Exxon to unveil spending plans Wednesday

HOUSTON Reuters -- Exxon Mobil will brief Wall Street on Wednesday on its spending plans, with investors looking for how it will balance oil and low-carbon initiatives without compromising shareholder returns.

This year, the largest U.S. oil producer slashed costs by slowing down several big expenditures while boosting investment in low-carbon ventures. Analysts will be the first time they can ask executives about spending and proposals for new investments in carbon capture and biofuels.

Ben Cook, portfolio manager of Hennessy BP Energy Transition Fund, holds shares in Exxon, said Exxon's disclosure of expected returns targets is the main concern for shareholders. The dividend yield is critical for investors, he said.

In 2027, a four-fold increase in low-carbon spending to $15 billion raised the question of which legacy projects will be pushed out and whether new low carbon investments can generate comparable returns to oil, according to Scotiabank analyst Paul Cheng, a four-fold increase in low-carbon spending.

Three new members elected last spring by investors want to reduce spending, boost returns and address climate concerns, the update will be the first of its kind under a board that includes three new members. Exxon has pivoted from questioning climate change to viewing it as a business opportunity.

The investors will want to know if Exxon's spending on carbon capture and clean fuels will require cutting some oil and gas projects, Cheng said. Cheng said that low-carbon could be a drag on the company's overall portfolio.

The company said last month that it would loosen its spending belt after pandemic-induced cuts, and restore between $4 billion and $9 billion in annual spending over the next few years. It promised to resume share buybacks next year.

New oil and gas investments in offshore Guyana, Brazil, U.S. shale and chemicals products have been included in the company's future budgets. There are proposed sales of billions of dollars in less productive assets that are offset by the costs.

Exxon recently raised to 10 billion barrels of recoverable oil and gas in Guyana and projected output will grow eight-fold to 1 million barrels per day in 2027 - more than a fourth of the company's total output.

Exxon holds a 40% stake in another $8 billion deepwater oil project in Brazil, which was approved this year. Two drilling rigs were added in the U.S. Permian basin, raising Exxon's total to nine in the top U.S. shale field.

The company pledged to add carbon capture technology to the effort in the east coast of Africa because of the $30 billion liquefied natural gas project in Mozambique.

Paul Sankey, Sankey Research oil analyst said that Exxon will add more spending or a tonne more spending. He said that the question is how much money it will put in the short term.