HOUSTON, Nov 30 - Exxon Mobil will give Wall Street a brief on its spending plans, with investors looking for how it will balance oil and low-carbon initiatives without compromising shareholder returns.
The biggest U.S. oil producer slashed costs by slowing down several big expenditures and boosting investment in low-carbon ventures this year. The briefing will be the first opportunity for analysts to quiz executives on spending and proposed new investments in carbon capture and biofuels. The disclosure of expected returns targets is the main concern for shareholders, said Ben Cook, portfolio manager of Hennessy BP Energy Transition Fund, which holds shares in Exxon. The dividend yield is critical for investors, he said.
A fourfold increase in Low-carbon spending through 2027 to $15 billion raised the question of which legacy projects will be pushed out and whether new low-carbon investments could generate comparable returns to oil, according to Scotiabank analyst Paul Cheng, a fourfold increase in low-carbon spending through 2027 to $15 billion.
Three new members elected last spring by investors want the company to cut spending, boost returns, and address climate concerns, the update will be the first under a board that includes three new members. Exxon has pivoted from questioning climate change to viewing it as a business opportunity. If Exxon's spending on carbon capture and clean fuels increases spending, investors will want to know if they will have to cut 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 it would loosen its spending belt after the pandemic-induced cuts, and restore between $4 billion and $9 billion in annual spending over the next few years. It also promised to resume share buybacks next year. The stock price went up 44% year to date to $59.84 on Tuesday.
New oil and gas investments in offshore Guyana, Brazil, U.S. shale and chemicals products have been included in the company's budgets. The costs are proposed sales of billions of dollars in less productive assets.
Exxon recently raised its estimate of recoverable oil and gas to 10 billion barrels and projected output will grow eight-fold to 1 million barrels per day in 2027, more than a fourth of the company's total 2021 output.
Exxon holds a 40% stake in a $3.8 billion deepwater oil project in Brazil 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 committed to a $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.