HOUSTON, December 1, Reuters -- Exxon Mobil set annual capital spending at $20 billion to $25 billion through 2027, allocating money to low-carbon projects and extending its previously projected spending rate for two years.
Exxon planned to spend $16 billion and $19 billion in 2021 and $20 billion to $25 billion from 2022 to 2025, according to Exxon last year.
Wall Street has been waiting for Exxon to outline a short list of projects it will pursue and detail those it has decided to eliminate. The capital budget has gone up by 55% this year, which could disappoint investors hoping for less spending and higher shareholder returns.
Chief Executive Darren Woods said that Exxon's spending is designed to create shareholder value. He said that the wide annual range allows for the flexibility to respond to future policy changes and technology advances associated with the energy transition.
The plan was approved by a board that consisted of three new members elected by investors to cut spending, boost returns and address climate concerns in the spring.
Oil analyst Paul Sankey said he was worried about the Exxon's disclosure, but he said he was worried that it would continue spending at the $20 billion -- $25 billion annual rate. On Tuesday, Sankey wrote that past spending on production growth led to falling upstream returns. Exxon tried to get rid of the fears of overspending. More than 90% of its planned oil and gas investments will generate double-digit percentage returns at oil prices of about $35 per barrel.
The company said that much of the money will go towards deepwater projects in Guyana and Brazil and the U.S. Permian shale patch. It did not reveal a target for future production.
Exxon plans to reduce greenhouse gas emissions per unit of oil and gas production by 40% to 50% by 2030, compared to 2016 levels.
The company promised last month to resume share buybacks and will spend $5 billion a year on top of $16 billion in dividends. Exxon's spending will include a fourfold increase in low-carbon initiatives spending to $15 billion a year through 2027.
The top U.S. energy producer slashed costs after a $22.4 billion loss last year. An oil-price rebound this year has resulted in profits that let Exxon pay down debt, maintain a hefty dividend and invest in a new low-carbon business.