and avoidance estimates from non-ExxonMobil operated facilities are included in the equity data and similarly may be updated as changes to the performance data are reported. The data includes XTO Energy performance beginning in 2011.
Definitions and additional information concerning certain terms used in this release including cash operating expense and net cash margin are provided in the Frequently Used Terms available on the Investor page of our website at www.exxonmobil.com under the heading News & Resources and in the March 3, 2021 Analysts’ Day material referenced below. Reconciliations of non-GAAP terms are provided for historical periods but not for future periods. We are unable to provide a reconciliation of forward-looking non-GAAP or other measures to the most comparable GAAP financial measures because the information needed to reconcile these measures is dependent on future events, many of which are outside management’s control as described above. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with our accounting policies for future periods is extremely difficult and requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated in a manner consistent with the relevant definitions and assumptions noted above.
This release references third party scenarios such as the 74 Lower 2°C scenarios, made available through the IPCC SR 1.5 scenario explorer data and the IEA Sustainable Development Scenario. These third party scenarios reflect the modeling assumptions and outputs of their respective authors, not ExxonMobil, and their use and inclusion herein is not an endorsement by ExxonMobil of their likelihood or probability. The analysis done by ExxonMobil on the IPCC Lower 2°C scenarios and the representation thereof aims to reflect the average or trends across a wide range of pathways. Where data was not or insufficiently available, further analysis was done to enable a more granular view on trends within these IPCC Lower 2°C scenarios as described in more detail in the complete March 3, 2021 Analysts’ Meeting presentation referenced below.
The term “project” as used in this release can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports. The term “performance products” refers to chemical products that provide differentiated performance for multiple applications through enhanced properties versus commodity alternatives and bring significant additional value to customers and end-users.
This release summarizes highlights from ExxonMobil’s 2021 Analysts’ Meeting held on March 3, 2021. For more information concerning the forward-looking statements, defined terms, and other information contained in this release, please refer to the complete Analysts’ Meeting presentation (including important information contained in the Cautionary Statement and Supplemental Information sections of the presentation) which is available live and in archive form through ExxonMobil’s website at www.exxonmobil.com.
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