By Steve Gelsi
Domestic oil and gas production takes center stage in Exxon's latest capital project list
Exxon Mobil Corp. has announced plans to spend $140 billion in the Permian Basin region as part of a plan by the oil and gas giant to ramp up its earnings and return cash to shareholders with a focus on U.S. production.
The move comes after Exxon (XOM) topped upstream production expectations in the third quarter, after spending $60 billion to buy Pioneer Natural Resources, an acreage holder in the Permian Basin of West Texas.
Its cost savings for the Pioneer deal will total $3 billion, which is 50% more than its previous projections, the company said.
The oil major said its big spend in the Permian Basin will generate returns of more than 30% by 2030, which will drive cash returns to shareholders.
Exxon said it will buy back $20 billion in stock in 2026 after spending the same big sum in 2025 to repurchase its stock.
Exxon Mobil's stock was down 0.3% in premarket trading on Wednesday. The stock has risen 12.7% so far in 2024, while the S&P 500 SPX is up by 26.5%.
"The company's capital allocation approach prioritizes competitively advantaged, high-return, low-cost-of-supply investments," the company said.
It'll spend $27 billion to $29 billion on capital projects in 2025, which will be the first first full year of Pioneer in its portfolio.
Looking ahead, Exxon Mobil expects to earn an additional $20 billion and $30 billion in cash flow, with a compound annual earnings growth rate of 10%.
It's also targeting $7 billion in cost savings. Its cost savings for the Pioneer deal will total $3 billion, which is 50% more than its previous projections.
Some other major capital projects underway include:
-- A boost in production from Guyana by developing two additional projects called Longtail and Hammerhead. The oil major expects total production capacity of 1.7 million barrels per day by 2030 in Guyana.
-- Liquid natural gas (LNG) production investment including first LNG sales from the Golden Pass development in the U.S and from the Qatar North Field East expansion project in 2025. In 2026, it's planning to make final investment decisions at the Rovuma development in Mozambique and the Papua project in Papua New Guinea in 2026.
-- The world's first large-scale carbon capture and storage system for carbon dioxide for permanent subsurface storage capacity throughout the U.S. Gulf Coast.
-- ExxonMobil is targeting 2029 to start operations on what it bills as the world's largest low-carbon hydrogen facility in Baytown. It'll produce uip to 1 billion cubic feet of "virtually" carbon-free hydrogen per day with about 98% of the carbon dioxide captured and stored.
- Steve Gelsi
https://www.morningstar.com/news/marketwatch/20241211219/exxon-pouring-140-billion-into-the-permian-basin-after-rise-in-third-quarter-production