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2025-01-31 03:30:00
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Operator: The next question is from Steve Richardson of Evercore ISI.
Steve Richardson: I was wondering, Darren, now that we've had a little bit of time to sit with the corporate plan update and all the visibility you provided out until 2030, and maybe this is a beyond 2025 question, but it seems to us that internal to Exxon, the biggest risk to hitting that return on capital employed target seems to be on the CapEx line. And so I was wondering if you could kind of talk about the forward look on CapEx, upside, downside risks, any proportion that you think is market indexed versus contractual. And it would just seem to us like a lot of the things you're doing the next couple of years are replication of things that you've already executed in the last number of years, Guyana, Permian, those types of things. Thanks.
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Darren Woods: Yes, thank you, Steve. Appreciate the question. As we talked about as part of the corporate plan presentation in December, if you look at the CapEx profile, a large portion of it is kind of dealing with, as you say, the things that we've already demonstrated we know how to do. And frankly, the CapEx that we're spending in that space is fairly flat as we continue to grow volumes in the cash flow and earnings that go with it. So as we're advancing, I'd say, the upgrade of our existing portfolio to advantaged volumes, we're doing that with a fairly stable and flat CapEx profile, which we feel really good about. And that reflects the continued efficiency that we're finding as we apply technologies. And my expectation is as we go forward, we're learning a ton. Even as we bring in new technology and begin to apply it, we're learning on that technology and finding additional opportunities. So I think we're on a really good trajectory with respect to continuing to grow advantaged volumes and continuing to drive capital efficiency. And so that's, we've laid out our best estimate now. But again, what I would say is really like what we're finding as we deploy these technologies and see the improvements. And then on top of that, we've got the lower emissions spend that we've laid out and the new products that we're looking to, new markets, new businesses that we're looking to establish with the Proxxima resin system and the carbon material ventures, which again, we see really, really high levels of interest from customers. We're continuing with working with them in trials and testing out the product. We feel good about what we're seeing there. Those investments, which is really the growth that you're seeing with our capital spend are all conditioned on making sure that those products, the value proposition that we believe we have there is realized and compensated and generate high returns for those investments. So I'd say those are less, those are, those are contingent. We feel today pretty confident that
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returns for those investments. So I'd say those are less, those are, those are contingent. We feel today pretty confident that we'll, we will pursue those investments because of what we're seeing today, but we're not going to go ahead with them until we're convinced that the value is there and we'll realize that value and the investments and get generated an advantage returns. And that's how we're thinking about it. Similar with the low carbon, we've said before where we need policy support, that policy needs to be in place and we need to have customers who are signing up for the offtakes and that work continues. And so there's, I'd say on top of the steady base that we've established here in 2024, all the additional CapEx will basically be conditioned on ensuring that we get good returns on that incremental investment in these new businesses and new opportunities. Anything to add Kathy?
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Kathy Mikells: So the other thing I would just say is we have a huge competitive advantage in our global projects organization. So you're talking about, Hey, one of the things is we look out and we think about continuing to improve your return on capital employed and the new projects that are coming online. That gives us great confidence. And the fact that they continue, especially in our base business to figure out how to get more and more efficient. So Guyana would be a great example of that, right? We get more and more learnings in terms of looking at those reservoirs and exactly what the kit is that we need in order to optimize production, I think is a significant advantage for us. If you look at the biggest risks, I mean, what you spend in bringing a project online is definitely has some risk associated with it. And again, I think we have competitive advantage there. What you get out of the ground, right? Understanding that, I think is really critical. And the Permian would be a great example of that. The synergies we're driving in Pioneer, as we look at recovery rates, as we look at implementing new technology, like a different approach to profit. I think those all give us really significant confidence in our ability to continue to improve overall capital return. We have an advantaged set of projects. It puts us in a very differentiated position relative to other competitors.
Operator: The next question is from Jean Ann Salisbury with Bank of America.
Jean Ann Salisbury: You have two major LNG projects coming online and are a major seller of LNG already. You've also signed some contracts to buy LNG from third parties that may now, kind of put the LNG permit ban being lifted, have a better chance of coming online later in the decade. Can you give more color on your LNG contracting strategy from here and how you see the LNG market in the medium term oversupplied or not?
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2025-01-31 03:30:00
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Darren Woods: Sure. Thanks for the question. So I think as a general context, I'd say as you look forward, we continue to see a really healthy demand and important role for LNG around the world as we go out into the future and you see economies grow and people's standards of living improve. And as countries around the world look to decarbonize and back out, coal LNG is going to play a really important role. So that broader theme we see continuing to play out well into the 2050 timeframe. So we think LNG is going to be an important product and continuing to find ways to bring on advantage supply of LNG is pretty critical to our strategy. As you know, the market today and these projects are underpinned by long-term sales contracts. We continue to progress those contracts in conjunction with the projects that we're developing. That continues to be the foundation for the LNG market. And so a majority of the production that we are looking to bring online will be underpinned by long-term contracts, which are linked to crude pricing. And that, I think, reflects really the demand that you're seeing from customers out there and the need for the continued gas. There's a portion that we're leaving uncontracted to support the work that we're doing with our trading organization and growing that business. And as that market grows, becomes more liquid. We continue to see opportunities to optimize around that market and extract some additional value through trading. And so we're making sure that we've got volume available for that.
Operator: The next question is from Bob Brackett of Bernstein Research.
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Operator: The next question is from Bob Brackett of Bernstein Research.
Bob Brackett: A bit of a follow up on the LNG team, but more specifically around the FID cadence this year and next. We've got Papua LNG and PNG. You've got Rovuma and maybe even Coral North in Mozambique. Those are very different investments than adding another well in the Permian. What do you need to see in terms of maybe returns and certainty and maybe even local situation to give you the confidence to move forward on those multi-decadal assets?
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Darren Woods: Good morning, Bob. Thanks for the question. You're right that each of these projects are somewhat unique. However, what I would tell you is the constant here, in terms of how we're evaluating and deciding to go forward, is making sure that they're low cost of supply. So they're competitive supply sources in a market so that as we move forward, irrespective of how the market develops and the highs and the lows, that we have an advantaged cost of supply vis-à-vis the rest of the supply curve and some of our competitors. So that's a critical component. And with that comes then an advantaged project and advantaged returns. And so that is fundamental to what we're looking at with each of these. And as Kathy mentioned earlier in the call, the project organization that we had brings a huge advantage in this space to help us drive these projects to the left-hand side of the cost of supply curve. I'd also add that our technology organization that we've established and the focus that they're putting on in working with the project's organization is another advantage that helps kind of drive that to the left-hand side of the cost of supply curve. So that's, I would say, the primary variables at play here. Obviously, we look at the stability of the area that we're in. We've got a really long history of managing that exposure and risk. We feel pretty good around what we're seeing in the local communities that we're looking at and the steps that we can take to make sure that we can develop a long-term successful business there in a stable environment. So I think that piece of it, while certainly something that we need to manage and be aware of, isn't impacting, isn't the largest variable with respect to how we think about moving forward on these projects.
Bob Brackett: Very clear. So we should think 2025 for PNG and 26 for Rovuma still?
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Bob Brackett: Very clear. So we should think 2025 for PNG and 26 for Rovuma still?
Darren Woods: We're working towards the 2026 timeframe in the Rovuma. In PNG, we're continuing to work through a target. Hopefully, we'll have something near the back end of this year for FID.
Operator: The next question is from Neal Dingmann of Truist Securities.
Neal Dingmann: Darren, my question is around your long-term plan for, I believe you all have suggested about growing the earnings around $20 billion in cash flow by an additional $30 billion by 2030. I think that goes along with the U.S. production. I think doubling or severely increasing. I'm just wondering, in order to achieve this, I'm just wondering, what type of levels are you all assuming on broad strokes for annual capital spend and OpEx during this period in order to achieve it? I'm just wondering, like, directionally, what are you assuming?
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2025-01-31 03:30:00
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Kathy Mikells: Sure. So, I'll start with capital because we gave guidance at our corporate plan. This coming year in 2025, we said we expect cash capex to be between $27 billion and $29 billion. And then, between 2026 and 2030, that number is $28 billion to $33 billion. And then, if you just think about expenses, obviously, we're growing, and we're growing across our business. That is going to have growth expense associated with it. And some of the offsets of that is driving significant structural cost reductions. And so, to date, since 2019, we're at a little over $12 billion in terms of structural cost reductions. And we said, between here and 2030, we expect to get that number up to $18 billion. So, kind of an additional $6 billion in structural cost savings to help to offset, just the cost of that growth overall, and, obviously, a little bit of inflation. And the last thing I would say on that topic is, we have a global procurement organization, as we talked about, the Global Projects Organization, working pretty hard to make sure that we're bringing kind of the full scale and the manner in which we integrate our business kind of to bear as we procure the different products and services that we procure. So, they're doing quite a good job, as they look to help us hold down expenses.
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2025-01-31 03:30:00
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Darren Woods: Yes, and maybe just to build on Kathy's point, if you look at where we were in 2019, we challenged the organization to pay for the growth to make sure that, as we were growing and adding some of those additional expenses associated with new facilities, new production, that we offset that through our structural cost reductions. If you look at where we were in 2019 and where we ended 2024, not only have we offset all the additional cost of the growth, we offset all the inflation and had a further reduction of about a billion and a half dollars. So, I think we've demonstrated the ability to both grow the business and grow the value while reducing cost. I think that is a very unique challenge and I think a great testament to the work that this organization has been doing to create value out there. The only other point I would make is not only do we have really solid plans to 2030, the new markets and new businesses that we're starting don't really start to move the needle until we're beyond that 2030 timeframe. And so, what I'm excited about is not only the fidelity that we have in terms of how we get to 2030 and that 2030 objective that we've talked about, but also that we've established a foundation that gives us a platform for growing well into the future in markets that are decoupled from the commodity price cycle. That's pretty exciting for our company.
Operator: The next question is from Roger Read of Wells Fargo.
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Operator: The next question is from Roger Read of Wells Fargo.
Roger Read: Yeah. Good morning. Maybe to take a slightly different tack here on some of the policy changes, like you mentioned at the beginning of the call, Darren, some favorable changes. One of the other ones that's percolating a little bit in the executive order was for the EPA to take a look at the endangerment finding on CO2. And I know there's a lot of ways CO2 is approached in terms of what's in the IRA and stuff. But if we were to see a change in federal government regulations on CO2, how do you think about that affecting some of the decisions you're making on the renewable and low carbon investment approaches here?
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Darren Woods: Yea. Good morning, Roger. Thanks for the question. So let me just start with the fundamentals of how we think about this stuff, because our work and the low carbon solutions business is reflective of not any specific policy that's existing. In fact, we put that business together and started it well in advance of the IRA and some of the policy that the Biden administration brought forward. We focused instead on what we recognize as a need to continue to supply the energy sources and products that the world desperately needs to grow and for people's prosperity to improve, but at the same time reduce emissions. And I would say as a company, we recognize the need for society to reduce emissions in a thoughtful, constructive way. And what we're trying to do is offer up a skill set and a capability set that can help accomplish that. That's the long-term objective here. And putting in place the foundations for an approach that makes sense, that leverages our key competitive advantages and affordably reduces emissions while we continue to meet the needs for our products is part of the strategy. And frankly, we're demonstrating the ability to do that and to pay for it and to generate returns at the same time. And so this and equation is, we believe, a real thing in that people should be focused on doing it all. And that's what we're trying to do. So I would say that's the foundation. That's how we think about it. We recognize the demand for the reduction and the intensity of the focus on that may vary as you move across different political regimes and move around the world, and we'll move up and down with time. But the fundamentals, we believe, are there. And that's what we're focused on is the long-term game here and making sure that what we bring forward in terms of a solution is cost-efficient and very effective. And that's how we're looking at it. And frankly, from what we've seen so far, I think we've got an advantage with respect to where we're at in looking at those opportunities. And we've got an
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seen so far, I think we've got an advantage with respect to where we're at in looking at those opportunities. And we've got an advantage with our capabilities and with the facilities that we've brought on so far and the ones that we're developing. So we feel good about that.
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Kathy Mikells: Yes. And the only thing I would add is, obviously, the new administration is focused on trying to streamline regulation and looking at how that can open things up for business. When we look at, just as an example, looking to permanently sequester CO2, getting that permitting has been a long process. And so it's just one area of many that you can look at across the industry to say, hey, what things can be done to ease regulation so that business can get done more quickly, projects can get put in place more quickly. And so we look forward to continuing to discuss those things with the new administration.
Darren Woods: Yes. The good news, Roger, is we've got flexibility here so we can adjust as we move forward and respond to some of the changes that we see.
Operator: The next question is from Paul Cheng of Scotiabank.
Paul Cheng: Darren, you guys clearly have an expertise in the deep water in your success, whether, say, two decades ago in Angola or recently in Ghana. But one deep water area that you are noticeable missing is the Gulf of Mexico basin. It's pretty small. I'm trying to understand that. Is it because when you guys are looking at that, you don't like about the cost structure there or you don't like about the regulatory environment or you don't like about the geologies? And as such that with the new administration they approach there, is that going to change the way that how you look at that basin?
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Darren Woods: Yes. Good morning, Paul. Thanks for the question. You're right that in terms of if you look around the world, our presence in the Gulf of Mexico is more limited. And I would just tell you it's a function of evaluating the opportunities there and the cost of supply. You touched on a couple of the factors. One is the cost of supply and the cost to develop there in the Gulf of Mexico. You talked about the geology. The geology is tough as well, which obviously impacts the cost. And so we look at all those factors. We are continuing to evaluate opportunities. And if the Trump administration opens up new areas for exploration, we will be in there with the rest of industry evaluating to see if we think there's an opportunity to cost effectively develop those resources. But I'll come back to. And so that's the lens we put across all of the opportunities. The Gulf of Mexico is no better off, no worse off than anything else that we're looking at. But it's really the criteria of cost-effective supply being on the low end of the cost of supply curve, making sure that we can develop those in an advantaged way that then brings advantaged returns into the portfolio. And that's the criteria that we're using. And if we find something in the Gulf of Mexico that we convince ourselves will allow us to do that, we'll develop it. If we don't, we'll continue to find and look for those opportunities in other parts of the world. We're pretty agnostic with respect to location, but we're a lot more focused on the characteristics and the ability to develop advantaged barrels.
Operator: The next question is from Ryan Todd of Piper Sandler.
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Operator: The next question is from Ryan Todd of Piper Sandler.
Ryan Todd: Thanks. Maybe one on carbon capture. You have four decent sized projects set to start up over the next 24 months on your list. I know in the past you've talked about some of the challenges of effectively creating a new industry that doesn't currently exist, particularly on the commercial side. Can you maybe give some color as to how the commercial side of that business has evolved, what challenges remain, including maybe on the regulatory support side, and maybe what contribution you expect to see over the next couple of years out of the CCS business?
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Darren Woods: Yes. Thanks, Ryan. I think a lot has happened in this space over time, and I think probably the most important development is there's been a real shakeout between people who are out there talking about a carbon capture and storage business and people who are actually capable of doing it. And that has, I think, created a lot more clarity, particularly from a customer standpoint in terms of where they need to go to find companies that can deliver on this. We are, as you mentioned, uniquely positioned here. We've got the world's only end-to-end capture, transport, and storage system. And so that puts us in a unique position to work with customers to help them decarbonize. And so I think those conversations continue to happen. There is a continued interest. We've got a fairly healthy sales pipeline that we're working with customers on. So I like how that's developed. I like our position. We continue to do a lot of work around that system that we've built and making sure that, unlike a lot of companies in this space that are limited to a single site, we've got a system and we're developing that system so that we've got a lot of optionality and take advantage of storage sites all along that pipeline. And so we feel good about having a very robust system that we can then ensure customers that, when we commit to capture their CO2 and store it, that we can effectively do that and manage any of the variables that kind of come along the pike. And so that's how we're looking at it. We've got pretty aggressive growth plans in this space. But again, all dependent upon customer interest and customers' willingness to engage in long-term contracts. And so that's what we're continuing to work on. Like I said, a lot of interest in this space, given our unique abilities.
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Kathy Mikells: Yeah. And what we said back at the corporate plan is, when we look at our low-carbon solutions business in its entirety, right, so obviously the CCS opportunities you just talked about, but hydrogen, lithium, everything all together, we would see $2 billion in earnings growth kind of between now and 2030. Obviously, that'll come as we pick up momentum and start to implement the projects that we've been talking about.
Operator: The next question is from Biraj Borkhataria of Royal Bank of Canada.
BirajBorkhataria: I just wanted to get some perspective on the chemicals market. You show a helpful slide every quarter on the margins related to a 10-year average. Obviously, the chems margin has been well below that very consistently. So do you see any signs of green shoots in that space, either regionally or product-wise, that you can talk about? And as a quick follow-on to that separately, are you able to disclose your reserve replacement ratio for the year, both total and organic? Thank you.
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Darren Woods: Yes. Good morning, Biraj. I'll start with that and see if Kathy has anything she wants to add. But the margins that we show and the markers that we show are kind of an industry perspective with respect to kind of the distribution of the chemical business globally around the world and the average margin that you see there. We're advantaged versus that with respect to our facilities. And so as you look across the world, I'd say the most advantaged region today is North America, where, as we've got a fairly large footprint. So we've been, despite, I'd say, very challenging conditions, I think we've been well-positioned there and very proud of the work that our folks in the chemical business have been doing to optimize and make sure that in this environment they continue to deliver earnings. The demand in chemicals is actually very strong, record levels of demand. The challenge has obviously been in the supply side of the equation. I think in terms of a green shoot comment, how do you balance supply and demand? I mean, every facility out there has to kind of figure out where they're at in the cost of supply and whether they can survive or not. I think you're seeing more and more companies that are disadvantaged with respect to their facilities evaluate their business and ability to be successful in the kind of market that we're in. The way I look at this at a macro level, these cycles are necessary. We've got to go through the lows to make sure that the industry continues to focus on efficiency and effectiveness and continuing the high grading of the broader overall industry portfolio. Our job, obviously, is to make sure that our facilities are on the high end of that high grading, and we feel really good about where we've been there. So I think that's going to continue to happen. I think from my perspective, this challenge here is not unlike the challenges we've seen in the past and, frankly, very much in line with our philosophy of you build this business to be successful in the bottom of the cycle,
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and, frankly, very much in line with our philosophy of you build this business to be successful in the bottom of the cycle, and then you take the gravy that comes with the top of the cycle. And so we feel good about our ability to be successful even in these bottom of the cycle conditions. Kathy, anything to add?
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Kathy Mikells: The only thing I'd add is if you look at the projects we're bringing online, those will continue to help us to be advantaged, whether it's the China One chemical complex that's coming online, which is really focused on performance chemicals, right, the upgrade we're doing overall in our Singapore facility, kind of resid upgrade on the margin, helps us. And then, obviously, bringing on more circular plastics basically helps us in terms of advanced recycling. So all the projects we have will continue to well position the company, and we've been very focused on ensuring that we're a low-cost supplier, which makes us resilient even in these difficult market conditions.
BirajBorkhataria: Thanks. Anything on the reserve replacement ratio?
Kathy Mikells: No, we don't really consider that to be particularly informative of where the company is going.
Operator: We have time for one more question. Our final question will be from Jason Gabelman from TD Cowen.
Jason Gabelman: I wanted to ask a question on Slide 6, where you lay out all the projects. And Doug alluded to it earlier. It seems like you're missing a couple of projects that are starting up here, TCO, the Permian pipeline project. We would have thought the overall potential earnings number from all the projects combined are closer to $5 billion, including those two projects. So, first, is that correct? And, second, is there any major difference you see between the earnings contribution of these projects and the cash flow contribution? Thanks.
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Kathy Mikells: Yes. So, I'm happy to take that. We tended to focus here on the projects where we're the operator, as opposed to TCO, where we're not the operator. Obviously, we will get some benefit from that, but we did not focus on projects that we're not the operator. We also focused on projects that are newly starting up, as opposed to projects like the Permian crude venture that is already underway. And so, I would say, yes, we clearly continue to get incremental benefits from the projects that are already underway, that the company started up pre-2025. And, obviously, to the extent that we're participating in an arrangement where somebody else is the operator and projects are starting up, we will get the benefits from those things.
Darren Woods: And I would add, in terms of those other projects that you referenced, obviously, they're baked into our plans and the volumes that we shared as part of the Corporate Plan Outlook includes all elements of the projects that are coming on.
Jason Gabelman: Great. And any difference between earnings and cash flow contribution from these projects? Any major difference?
Kathy Mikells: No. All I would say is, typically on projects generally, there's a little bit of a lag on earnings relative to cash flow.
Jim Chapman: All right, Jason. Thanks. And thanks, everybody, for joining this call and for your questions. We'll post the transcript of this call to the Investor section of our Web site early next week. And have a nice weekend. That concludes today's call.
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2024-11-01 09:30:00
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Jim Chapman: Good morning, everyone. Welcome to ExxonMobil's Third Quarter 2024 Earnings Call. Today's call is being recorded. We appreciate you joining us today. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. I'm joined by Darren Woods, Chairman and CEO; and Kathy Mikells, Senior Vice President and CFO. This quarter's presentation and pre-recorded remarks are available on the Investors section of our Web site. They are meant to accompany the third quarter earnings news release, which is posted in the same location. During today's presentation, we'll make forward-looking comments, including discussion of our long-term plans and integration efforts, which are still being developed and which are subject to risks and uncertainties. Please read our cautionary statement on slide two. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our Web site. Note that we also provided supplemental information at the end of our earnings slides, which are also posted on the Web site. And now, I'll turn it over to Darren for opening remarks.
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Darren Woods: Good morning and thanks for joining us. ExxonMobil's announced earnings of $8.6 billion this morning, one of our best third quarters in the past decade. Even more importantly, this quarter's results continue to demonstrate our enterprise-wide transformation is improving the earnings power of the company. Our Energy Products business provides a compelling proof point. In 2024, year-to-date earnings are roughly double what they were in the same period of 2019 on a constant margin basis. For all of our businesses, we've been focused on reduced cost, higher-return investments, and selected divestments to improve profitability, particularly in bottom-of-cycle conditions. This work has fundamentally transformed our refining business. For instance, we've high-graded our portfolio by divesting less advantaged sites. At the time of the Exxon and Mobil merger, we had 45 refineries. In 2017, when I stepped into this job, we had 22. I expect to end this year with 15, bringing us very close to an entire portfolio advantaged by location and configuration. We've also significantly improved our product yield. By investing in assets, such as the Rotterdam Advanced Hydrocracker and the Beaumont expansion, we've increased the yield of higher-value products from lower-value feeds. Finally, we've achieved dramatic structural cost savings. In our overall Product Solutions business, we've reduced cost by $5 billion versus 2019. In Energy Products specifically, to take one example, we completed our first-half 2024 turnarounds for $200 million less than the previous turnarounds on these assets, a 24% reduction. Our results from the quarter also demonstrate the value of diversification by geography, resource, and product mix, providing natural hedges that increase the stability of earnings. In the third quarter, while liquid prices and refining margins were down, gas realizations, chemical margins, and specialty margins were all up. Underpinning our results is a relentless focus on execution excellence. We saw a good
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and specialty margins were all up. Underpinning our results is a relentless focus on execution excellence. We saw a good example of this in the quarter at our Joliet Refinery, in Illinois. In July, a tornado ripped through the site, cutting power, steam, instrument error and potable water. We've never had a harder shutdown. With extensive damage to the transmission system that provides power to the site, we were cold for almost two weeks. This was an unprecedented event that severely impacted fuel supplies for the entire region. Our community, the City of Chicago, local, state, and federal governments were all counting on a quick recovery. And I'm proud to say that the men and women Joliet, with a lot of support from across the corporation, delivered. Thanks to their remarkable efforts, we beat an aggressive recovery schedule and we're supplying much needed fuel to the market far faster than we thought possible, reducing the time to recover by a third. I want to take this opportunity on behalf of all of their colleagues at Exxon Mobil and the communities that depend on them to thank everyone involved in the recovery for their hard work, commitment, and personal sacrifice. Thank you. You did us proud. As always, our success is our shareholders' success. This morning, we announced a 4% increase to the quarterly dividend to $0.99 per share. We've now increased our annual dividend for 42 years in a row, putting us in an elite tier of the companies known as Dividend Aristocrats. Less than 4% of S&P 500 companies have paid higher dividends every year for more than 40 years. We've also sustained our position at top five of all S&P 500 companies with the largest dividends paid. We know how important the dividend is to our investors, particularly our millions of retail shareholders. We remain committed to a sustainable, competitive, and growing dividend, which is a key component of the attractive total shareholder return we are delivering. In the first nine months of 2024, we've generated a TSR of 20%, leading all IOCs,
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total shareholder return we are delivering. In the first nine months of 2024, we've generated a TSR of 20%, leading all IOCs, just as we've done over the last three, five, and 10 years. Turning to our Upstream business, the portfolio of advantaged assets we've built is the envy of the industry. In the third quarter, we grew production to 4.6 million oil-equivalent barrels per day, a 24% increase versus the prior-year quarter. To driver higher value, we continue to improve the profitability of the barrels we produce. Our progress has been exceptional. On a constant price basis, our 2019 unit earnings were about $5.00 per oil-equivalent barrel. Year-to-date in 2024, excluding Pioneer, we've doubled that to $10.00 per barrel. The third quarter was our first full quarter with Pioneer, which added 770,000 oil-equivalent barrels per day of highly advantaged production. As we said when we announced the deal, combining our technology, Pioneer's contiguous acreage, and the capabilities of our two organizations is allowing us to recover more resource more efficiently with a lower environmental footprint. In the third quarter, we drilled the longest ever laterals on Pioneer acreage at 18,250 feet or nearly 3.5 miles. We're scheduled to spud the first ever 20,000-foot laterals on Pioneer's acreage this quarter. The benefits of long laterals are significant; fewer wells, a smaller surface footprint, and greater capital efficiency. In Guyana, we completed tie-ins for the country's Gas-to-Energy project on budget and schedule. And we are back to full production. Once the government completes the associated power plant, the Gas-to-Energy project is expected to provide the people of Guyana with electricity that is significantly cheaper, cleaner, and more reliable. This will further spur the Guyanese economy, which was the fastest growing in the world in the first-half of 2024, with GDP up 50%. Our Payara project, which remained online during the tie-ins, continues to perform above investment basis, as has been the case with all
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project, which remained online during the tie-ins, continues to perform above investment basis, as has been the case with all the projects we've brought online in the world's premier deepwater development. We'll have much more to say about the upstream business during our spotlight next month. I promised Neil I wouldn't steal his thunder. So, let me just say on the Pioneer synergies alone, which are considerably higher than expected, we think you'll find the story compelling. As I said many times, we're a technology company, managing and transforming molecules provide products that meet society's greatest needs and deliver attractive returns. In our low carbon solutions business, we continue to lay the groundwork for the world's largest low carbon hydrogen production facility at our integrated site in Baytown. Facility represents a new energy value chain and produce 1 billion cubic feet per day of virtually carbon free hydrogen, with 98% of the CO2 emissions captured and stored. In the third quarter, two new partners joined the project to accelerate market development for this new energy value chain. ADNOC has taken a 35% equity stake in the facility. We're pleased to add their proven experience in global market insights to this world scale project. In addition, Mitsubishi signed an agreement for the potential offtake of low carbon ammonia and equity participation in the project. The ammonia will be used to generate power and heat for industrial applications in Japan, helping to establish a new supply chain for low carbon energy. The agreement with Mitsubishi follows a similar agreement earlier this year with JERA, Japan's largest power generator. While we still have some hurdles to clear, we're encouraged by the growing market recognition of the significant value and advantages of this first in the world low carbon project. Of course, the highest hurdle as we've said is the translation of the IRAs technology agnostic legislation into enabling regulations that maintain focus on the what, carbon intensity and not
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of the IRAs technology agnostic legislation into enabling regulations that maintain focus on the what, carbon intensity and not the how. We are ready to move forward once the Biden administration publishes regulations consistent with the legislative intent. Assuming this happens, we plan to reach FID in 2025 with startup in 2029. We've also made noteworthy progress on the CCS front. In October, we announced an agreement with our first natural gas processing customer to transport and store 1.2 million metric tons of CO2 per year. This is our fifth agreement overall and brings our total CO2 contracted for storage to 6.7 million metric tons per year, more than any other company. In addition, we secured the largest offshore CO2 storage site in the United States through an agreement with the Texas General Land Office. The 271,000 acre site further solidifies the U.S. Gulf Coast as a leading market for carbon capture, transport and storage. In addition to LCS, we're advancing other technology driven businesses that have huge potential. We've spoken before about our Proxxima thermoset resin, which is a revolutionary new material that is stronger, lighter and more corrosion resistant than conventional alternatives. We see a total addressable market in the space of 5 million tons per year and $30 billion by 2030. One major application of Proxxima is rebar that is only one-fourth the weight, but twice as strong as steel. In the third quarter, we signed a licensing agreement with Neuvokas Corporation, a North American manufacturer of rebar from Proxxima. That allows rebar to be produced anywhere in the world. Rebar is just one example of Proxxima's value in use. Others include high performance coatings and a range of lightweighting applications for automobiles. In our carbon materials venture, we see a massive opportunity in the market for battery anode materials, which could grow at 25% per year and like Proxxima reach $30 billion by 2030. The primary material in battery anodes is graphite and we've developed proprietary
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and like Proxxima reach $30 billion by 2030. The primary material in battery anodes is graphite and we've developed proprietary technology that allows us to produce feedstock for next generation graphite at scale. This innovative material has potential to improve EV battery range by 30% and enable faster charging. ExxonMobil's history with transportation dates to the very beginning of the automotive age, when we provided fuel for Henry Ford's first automobiles. Some might find it ironic, but with the work we're doing in lithium for cathodes, graphite for anodes, Proxxima as a lightweight battery case and the plastics, lubricants and cooling fluids we already provide, we may become one of the most important players in a new automotive age of EVs. At our corporate plan update next month, we'll highlight how we're investing in technology-based high-return growth opportunities across all of our businesses, from the Upstream to Product Solutions, to LCS, to new growth areas. What I would leave you with today is this, all our success, our continuously improving profitability, our execution excellence, our technological innovation, and our tremendous portfolio of growth opportunities flows from our strategy and focus on fully leveraging our core capabilities and competitive advantages. The most important being our people. We have the best team in this industry; and in my view, any industry. I look forward to sharing more of their work during the corporate plan update. Thank you.
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Jim Chapman: Thank you, Darren. Now, let's move to our Q&A session. And as a reminder, we ask each participant to keep it to just one question. And with that, operator, we'll ask you to please open the line for the first question.
Operator: Thank you. The question-and-answer session will be conducted electronically. [Operator Instructions] The first question comes from Devin McDermott of Morgan Stanley.
Devin McDermott: Hey, good morning. Thanks for taking my question. So, Darren, you had some helpful prepared remarks on the downstream business. So, I actually wanted to start there. If we look at results in the quarter, they were strong and actually looks like they came in a bit ahead of what was implied by the 8-K earnings considerations, even with that Joliet impact you discussed, and softening crack spreads in the quarter. And it looks like margin capture, volume costs were all factors here. So, I was wondering if you could just talk through some of the latest trends you're seeing across your refining footprint, the drivers of that beat versus the earnings considerations, and then, specifically, how some of the strategic projects are impacting results relative to your expectations?
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Darren Woods: Yes, sure, Devin. I'll start with that, and then see if Kathy wants to add anything. I think you've got to step back to the broader approach that we've established with the downstream business and its integration into the new company of Product Solutions, which is really looking at how you optimize the full value chain. That, I think, is a fundamentally different approach to how we were historically running the refining business, and looking at all the value levers to pull from bringing crude in to the refineries, all the way out to marketing the products. And I think the results that we see in that business are reflective of a collection of those efforts across the whole. In addition to a lot of the cost cutting that we've doing to reduce structural cost, and the effectiveness and improvements that we're seeing by centralizing a lot of activities and bringing the best thinking of the corporation to bear on each part of the business that we're operating. A great example in the refining business has been the centralization of the maintenance approach that we're doing, not just in turnarounds, but in our routine day-to-day maintenance. That has brought a huge amount of value and lower cost to our refineries operating around the globe by taking the best thinking across both our Upstream and downstream and chemical businesses, consolidating that into a single approach, and then effectively executing that at each of the sites is driving huge value. I think two, eliminating what was somewhat of an artificial barrier between our chemical businesses in the facility and our refining business in the facility, and making sure that the organization thinks about the whole and optimizes the whole in the disposition of each stream as it flows through those facilities is having a big impact. So just I would say the optimization of the facility and the molecules that flow through those facilities, irrespective of whether it's a product that goes into the petroleum product space or whether it goes into the chemical
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irrespective of whether it's a product that goes into the petroleum product space or whether it goes into the chemical product space, I think has been a significant uplift. And then on top of that, I would say the thinking about the channels to market and the value uplift we can get through those channels, and bringing a trading organization along and thinking about them as a value channel to optimize across the value chain that our refineries participate is also bringing additional value in making sure that we're maximizing the value and the placement value of all the barrels that come out of the refinery, and all the products that come out of the refinery. So, there is a collection of things that have been changed over the years that are fundamentally different than how we've historically been running the business. And obviously, some of those and the benefits of those will move with the market environment and the available spreads in the market. But, generally speaking, it's a combination of a lot of things that we've been working on to drive value in that business, along with the others. Kathy, anything to add?
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Kathy Mikells: The only that I'd add is we try pretty hard to demonstrate in the materials we provide you earnings the underlying big movers that are improving the earnings power of the company. And so, in this case, I'd say we put forward the year-to-date results more so than just the quarter because that's a bit easier then to see that coming through our results. So, if you look at our Energy Products business on a year-to-date basis, you'll see that we got about $500 million uplift from advantaged project growth, as well as cost savings, right. So, that's coming from both the Beaumont expansion as well as Permian Crude Venture, and all the structural cost savings that we're driving, not just through the Energy Products business, but obviously more broadly for the company. And then early on in the question you referenced we came in a bit better than what the Street was expecting in this area. One of the reasons we came in better was the much faster startup at Joliet. And so, we had given some guidance on what we thought that impact was going to be. And the team just did a wonderful job in restarting that facility safely and more quickly than we had expected. And that also really accrued to our bottom line.
Devin McDermott: Great, appreciate the detailed response. Thanks.
Darren Woods: Thank you, Devin.
Operator: The next is from Neil Mehta of Goldman Sachs.
Neil Mehta: Yes, good morning, Darren, Kathy, and team. I just want to spend some time talking about the startups of the key LNG projects. And maybe you could talk about what we're seeing in terms of de-risking Golden Pass, and bringing that into service? And then we get less visibility on what's happening in Qatar, but it's going to be a big important project, North Field Expansion. So, to the extent you're able to, can you just share your perspective of how that's going on the ground?
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Darren Woods: Yes, good morning, Neil. Thanks for the question. I'll just say, obviously, that the Golden Pass venture is managing the project, and we're contributing as best we can, and obviously worked with the venture in response to the bankruptcy. And that team, I think, is making really good progress at re-optimizing the work and the schedule. We anticipate today that that venture will basically be delayed by about six months. So, we expect to see first LNG out of that train back-end of 2025, to potentially slipping over into the New Year, but it'll be in that timeframe that we see. And then, of course, each train after that, we anticipate about six months' separation between the trains coming on. So, think that venture has done a lot of really good work to overcome what was a pretty challenging set of circumstance. And we feel pretty good about the path that they're on. There's still more work to do, but I think a really good vector. And the fact that the existing contractors that were involved in that venture have stepped in to fill the void and pick up the baton and keep running the race I think is a huge testament to those and their commitment to the success of this project, along with all the folks at the venture who were working this real hard. So, we stay close to it, but the venture organization there really owns that and deserves the credit for the recovery there. I think on Qatar, same thing. We're a participant in there. And QatarEnergy obviously is managing those projects. But a better place for them to give status of where the projects are. We feel pretty good about the collaboration and our ability to work hand in glove with QatarEnergy, and frankly feel really good about the competitiveness of those projects, and so are fairly engaged with those, and feel good about the work that's happening in that space. And the, obviously, we're doing work in Papua, and looking to make sure we can come with an attractive project there, and looking at opportunities to advance the Mozambique project as well.
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make sure we can come with an attractive project there, and looking at opportunities to advance the Mozambique project as well. So, we've got a pretty good portfolio of LNG projects that we see going into the future. And the market response that we're seeing on the potential for those projects is very positive. So, we see strong demand signals and, frankly, a lot of customer interest. So, I feel good about the LNG business as a whole. And then I think working really constructively through the projects that are in development or under construction, and then making good progress on the concepts and the engineering for the LNG projects to come.
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Neil Mehta: Thanks, Darren.
Darren Woods: Thank you, Neil.
Operator: The next question is from Doug Leggett of Wolfe Research.
Doug Leggett:
,:
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Darren Woods: Yes, I think, there's a lot of -- as you know, having spent some time down there, Doug, a lot of variables at play. And oftentimes those investments that we make are coming in -- or coming on stream at the back end of the year. And so, part of the capacity versus production is just the timing of when we bring those projects on. Then, obviously, there's the timing of -- as we know, all these resources over time deplete. And the organization is working really hard at infill drilling and doing the other things they need to keep capacity utilization high. And so, that work and the timing of that, scheduling of that work, features into it. And so, I think a lot of those things go into it. We do our best to give all of you a good view of what we expect to be producing versus the capacity. And obviously, the organization is working really hard to do an even better job. And everyone, I think, that's working that project, and as we've demonstrated over the years, is very focused on continuing to operate those facilities in a very environmentally responsible way. We've been very pleased with the low level of flaring that they've managed to achieve. The ability to bring those facilities on really in an outstanding fashion with very low levels of flaring as they start these things up and then continue to run with no routine flaring. And then, at the same time, really push production to make sure that we're fully utilizing the capital that we put in the ground and doing that very safely. And we continue to surprise ourselves with the ability of those organizations to find ways to fill up that capital. My expectation is they'll continue to do that. Really hard to forecast exactly how successful they are going forward. But we focus on the capacity and then the targets that we're providing you. And we'll give you updates. Obviously, in our best interest, as we sharpen our plans and get a better look at things that we'll bring that forward and share it with the rest of you. And I do think when we get into December
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better look at things that we'll bring that forward and share it with the rest of you. And I do think when we get into December with the corporate plan reveal, I know that Neil is anxious to talk about his entire portfolio and the progress that we're making across not only Guyana but the Permian. So, we'll give you some more color commentary then as well.
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Doug Leggett: Great. Thanks so much.
Darren Woods: You bet. Thank you, Doug.
Operator: The next question is from John Royall of J.P. Morgan.
John Royall: Hi, good morning. Thanks for taking my question. So, my question is on your balance sheet. The 5% net debt to capital is very impressive. And you're continuing to live within your means on the cash flow side, even when the cycle is turning down off of peaks. So, my question is do you consider yourselves under levered at the higher point in the cycle? And expecting to get your leverage back to higher levels as you continue a steady capital return program at the low point in the cycle, or does the fact that you've remained in the 5% or less type of range for almost two years now maybe mean that you could get a little more aggressive on returning capital and go a little higher on the leverage side?
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Kathy Mikells: Sure, I'm happy to take that. So, look, what we're doing with our capital structure is pretty purposeful. And I think we've been straightforward about that. We, obviously, operate in an industry that has commodity cycles. And it's really important for us and a clear competitive advantage to have an incredibly strong balance sheet to manage through those cycles and to have flexibility, right? So, you see us continuing to focus on a very strong approach in terms of capital allocation. And first and foremost, when we think about capital allocation, we think about making sure we have the firepower to invest in what are great projects with great returns. Growing things like the Permian and Guyana, investing in strategic projects in our EMPS business like China 1, which will start up next year, as well as continuing to invest in more capacity for things like advanced recycling and building our low-carbon solutions business. We then really want to make sure that we keep that balance sheet strong because we want flexibility when inevitably the market gets softer and then clearly we're looking to reward our shareholders with our success. And you would have seen that this quarter with the $0.4 quarterly dividend raise. And in Darren's comments, he mentioned it's the 42nd year in a row that our annual dividends have increased. That puts us in a quite small group of companies in the S&P 500. Only 4% of companies have that kind of longevity in terms of annual dividend growth on an ongoing basis. So, it's important to us that we're conservative now with that balance sheet to give us all the flexibility that we need through the cycles that we have to manage through.
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Darren Woods: Yes, and I would add to that, John, I think as we've talked about, it feels like every year I've been in the job. For us, the definition of disciplined capital spending is only investing in the things where you have an advantage, where your projects are robust to down cycles and where they deliver highly advantaged returns. And so, that portfolio of investment opportunities, were very keen on prosecuting across the cycles. And I think that's what we're always mindful of is ultimately we know there's going to be business cycles, commodity cycles, price cycles, but ultimately the demand for the products that we're trying to produce and the advantage of the projects that we're investing in to produce those products are going to be needed. And so, having the constancy of purpose there and being able to continue to invest through the down cycles are really, really critical. And so, that's fundamental to how we're thinking about this. We got good projects. We need to execute on those projects, and if we find additional opportunities as we move forward, we need to invest in those as well. That's going to drive kind of the approach that we take to the rest of the balance sheet and our capital allocation priorities.
John Royall: Thank you.
Darren Woods: Thank you. The next question is from Betty Jiang of Barclays.
Betty Jiang: Good morning. Thank you for taking my question. I want to ask about the Permian efficiencies and trends in general. I know we will get a lot more in December, but if we could get some early flavor on what you're seeing in the fields, specifically these 3.5 to 4-mile laterals seems really interesting. And is that part of this image that you have identified with Pioneer initially?
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Darren Woods: Sure. I'll start, Betty, and then, I'll let Kathy add some perspective as well. I would say, just at a very high level, we could not be more thrilled by what we're finding with respect to bringing the two organizations together and the opportunity that's in front of us I think we certainly had saw a big opportunity for Exxon Mobil to bring some of its strengths to the Pioneer acreage and the work that they were doing we anticipated the reverse happening where the organization's Pioneer could bring a lot to what Exxon Mobil was doing, but frankly, very hard for us to estimate that prior to closing the acquisition and getting together and working together. I think what we're finding through that process is there's a real big opportunity to bring a lot of what Pioneer is doing into our operations. Here's a couple of examples. They've got a world-class water infrastructure network that we're now leveraging to serve the combined assets at a much lower cost. They've got a remote logistic operations center to help on their supply chain, and we're taking full advantage of that. We just achieved an all-time Pioneer record for drilling performance in terms of lateral feet drilled per day. We're leveraging the cube design that we had and applying it to good effect in the Pioneer acreage. We're harmonizing a lot of the specifications that we have on materials and services to try to take advantage of the scale and to simplify the procurement supply chain and drive cost efficiencies. And I would just say, as everyone talks about, there's a lot of art to this drilling and completions improvements and getting the best thinking of both organizations and actually in combination, developing thoughts and approaches that neither organization came up with independently, I think is all manifesting itself, and additional synergies and we're bringing those synergies to the bottom line faster than we had anticipated and they are larger than we had anticipated. So, it's a really I think good news story and one that we're
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we had anticipated and they are larger than we had anticipated. So, it's a really I think good news story and one that we're going to spend quite a bit of time talking to you about on December 11th and I know Neil and his team are real keen to share some more of the specifics to help kind of take what has been some high level indication of value and translate that down into a lot more detail so that all of you can get much more better feel in terms of what's happening there. Anything else to add, Kathy?
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Kathy Mikells: No, I mean we initially talked about an average of $2 billion in synergies over the next decade. Obviously that would start smaller and build and we're clearly seeing more synergies than we initially anticipated. And as Darren said, Neil will definitely enjoy the opportunity in December to give an update on that and quantify it more specifically.
Darren Woods: Yes, I would just say that the focus of that team is NPV and maximizing NVP. I think the drive like we've always said, it's not a volumes game here, it's a value game here and the great news is we're seeing a lot of value.
Operator: The next question is from Bob Brackett of Bernstein Research.
Bob Brackett: Good morning. I'd like to talk a little bit about Proxxima rebar and your comments around the addressable market. If I think about steel, steel is almost 2 billion tons a year, half is construction and infrastructure-ish, rebar is $400 or $500 a ton. And so, the rebar market is something like say a $400 ish, $1 billion market. You're talking about $30 billion. How do you think it's almost heartened back to value versus volume? When you think about putting this product, which again as you said is lighter and stronger into the market, do you go for value and pricing or do you go for market share and is the $30 billion reflecting that or is that just a preliminary sort of estimate?
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Darren Woods: Thanks, Bob. Thanks for the question. So, I would say, we're going to have targeted areas of rebar applications that we'll look at for Proxxima. So, it's not, we're not trying to address the entire market for rebar, but for the rebar markets where we think the value and use for what we're doing is strongest and therefore generates the most opportunity for earnings growth. Necessarily, it is a segment of the rebar market that we're starting with recognizing that we're pretty early into. I think what we're finding though through that infrastructure market is, as we said at the beginning, when we're looking for opportunities is they've got to be big markets with big value use in order for it to be a material effort at some point in the future. It's got to be material with respect to ExxonMobil and so they've got to be big markets and so we're focused on that. Rebar actually in the infrastructure market is not the biggest one that where we see an opportunity. There's also a lot of advantages just using this thermoset resin as an epoxy and there are many, many applications into a number of different industrial uses that where there's great huge value in use from the epoxy and good margins and good growth opportunities. Also a lot of applications in the automotive sector, particularly as you think about EVs and light weighting, this is an incredibly strong and incredibly versatile product that lends itself to a lot of applications in the automotive industry and so longer term, we see opportunities there. And so, what we've really been focused on at Proxxima is making sure that we've got a good understanding of the value in use that we're working with customers so that they demonstrate, they can see the demonstrated value in use and make sure that we're testing out the value proposition. We've challenged the organization to put together a very aggressive plan in terms of growing Proxxima and then have established what I would say are milestones in our development of that to continue to assess, are we
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Proxxima and then have established what I would say are milestones in our development of that to continue to assess, are we seeing this potential being realized and therefore earning our way to the continued emphasis on the growth and investment. And in these early days things look really, really positive. But this is a new to the world technology, new to the world processes that we're building into the planned process. And as you can tell from the way we're talking about this, we see huge opportunity here. It's very, very consistent with kind of the history we have in our historical chemical business in terms of taking molecules, developing unique applications with unique performance parameters and then selling those into large market applications and this fits right into our wheelhouse with respect to that. So, it's early days, rebar is one of the first out the gate, but I would say there's a lot more to come in this space and feeling really, really excited about this opportunity.
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Bob Brackett: Interesting. Thank you.
Darren Woods: You bet. Thank you.
Operator: The next question is from Jean Ann Salisbury of Bank of America.
Jean Ann Salisbury: Good morning. With China 1 startup drawing closer, what is your view on the medium term Asia Chemicals market? China 1 does mostly high performance chemicals. Do we need to see a return all the way to mid-cycle CHEM's margins for that project to meet your projections?
Darren Woods: Yes. I'll start with that and then hand it over to Kathy to comment on it. But I would say when we went into the China 1 project, we recognized, I'd say the macro challenges with the chemical industry, particularly in China. And so, one of the things that underpinned that investment and the thinking behind it was making sure that as you point out that it's going to be high performance, but also low cost and therefore competitive in bottom of cycle conditions and generating returns and making money in tough environments. And so, we went into that with our eyes wide open and actually as we've progressed the project feel really good about where we've ended up with the project. So, my expectation is, it will be a valuable part of the portfolio even as the market remains challenged and that challenge will exist for some time. We continue to see good demand growth, but there's just a lot of supply that the industry has to work through and it will take time for the rationalizations to occur, but we'll be in a good position as we've demonstrated to date that our portfolio is built for these tough conditions and therefore our view is once the market clears we'll see a lot more upside than we've experienced here over the last couple of years. Anything to add, Kathy?
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Kathy Mikells: Yes. The only thing I'd add is, for us, China is going to be one of the biggest drivers of chem growth longer term, right, as they continue to have their population kind of moving up to the middle class and longer term chem growth is usually a bit above GDP. And so, the fact that we were able to strategically place this big project in China moves us from what was 100% importation model to now having our own production there on the ground. That's very low cost. So, we would expect even though Asia continues to be in bottom of cycle conditions because of the low cost of this facility, we should get to positive cash results reasonably quickly and it will be a very resilient asset for us long-term.
Jean Ann Salisbury: Great, thank you.
Darren Woods: Thank you, Jean Ann.
Operator: The next question comes from Biraj Borkhataria of RBC.
Biraj Borkhataria: Hi, there. It's Biraj from RBC. Just wanted to ask around some recent reports in September that you were withdrawing from a farm down process in Namibia. Is there anything you can say about what you saw there that was lot of interest? Obviously, there seems to be a lot of resources discovered there, varying views on commerciality of the reservoirs. So, any thoughts there would be appreciated as well as how you're thinking more broadly about bringing inorganic opportunities into what already feels like quite a full upstream hopper? Thank you.
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Darren Woods: Yes, sure. Thanks for the question, Biraj. I would just say maybe a little more generally than the specific question on what we're seeing. One of the changes that we've made in the organization is through this value chain concept is making sure that as we're evaluating potential resources and discoveries that we are thinking about the whole end-to-end process and making sure there is a commercial and economic opportunity set there that justifies the investment. So, we know it is an integrated approach to make sure that as we are doing the work to understand the resources and what would be required to develop resources that at the same time, we're looking at in the context of the cost of developing those resources and then the economics of that cost and returns that we could generate and how even the quality of the resource to make sure that it would be competitive on the market. So, all that now today is built into the early decision making. And at the same time, the size of the opportunity has to be large enough to give us the scale advantages. So, a big difference to how we think about opportunities today versus maybe 10 years ago is if it doesn't work across that entire value chain, we don't see the full value proposition, then we're not going to be interested in it. So, I would say that's just generally the macro approach without addressing specifically any one particular area, which I'm going to refrain from doing. I think then, to the second part of your question, with respect to inorganic opportunities, I would say, look, we all know this is a depletion business. And so, I don't think we can sit at any point in time and get comfortable that you don't need to be doing anything at some point for the future because of the recognition that every barrel you produce is a barrel that's gone, and you've got to keep thinking and have in your mind that you're on this treadmill and finding new opportunities as you go. And so, I would say the organization is very active across what are the three key
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and finding new opportunities as you go. And so, I would say the organization is very active across what are the three key levers for making sure that we keep a very full portfolio of production opportunities, which is continuing to focus on technology and making sure for the things that we have today, we're maximizing the recovery of those things. Continuing to look for new resources through the exploration lens and finding opportunities in that space, organic opportunities. And then, the inorganic opportunities, looking for opportunities where we can bring a value proposition to enhance what somebody else is already doing in this space. And I'd come back to the formula that we've always talked about, which is anything that is inorganic that we're going to acquire, we have to bring and we have to see an ability to offer some unique value. So, the one plus one equals three has to be part of the equation. And if we can't convince ourselves that, that proposition is there, it's very difficult to justify making the investments. And so, that's a high hurdle to clear. And so, it's one where we've got to work real hard and continue to look for the opportunities where that opportunity is available. And I would say the emphasis that we're putting on the technology side of the equation helps with that, which is what we saw with the Pioneer acquisition. As we drive the technology to improve what we're getting out of our base business, that lends itself to opening up deal space on acquisition opportunities. That's how we think about it.
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Operator: The next question is from Ryan Todd of Piper Sandler.
Ryan Todd: Hi, thanks. Maybe if I could ask one as we think about, maybe this is front-running, but as we think about CapEx in the 2025, is the post-Pioneer kind of normalized run rate on quarterly or annualized CapEx the right way to think about a starting point for next year or are there any material moving pieces whether it's incremental project timing or maybe even more specifically potential for cost deflation and efficiency gains and a lower part of the upstream that could push CapEx way in one direction or the other.
Darren Woods: Yes, I'll start and then I'll let Kathy fill in a lot of the details. I would just, I think the one thing which you'll hear on December 11th is what Neil and the team did is this is not a bolt-on where we're kind of adding what the two organizations were doing and then going forward with that. This was kind of going back to the fundamentals, clean sheets of paper and developing up what we view as the optimum development plan across that portfolio. And so, the optimization of our efforts across the broad portfolio means that the plan going forward is different than what the individual plans of both Pioneer and Exxon Mobil were prior to the acquisition. And so, it's a new mix, it's a new development plan that that will share a level of detail on December 11. And again, what I would tell you is it's really looking at what do we see as the capability of the organization, the value opportunity, and our ability to deliver on that that's going to set the CapEx plans. But I'll let Kathy provide some additional comments.
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Kathy Mikells: Yes. Otherwise, I would have said, look, starting point was look at Pioneers as far as starting point, they would have been projecting their own CapEx before we put Exxon Mobil and Pioneer together at, I'll call it beginning at $4.5 billion and sort of building to the $5 billion level over time. So, that's a starting point. But we are going to be looking at the Permian holistically and we are going to be putting our collective dollars kind of into an overall production plan and program that we think is going to drive the highest levels of efficiencies and the highest returns, as Darren already mentioned. So, the one other thing I just want to take the opportunity to mention is we have been guiding to CapEx and exploration expense. We had said for this year that's going to be $28 billion. That's what we still think it's going to be. That's $25 billion for Exxon Mobil and about $3 billion for Pioneer. We're going to move to cash CapEx for our guidance going forward, and we'll talk about that more during the corporate plan. That's a metric that is consistent with what other IOCs kind of guide to, and it will make it easier for you to translate that information kind of into the cash flow that we provide when we report our results.
Ryan Todd: Great, thank you.
Darren Woods: Thank you, Ryan.
Operator: The next question is from Paul Cheng of Scotiabank.
Paul Cheng: Thank you. Good morning.
Darren Woods: Good morning.
Paul Cheng: Darren, I'm interested -- thank you, I'm interested by your comment about the kinetic graphite. Is this a long term over the next 10 years or that this is like over the next five years become a potentially that a very sizable business for the company? And when I say sizable, I mean, what is your capability to ramp up the production warning within the next five years if the market is there to accept it? I mean, trying to understand that, how big are we talking about this one, and what kind of timeline are we really talking about?
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Darren Woods: So, yes, thanks, Paul. I think, I would talk about Proxxima and our carbon materials venture maybe collectively there, because there are two examples of basically looking at our portfolio today, looking for where we saw some advantaged feedstock, where we've got access to low-cost feedstock, and then looking at our technology and capability to take that feedstock and build a product that meets an existing need out there with additional advantage and value to customers. And that's kind of the approach we've taken across both of those. I think Proxxima, as I said earlier, we challenge the organization for both of those new opportunities to put together an aggressive schedule, what it could look like and how quickly we could ramp it. And those businesses have the potential to get fairly large moving forward in the next, call it, five to 10 years and multiple billions of dollars. That's the potential that we see in terms of our ability to ramp up production and sell into that marketplace, assuming that the technology scales up and commercializes successfully and that we get the kind of customer acceptance that we're looking for. So, that's, I think, aggressively we could make that happen, and we have -- we have set ourselves kind of a plan that allows us to achieve that, but recognizing these are new products, new technologies, just beginning to scale these things. We've got a number of steps as we move towards that broader ambition to demonstrate to ourselves that it will be successful, because we're not going to rush in and spend a lot of money until we convince ourselves that what we're seeing today, at a much smaller scale, we're seeing as we ramp this up and implement these technologies. So, the plan today has investments that grow both of those businesses in the early stage to demonstrate the value proposition that we believe is there. And assuming as we go through the next few years that we see what we expect to see there, then we will ramp up the spending and build those into the plans to build
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few years that we see what we expect to see there, then we will ramp up the spending and build those into the plans to build on the early successes that we're seeing. So, you think of it as milestones along what could be a very rapid growth plan, but we're not locking in the rapid growth or locking in the capital investments until we've demonstrated the success that we believe is going to be there.
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Kathy Mikells: Yes, the only other thing that I'd add to that and something our EMPS business is really good at we have to qualify all these new products for their in-use in any company, right? And that takes a lot of time and effort on our part. Again, it's something that our EMPS business is quite skilled at doing. We do that today as we bring new products to market. But that also creates as you do that a bit higher kind of barriers to entry, right? And again that's something we bring a lot of skill to. So, while it will take us time to build these different ventures up and the product qualifications for different applications, as we do that, we'll build growth and momentum and it will be hard for others to come in.
Paul Cheng: Very good. Thank you.
Darren Woods: Thank you, Paul.
Operator: The next question is from Jason Gabelman of Cowen.
Jason Gabelman: Good morning. Thanks for taking my question. I wanted to ask about the advantaged asset earnings in the quarter, which were lower quarter-over-quarter. And I'm just trying to understand the underlying drivers of that decline. If I think about it, Guyana production was down 30,000 barrels a day. Oil production from Pioneer maybe added 100,000 barrels of oil. So, it kind of implies that the Guyana earnings per unit are about 3x what you're getting from the Pioneer assets. And I wonder if that math is reasonable or if there were other factors that were contributing to that Advantage asset volume, earnings impact on the quarter? Thanks.
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Kathy Mikells: So, the biggest thing that impacted that, as you already mentioned, was the tie-ins for Liza-1 and 2 to the gas to energy project and that impacted our Guyana overall volumes. And so, that impact was only partially offset by getting the additional month of Pioneer kind of volumes on the other side of that. So, those were the two biggest movers. If you take a step back from that though and look at where we're at on a year-to-date basis, I mean, you really see the power of the Pioneer acquisition and Guyana volumes increasing year-over-year. So, on a year-to-date basis, our advantaged volume growth in upstream gave us almost $3 billion of incremental earnings and that's the engine that we're counting on long-term.
Jason Gabelman: Okay. Was there anything that was unique to Pioneer contribution in the quarter that would have depressed it versus where it was last quarter?
Kathy Mikells: Nothing unique, I mean, Pioneer's overall contribution in the quarter, just in terms of the volumes they produced, were, I would have said, pretty steady, I mean down marginally quarter-over-quarter. But again, we only took two months of the quarter from last quarter relative to three months this quarter. And in any quarter in the Permian, we're seeing growth obviously year-on-year, but on quarter-to-quarter, those results might look a little bit different. But we're really pleased overall with what we're seeing in production. I mean, we had a third quarter production record in the Permian of over 1.4 million oil equivalent barrels. So, both the ExxonMobil operation and the Pioneer operation in the Permian is going really well and obviously Darren talked a lot about the efficiencies that we're seeing as we move to the, I'd say deeper technology that ExxonMobil is bringing in its cube development and getting the best of both, both in terms of drilling and in terms of completion experience from both companies and applying that across all the acreage in the Permian.
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Darren Woods: And just to add on the earnings basis with the step up, you've seen increased depreciation with bringing Pioneer into the portfolio.
Kathy Mikells: Yes. The last thing is I'd say if you looked at Pioneer on a cash flow basis, I mean we're already cash flow accretive, which is what we expected to see and obviously that neutralizes for the incremental depreciation that we took on through the purchase accounting last quarter.
Jason Gabelman: Okay, great. Thanks for the answers.
Darren Woods: You bet.
Operator: We have time for one more question. Our final question will be from Roger Read from Wells Fargo.
Roger Read: Yes. Good morning. Thanks for fitting me in here. To stay away from the December questions, let me throw one at you here on the overall op cost savings, the $15 billion total by '27, Obviously, about three quarters of that's in. I was just curious, you mentioned earlier, Darren, a technology company. Is any part of that cost savings up to the 15 related to any sort of an AI effort internally, or is it strictly the logistics as you've talked before? And if so, is there something beyond the $15 billion as you think about kind of a technology change over time?
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Darren Woods: Yes. Thanks, Roger. I'll start with the end of your question, which is my expectation is there's more to come in this space and I'll talk to AI more specifically, but I would just context it more broadly in that, if you look at the transformational change that we've been making across the entire enterprise, we're very early into that process. We just this year's the plan that we are developing that we will talk to you about on December 11, the new organizations that we put in place, the GBS, the supply chain, even the trading organization, those are just they were kind of the first had some time to run and develop a full blown plan this year and so with a lot more experience under the belt and we continue to see a lot of opportunity out there that will take us time to capture. And so, I would see that there is going to be a continuum there and continued progress that we are going to make, based on the centralized approach, and the organization getting more and more efficient, but more importantly more effective at executing on the core task of driving value in the company. So, my view is that we're going to deliver on the 15 and then as we look going forward there will be more to come as that organization continues to become more effective and more efficient. The technology side of the equation I think is another area that will take longer to manifest itself, but I have a lot of optimism that the work that they're doing will ultimately drive not only I'd say the revenue side of the equation and basically higher value on that side, but also drive cost down. And so, we'll get kind of that double effect of higher revenues and lower cost to improve profitability. There's a good portfolio of things that that organization is working on and because we've now centralized that and organized ourselves around our own capabilities, we can now take the best capabilities and put them to the hardest problems, the most valuable problems, which I think are going to end up delivering a lot of good value. And AI is
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the hardest problems, the most valuable problems, which I think are going to end up delivering a lot of good value. And AI is part of the equation. So, there is a concerted effort to make sure that we're really working hard to apply that new technology to the opportunity set within the company to drive effectiveness and efficiency. So, that's certainly part of it. Like everything that we're doing, it's a thoughtful approach. It's one where we're going to make sure that we can get the value that we anticipate. We don't like jumping on bandwagons and kind of talking in aspirational terms, but I would tell you we do see a good potential there particularly in a lot of the data rich areas of the business and the team is working on how best to take advantage of AI as a tool to help drive value there.
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Kathy Mikells: And I'd certainly say if I take one step up from AI and just talk about technology more broadly and especially information technology, that's a space where we continue to have a lot of opportunity. We grew up with very siloed businesses, which resulted in our processes not being very standardized or conforming across the company. That made it more difficult, I'd say, to apply single type technology applications across the company, but that's something that we're getting at today. And so, we'll be continuing to automate much of what we do today manually and that's going to drive importantly improved effectiveness as well as improved efficiency and a way better experience for our people and our customers and our vendors, because we're not always the easiest company to do business with when it comes to information technology and self-service and those types of things. So, that has a big role to play as we look forward. We have a pretty complicated kind of IT environment as we sit today and we're in the process of simplifying that which is going to drive a much higher degree of automation into the business and give us importantly way better and more timely information that will be used to make faster better business decisions to drive better results kind of in the business more generally.
Darren Woods: All right. Thanks, Roger. And thanks everybody for joining the call and for the questions. We will as usual, we're going to post the transcript of this call to the Investors section of our website early next week. But before we wrap up, I want to again remind everyone we've mentioned a few times this morning of our corporate plan update and upstream spotlight, which will be held next month, December 11, and we will look forward to connecting with everyone again then. So, with that, have a good weekend. And I'll turn it back to the operator to conclude.
Operator: Thank you. This concludes today's call. We thank everyone again for their participation.
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Operator: Good day, everyone, and welcome to this ExxonMobil Corporation Second Quarter 2024 Earnings Call. Today's call is being recorded. At this time I would like to turn the call over to the Vice President of Investor Relations, Mrs. Jennifer Driscoll. Please go ahead ma'am.
Jim Chapman : Good morning everyone. Welcome to ExxonMobil's Second Quarter 2024 Earnings Call. We appreciate you joining us. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. I'm joined by Darren Woods, Chairman and CEO, and Kathy Mikells, Senior Vice President and CFO. This presentation and pre-recorded remarks are available on the Investor section of our website. They are meant to accompany the second quarter earnings news release, which is posted in the same location. During today's presentation, we'll make forward-looking comments, including discussions of our long-term plans and integration efforts, which are still being developed and which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Note that we also provided supplemental information at the end of our earnings slides, which are also posted on the website. And now I'll turn it over to Darren for opening remarks.
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Darren Woods : Good morning and thanks for joining us. ExxonMobil's performance remains strong. In the second quarter we delivered earnings of $9.2 billion, our second best second quarter results in the last 10 years. Just as important, we continue to improve the fundamental earnings power of the company, as Kathy covers in her prepared remarks available on our website. Our overall market conditions were softer in the second quarter. Oil prices remained firm. As a reminder, at Brent between $60 and $80 a barrel real and 10-year average refinery and chemical margins, we expect to generate between $80 billion and $140 billion in cumulative surplus cash from 2024 to 2027. The Pioneer acquisition increases that even further. In the quarter, we once again set production records from our advantage assets in Guyana and the Permian. Including Pioneer, our Permian production surged to 1.2 million barrels per day. In product solutions, our sales of high-return performance products rose 5% sequentially to a new record. Our strong performance in the quarter continues to support our capital allocation priorities, including the distribution of $9.5 billion to shareholders, of which $4.3 billion was in dividends. With the close of the Pioneer transaction, our shareholders now include the former owners of Pioneer stock who have begun to benefit from the strength of our combined companies. We welcome them to ExxonMobil, just as we do the talented people of Pioneer who bring a strong entrepreneurial mindset and deep expertise in unconventional resource development. I also want to recognize the combined transaction team for their excellence in execution. The average time to complete this type of merger over the last several years has been more than 11 months. We closed Pioneer in six months, once again demonstrating the strength of our organization and effectively executing large, complicated projects, including large acquisitions. It is challenging work, requiring deep thinking, a highly structured approach, and disciplined
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including large acquisitions. It is challenging work, requiring deep thinking, a highly structured approach, and disciplined action, areas where we excel. Although, it's still early days, the integration is exceeding our expectations, and I'm confident we'll deliver even more synergies than we've announced. The team looks forward to sharing these details and all the other work we're doing to significantly grow value at our corporate plan update and Upstream spotlight in December. As we look ahead, we see opportunities to grow value not only through our corporate plan period, but long into the future. Later this month, we'll publish our global outlook, which projects global energy demand 15% higher in 2050 than it is today. We see oil demand holding steady at around 100 million barrels per day in 2050, while demand for renewables and natural gas grows considerably. An energy abundant future, driven by economic growth and rising levels of prosperity, creates opportunity for ExxonMobil, no matter the speed or direction of the energy transition. Over time, as it becomes more and more obvious that heavy industry and commercial transportation will not be meaningfully powered by renewables, the world will come to rely more on technologies where we have an advantage, including hydrogen, biofuels, and carbon capture and storage. A serious approach to the transition should focus on moving the world from high carbon to low carbon energy, not simply from oil and gas to wind and solar. The data, science, and economics all support this as fundamentally necessary. Our strategy reflects this reality and since it relies on the same corporate capabilities and advantages under any scenario, it is extremely flexible, delivering strong profitability irrespective of the path society takes. As a technology company that transforms molecules to meet society's needs, we're not defined by our existing product suite. We began as a maker of kerosene for lamps. Today, No one thinks of ExxonMobil as a kerosene company serving the lamp
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suite. We began as a maker of kerosene for lamps. Today, No one thinks of ExxonMobil as a kerosene company serving the lamp industry. In the future, ExxonMobil will be defined by the technologies and products it is producing to meet the world's future needs. As always, by drawing on our unique combination of competitive advantages. We shared with you a variety of technologies and products we're developing to more effectively meet existing needs, while helping the world achieve a lower carbon future. Two examples where I see significant new market potential are Proxxima and carbon materials. With Proxxima, we transform lower value gasoline molecules into a high performance, high value thermoset resin that can be used in coatings, lightweight construction materials, and advanced composites for cars and trucks, including battery boxes for electric vehicles. Materials made with Proxxima are lighter, stronger, more durable, and produced with significantly fewer GHG emissions than traditional alternatives. In March, we showcased the automotive uses of Proxxima at the world's leading international composites exhibition in Paris. We're progressing projects in Texas with startups planned in 2025 that will significantly expand the production of Proxxima. We see the total addressable market for Proxxima at 5 million tons and $30 billion by 2030, with demand growing faster than GDP and returns above 15%. That's an exciting new business opportunity with significant profit potential, for we have unique and hard to replicate advantages consistent with our strategy and core capabilities. We also see a sizable opportunity in carbon materials, transforming the molecular structure of low-value, carbon-rich feeds from our refining processes into high-value products for a range of applications. We are targeting market segments with margins of several thousand dollars per ton and growth rates outpacing GDP. These include carbon fiber, polymer additives, and battery materials. Our competitive advantages of scale, technology, and
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GDP. These include carbon fiber, polymer additives, and battery materials. Our competitive advantages of scale, technology, and integration, combined with our North American manufacturing footprint, provides a foundation for building these compelling new high-margin businesses. I've challenged the product solutions team to lean into those opportunities and develop plans to accelerate the growth of both of these profitable new businesses. I hope we can ramp up investments to make them a meaningful part of our overall portfolio sooner, which will help further diversify earnings and significantly grow shareholder value for decades to come. ExxonMobil has a long history of successfully establishing new high-value and used products for established and growing markets. Consider Vistamaxx, which we launched to enhance the performance of everything from auto parts and construction materials to personal care products and packaging. We've grown our Vistamaxx performance polymer from five grades to 20, and total annual production capacity is 700,000 metric tons per annum, with highly attractive returns and significantly more growth potential. Of course, consistent with the track record we've established over the last seven years, the hurdle for investing will be high. Any investment will have to generate competitive returns, possess clear competitive advantages, and be resilient to the bottom of any commodity cycle. As we've demonstrated, our capital allocation decisions have generated robust earnings, cash flow, and shareholder returns. I look forward to sharing more about our growth opportunities in December. In closing, we have a lot to feel good about. Our performance is strong. Our merger with Pioneer is already creating tremendous value with more to come. And we continue to develop products and build businesses that will enable us to grow properly far into the future across a wide range of scenarios, including a rapid energy transition. With that, we'd be happy to take your questions.
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Jim Chapman : Thank you, Darren. Now, let's move to our Q&A session. As a reminder, we ask each participant to keep it to just one question. And with that, operator, we'll ask you to please open the line for our first question.
Operator: Thank you. The question-and-answer session will be conducted electronically. [Operator Instructions] The first question comes from Neil Mehta, Goldman Sachs. Your line is open. Please go ahead.
Neil Mehta: Good morning, Darren and team, and thanks for the update. I wanted to build on your comments on Pioneer. Now that it is under your umbrella. Can you build on some of your comments around, one how is the asset performing from a volume and type curve perspective relative to expectations, and two you alluded to synergies tracking ahead of expectations. Can you help delineate what those buckets of out performance are?
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Darren Woods: Yeah, good morning Neil. I'll start with a few comments and then let Kathy kind of add on top of that. I’d say, early days yet two months in, but the work of the team prior to the change in control and then what we've seen since then is extremely encouraging. As we've stated, the Pioneer assets basically delivered a record performance in the second quarter. And if you think about the context of doing that with all the change that was going on with respect to the merger, I think a real testament to the quality of the people there and the work that they've been doing. So I'd say vectors are all pointing up. I think probably better than what we had anticipated, but I would also say it's early in the process. The teams today are working very well together, which has led to frankly, identifying a lot more value opportunities than frankly, I think either of us could see when we were on opposite sides of the fence. And now that we're together working, we see essentially a lot of opportunities to transfer the best practices of ExxonMobil into Pioneer and likewise to transfer a number of best practices from Pioneer into the ExxonMobil Base, which when you think about our size has some tremendous leverage associated with it. So that's all being worked through in detail. As you know, when we commit to some of our objectives, they're based by some very detailed plans that sit behind them. The organization today is working those plans, but we already see significant upside potential, not only in the magnitude, but in the pace at which we'll be able to deliver them. So I think a really positive story there. I'll let Kathy maybe add some additional details. Kathy?
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Kathy Mikells: Sure, I think one of the things we've been really pleased by is the number of learnings that we've already had from Pioneer. And so not only will we bring our technology and cube development to them, but they are bringing a bunch of learnings to us. So we're already utilizing their remote logistics operations center in our own drilling and completions operations in order to improve supply chain. They've done some things on the procurement side, I'd say, that we think can help us to kind of leverage up our expertise. They've been really good over the years of locking up their acreage. So we think that's another thing that ultimately we can benefit from. And then as I think everyone knows, they've got a quite large water infrastructure in the Midland Basin. And we'll be looking to also leverage that. So we've been really pleased with what they bring to the table and we're off to a really good start, as we look at building an integration development plan with them that fully utilizes the technology that we bring to the table. And so we're going to have a corporate plan update in December. We are going to do a spotlight on the Upstream, and we'll update where we're at with the synergies and how we are looking forward at that time.
Darren Woods: Yeah, I guess cap it off, Neil, with we said at the time we announced the acquisition that we were going to produce more barrels at a lower cost and in a more environmentally friendly way. That continues to be the case. That's obviously good for our company, but more importantly, as we said at the time, we continue to emphasize it's good for the US, it is good for the US economy, it's good for the people living in the US, it's good for US businesses and critically it's good for US energy security. So I think this is as I said at the time, going to be a win-win proposition for all.
Neil Mehta: All right. Thank you, Darren. Thank you, Kathy.
Operator: The next question is from Betty Jiang with Barclays.
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Neil Mehta: All right. Thank you, Darren. Thank you, Kathy.
Operator: The next question is from Betty Jiang with Barclays.
Betty Jiang: Darren, Kathy, good morning. Since I just talked about Permian, we'll hit on the other region that's also hitting record production, so Guyana volumes continue to exceed expectations and the FPSO just continue to produce while above capacity. We'd love to just get an understanding of, do you think this type of performance is likely to continue and is that translatable for what you would expect for the future projects that's yet to come.
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Darren Woods: Sure, I'll take that Betty. Thank you and good morning. Good to hear from you again. I would say, you know, what you're seeing is the collective effort of our organization focusing on what is a very high value development and making sure that we are taking advantage of all the opportunities we can find to safely grow production. And as you commented, we are seeing some significant improvements with production rates well above what we had based the investment decision on and that's continuing across all three of them. We try to take that into account as we develop the next and so in theory, you would think we build that into the base and don't continue to see that. But frankly our experience is telling us otherwise, which is this organization, complemented by the work that we're doing with our technology organization, our global operations and sustainability organization, every element of the organization that we have now created and functionalized is very focused on maximizing values. And so, with these new organizations and that focus, they continue to find additional opportunities. So, I would bet that we'll continue to see how performance versus the basis on which we FID, but I would also tell you that every development is unique unto itself and obviously we got to get it up and running and then let the teams get after it and find the opportunities to safely increase its capacity. But I would just tell you, I would bet on our people to find that. We've got a long history of doing it, and it's clearly demonstrating itself with this unique and valuable opportunity here.
Betty Jiang: Thank you.
Darren Woods: You bet, thank you Betty.
Operator: The next question comes from Doug Leggate with Wolfe Research.
Doug Leggate: Hey, Good morning, thanks for taking my questions. Good morning Darren and Kathy.
Kathy Mikells: Good morning.
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Doug Leggate: Hey, Good morning, thanks for taking my questions. Good morning Darren and Kathy.
Kathy Mikells: Good morning.
Doug Leggate: I'm still getting used to the new moniker Darren, but thanks for having me on. So I wonder if I could ask a question about portfolio now that you've got Pioneer in the door. You've got a lot of things that are perhaps you could characterize as maybe non-core, a lot of tails in the portfolio. And I'm just curious, we haven't really heard much on the asset disposal front in a while, and I'm curious if now that you've got two very significant concentrated assets to some extent, the Permian and Guyana, what it means for the portfolio in terms of high-grading opportunities going forward?
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Darren Woods: Yeah, I'll start with that, and then I'll let Kathy add anything that she wants to. But I would say, actually, we've been fairly aggressively going after the tail. You remember, I think back in 2019, we had announced that we were going to divest about $15 billion over time. Of course, we got into the pandemic and we said we're not going to, this is not a forced-March. We're going to basically divest when the market conditions ensure that we can realize the value that we think the assets that we are marketing can be realized. And frankly, that's what we've been doing. So as you look at where we're at today, second quarter this year, I think we've basically gotten to the $15 billion in the Upstream. And then if you look at what we've been doing in the downstream, there's another few billion dollars that we've added on top of that. So frankly, from a cleaning up the tail standpoint, we've made significant progress. Obviously, there's a few more things that we're working on and we'll continue to assess every one of the assets in the portfolio, make sure that they are competitively advantaged. And, you know, frankly, as we look at new investments, we force those investments to compete on an industry-wide basis and make sure that they're advantaged versus the industry and therefore can be a supply product at low cost of supply. We also do that with all of our existing assets. And if they are not competitively positioned on an industry supply curve, then the organization has two options. Either we come up with an advantage investment that makes them more competitive and moves them to the left on the cost of supply curve, or we look to divest. And that process has been ongoing across all of our businesses. And then obviously the timing of when we then take action is a function of realizing the value that we think those divestments should bring. And we're patient. We're not going to rush that process. But I would just say staying after it, being very steady, waiting for the market to meet, to be where it
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to rush that process. But I would just say staying after it, being very steady, waiting for the market to meet, to be where it needs to be in order for us to [reevaluate] (ph) it has paid off significantly. And basically, we're delivering on what we said we were going to do, and we'll continue to look at it. But I don't see any big step changes here in the medium-term.
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Kathy Mikells: And the only other thing I'd note, Neil, is you can see in our cash flow bridges every quarter.
Doug Leggate: Doug.
Kathy Mikells: Sorry. I'm sorry, Doug. I'm sorry. But you can see in our cash flow bridges, we're pretty consistently every quarter bringing in more proceeds from the divestments that are occurring. You know, in the first half of the year that was $1.6 billion. And then I would just note we had a lot of activity in Upstream. And so that generated some positive earnings for us in the quarter. And so if you look at my prepared remarks, you know, that we published earlier this morning, I talk about sort of $380 million in the Upstream being kind of these other one-off items. And that was a lot of earnings coming in from divestments only partially offset by the one-off cost associated with Pioneer.
Doug Leggate: Terrific, it would have been worse if you'd called me Jennifer Kathy, but thanks so much. I appreciate it.
Kathy Mikells: Yeah, good appreciate that. Sorry about that Doug.
Jim Chapman: Doug, congratulations on the new shop, the new platform.
Doug Leggate: And to you, Jim. Thanks so much.
Operator: The next question is from Devin McDermott with Morgan Stanley.
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Doug Leggate: And to you, Jim. Thanks so much.
Operator: The next question is from Devin McDermott with Morgan Stanley.
Devin McDermott: Hey, good morning. Thanks for taking my question. So Darren, you had a lot of good updates in your prepared remarks on some of the low carbon initiatives. There's been a lot of progress there, it seems over the past few months and quarters, which is great to see. And I think back to the corporate plan you laid out late last year, this is a growing wedge of your overall capital spending in each of the next few years. So I was wondering for some of these investment opportunities, and more about what miles you're focused on to actually start allocate more capital to these areas. So what's needed to make final investment decision on [ExxonMobil] (ph) [indiscernible] or move forward with carbon materials or build the scale you talked about in lithium production. Is it more commercialization in offtake, technology development, regulatory clarity, something else?
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Darren Woods: Sure. Yes. You broke up just a little bit on that, Devin, but I think I got to gist of your question. If I don't hit the mark then please steer me in a slightly different direction. I think your question around what's required to kind of continue to move along in our investments in the low carbon solution across the portfolio of products that we've been talking about. I would just say, fundamentally we expect in the low carbon businesses -- and in fact, some of these new products that while they contribute to a lower carbon future, they also bring significant value in use in today's application, they have to compete in the portfolio, they have to be advantaged versus what's out there today and they have to basically generate good returns across the commodity cycles. And so the fundamental philosophy that we've been applying in the base business also is required in these -- the new businesses that we are trying to generate. So that's foundational what each of -- and Dan Ammann, in particular but then the stuff that's coming out of the Product Solutions organization, has also got to meet that initial hurdle. And then as you look across each of them, the hurdles to clear to deliver on that expectation vary little bit. I would say in Dan's business with the carbon capture and storage, he and his team are building a brand-new business. And so there are very few, I think examples of where the company is not only developing the technology and the infrastructure and logistics system, but also developing the capacity to supply, while developing the demand and developing the market in general, and advocating on, what I’d say, are the initial policies needed to get things kick started. So there are a lot of moving parts. I would say the broader industry and business community, frankly haven't gotten far enough along this to truly appreciate just how complicated it is. But I’d say leveraging the capacity and capability that we've built over the decades doing this in other parts of our company, particularly in
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the capacity and capability that we've built over the decades doing this in other parts of our company, particularly in the Upstream, that we are leveraging those capabilities and making really good progress there. On the blue hydrogen project, as we've worked through the engineering -- and we've got a really good line of sight to what that project can deliver. Obviously, a critical element of that is getting the IRA legislation translated into final regulations, and that's a process that's been ongoing. We are optimistic that the regulations will reflect the intent of the legislation. And if it does, I think we'll have a very attractive project that we can then FID here once those regulations are finalized. So I am optimistic in that space. And as you may have seen, we've just added another 500,000 tons of carbon capture and storage into Dan's portfolio. And there is a pipeline that the team continues to work. So we see continued opportunity and growth with good returns in the carbon capture side of the equation. On the lithium same thing -- while lithium is an established market, it's fairly small with respect to what its ultimate potential is. And of course, we are bringing on a new production method with some new technology. And so again, doing the work to understand what the investments required there are and to establish and ensure that we've got a real advantage versus what else is out there and what else needs to come on to meet the growing demand in lithium. But again, I feel good about that. We've told the team, don't -- we're not looking to rush this through and get something, get money spent. We are looking to make sure that we build a very strong long-term foundation. So none of the work that we are doing in these new businesses is schedule-driven. It is all about establishing successful long-term foundations. And then maybe just briefly touch on Proxxima and the Carbon Ventures, which that's a broader effort that we've been on for quite some time, which is to say, leverage our technical
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Carbon Ventures, which that's a broader effort that we've been on for quite some time, which is to say, leverage our technical capabilities to transform molecules and apply that to markets that exist with unmet needs. And I think we are making really good progress with Proxxima. We've got some, I think very high barriers to entry and competitive advantages there. And so I'm anxious to kind of prosecute that business and establish it as quickly as we can because we see real potential there. And same with Carbon Ventures, again leveraging our ability to transform the molecule, shape the molecules and get some structures that improve performance. I think there is a big opportunity there. So but that's – I’d say Carbon Ventures is still early in the technology cycle, but I think we've gone far enough along to see some real opportunity there. And as I said in my prepared remarks, the challenge I've given the Product Solutions organization is what's a realistic but aggressive business plan look like and what would be the investment required to establish that. And that's good because it grows value today, but it also positions us well. As those molecules become less demanded in their traditional applications, it becomes a much lower feedstock to these new applications. And so there is a lot of opportunity to diversify the [slate] (ph) and protect the business or diversify the business, as we move through the transition. So long answer, but a lot of variables at play here, but frankly, all variables that we feel very comfortable managing. And I think the progress we're making there demonstrates our capability to manage those things.
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Devin McDermott: All right. Thanks Darren. I appreciate all the detail.
Darren Woods: Thank you.
Operator: The next question is from John Royall with JPMorgan.
John Royall: Hi, good morning thanks for taking my question. So my question is on the CapEx guidance update. We see that you moved to the legacy CapEx up to the top end of the prior range. And then obviously, you layered in Pioneer as well. But can you talk about the drivers of the legacy CapEx bumping up to $25 billion for the year?
Darren Woods: Yes. Good morning John. I'll start with that and then let Kathy finish up. But -- so the way -- the reason we put a range out on the CapEx, as we build these plans in the previous year, starting around this time in the summertime and then kind of lock and load them in October. And obviously, there is a lot of things that develop and evolve from the middle of the previous year to -- as go into this year. That range is not meant to have you guys slice it down the middle and fix on a number. The range is to say, we've got optionality here. And as things evolve, we may reduce some of the spending. Or if we find that the opportunities are panning out the way we expect, we may be on the other end. So that range is truly where we expect to be somewhere in -- and how things evolve and what the opportunity set looks like. I mean the key focus here is to make sure that we are investing in highly advantaged, highly profitable projects. And basically, as we worked our way from October of last year into this year, we see a lot of attractive opportunities that we continue to invest in which puts us at the top end of that, consistent with what we understood the opportunity set could look like, as we went into the plan process last year. That's why we are coming in at [2025] (ph). And then of course, we're using the Pioneer number to add on top of that. But Kathy, anything to add to that?
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Kathy Mikells: No, I would just say, obviously we have a lot of projects coming online in 2025 and the exact pace of all of those. And therefore, making sure that we provided sort of enough room, I would say, in the initial guidance supporting of all of those projects that are coming online in 2025. We can't pinpoint, predict all of that as we put our plans together for the year. And so just as an example, China 1 is a huge project. It is going to be coming online early next year as an example. So there is always a little bit of give and take, which is why we give the range to start with.
Operator: The next question is from Jason Gabelman with TD Cowen.
Jason Gabelman: Hi, good morning. Thanks for taking my questions. I actually wanted to follow up on the 2025 project startups that you just mentioned, and thanks for a little bit more detail on the China chemicals complex. But as I look to the other projects coming online, I think the largest earnings contributors, include the Permian crude pipeline and then in the Upstream, Golden Pass and then the next [Guyana boat] (ph). So I was just wondering if you could provide a little more color on those projects in terms of how they're progressing and kind of phasing through the year? Thanks.
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Darren Woods: So I would say consistent with the plans that we put out, the projects are all with obviously the exception of Golden Pass, moving consistent with the planned development and the announced dates that we talked about. All of them, I think we feel really good about in terms of the work that we're doing. And the case for the contributions, the returns the earnings that we expect to get out of those projects, I think we continue to feel good about. Underpinning all the projects is we'd never try to take a position on where we're going to be in the market cycle, but instead make sure that these projects, when they come on, can compete in any of the areas of the cycle. And we've actually found that, if you look at the investments we've made since 2018 brought online, if you look at the aggregate return of that portfolio, it is exceeding the basis in which we FID-ed those projects. Even as we have been, say in the Chemical business at bottom-of-cycle conditions. So I think we continue to demonstrate to ourselves the time we spend to make sure these projects are advantaged in the best case is paying off. And then, of course our global project organization is really continuing to drive very effective execution of the portfolio with -- keeping our cost well within the FID basis and generally delivering it faster and therefore, bringing more value sooner. Kathy?
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Kathy Mikells: Yes. And I would just note and especially a big year for our [E&PS] (ph) business. So I already noted China 1. You noted a couple of projects. I mean, the Singapore resid upgrade project is a pretty big project. We have an upgrade project at Fawley in order to bring on ultra-low sulfur diesel. We've got the Strathcona project for renewable diesel coming online in 2025. So a really big year for the E&PS business in terms of the number of projects we have coming online. And then we're going to continue to expand our advanced recycling. So we'll be adding more capacity as well next year. So we noted, again if you look at our IR slides, we talk about projects being a big driver of underlying earnings growth in the E&PS business, and you see that supported by everything coming on in 2025.
Jason Gabelman :
Operator: The next question is from Biraj Borkhataria with RBC. Your line is open. Please go ahead.
Biraj Borkhataria: Hi, there. Thanks for taking my question. Just wanted to follow up on Jason's question, and more specifically on Golden Pass. So I guess, at this point, are you able to confirm, update the scheduled guidance for the start-up? And then the second question is just going to some of your prepared remarks. If I think about your Upstream portfolio, a lot of your growth is liquids or liquid prices linked to LNG. I think you say 80% of your Upstream is now linked to liquid business. So I was thinking, as you're building out your LNG portfolio and your trading function, is there any desire to diversify that sales mix a bit more? Or is this intentional on where you want to be? Thank you.
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Darren Woods: Yes. Sure. I'll start with the last part of the question, which is it is a conscious decision to get weighted on liquid prices. And frankly, if you look at the LNG market. And when you're building large LNG projects, you tend to sell those out and sign contracts in advance of the investments, which the market today is linked to oil. And so we continue to have a desire to lock in a significant portion of those developments, so we've got surety on the sales side of the equation as we bring those projects up. So my expectation is we'll continue to be weighted on that, and we're very comfortable with that. In fact, there is been a huge drive since I've been in this job and brought Neil into the Upstream to basically shift the portfolio and get a little heavier weighting in the oil side. And as I mentioned, this morning on CNBC, if you look at the oil that we're producing today, we are producing more oil than at any time since the merger of Exxon and Mobil. So that strategy is beginning to manifest itself. On your Golden Pass project, so we've just gotten through -- the venture just reached a settlement with Zachry. And so that venture is in the process of kind of restaffing and getting started back up again. Obviously, we are in the very early days of that. So there is still more work to be done. And of course, the teams are very focused on getting back to work, effectively executing and bringing that project in as quickly as they can and as close to the original schedule as they can. Right now, our estimate is we are going to see about a six month slippage. So we had anticipated kind of first LNG in the middle of next year. We now are looking at probably the back end of 2025 for first LNG. And that is kind of where the current schedule is. But I would just condition that with the teams are just getting back up and running, and they have a clear mandate to try to bring that in as effectively as they can. And my -- again, my expectation is it will do better than we currently think, but we've got work to
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as effectively as they can. And my -- again, my expectation is it will do better than we currently think, but we've got work to do.
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Biraj Borkhataria: Yeah, understood. Thank you very much.
Darren Woods: Thank you Biraj.
Operator: The next question is from Stephen Richardson with Evercore.
Stephen Richardson: Hi, thank you. I was wondering if you could circle back. I appreciate all the conversations about the projects and projects execution and how you've got a number of really important and interesting projects coming on in the Downstream in short order. Just wondering, you've added seemingly quite a bit of length to your Upstream portfolio over the last number of years. And as you think out beyond '26, '27, Darren are the teams continuing to bring you new and interesting projects in E&PS? And do you think continuing that kind of pace of integration out in the plan horizon is still interesting. Maybe you could just talk about that in terms of the investment mix and the opportunities and maybe address E&PS and chemicals as well.
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Darren Woods: Sure. No, I appreciate the question, Steve, because I think you touched on a really important point. I think one of the advantages of the restructuring that we've done is we no longer identify our business with the products that we are making. So if you go back in time, the functional organizations that we established, every refining organization that was producing refining products, and we had a fuels marketing organization that we marketing fuels, and we had a chemical company that's marketing chemicals. We've now combined all that into a Product Solutions organization, which is supported by a technology organization, which, again is not organized around any of our heritage businesses or heritage products, but instead is organized around core capabilities, core technical capabilities to deliver value to the businesses that they support. So while it may not be intuitively obvious, that change in structure and the way we think about and talk about the business has also opened up a lot of white space in terms of the challenge here is how do we take our core advantages, core capabilities. Some of it includes our existing footprint, but a lot of it includes our ability to upsell and to identify value and use applications, and combine that with a technology organization that's very focused on applying core technology capabilities to business challenges and business opportunities which is starting to unlock applications that frankly, in the past wouldn't have been identified because they didn't fit in the context of the organizations that we had in place. But today the aperture is much broader and the playing field is much bigger. And so we see that with Proxxima and Carbon Ventures. My expectation is as we go forward, we'll continue to talk about those markets, and we'll talk about the applications that we are developing. And the technology organization is continuing to look at how else can we use our capabilities and manipulating the molecules and particularly hydrogen and carbon molecules, to make
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at how else can we use our capabilities and manipulating the molecules and particularly hydrogen and carbon molecules, to make products that society needs and at the same time reduce emissions. So I think that organization has been given a license, a hunting license go out and find how we can lean into and create more value out there and grow our earnings. So my expectation is as we go forward well beyond the 2027 time frame, we are going to continue to bring in opportunity sets as we unlock them through the work of both our Product Solutions organization but also our technology organization. And then of course, we can take advantage of our Product Solutions organization and then go off and build these things at scale and do it at a lower cost than anybody else. So I think there's a really powerful combination there. And our horizon extends well beyond the 2027 in terms of thinking through the pipeline and making sure that we're positioned to be successful well into the future. And I would just quickly add then -- and that's true for Product Solutions which has got the chemical portfolio, our specialty portfolio. And then what I would say are the energy portfolio, but more specifically the molecules that go into energy, that we expect to become feedstocks of the future like they are today for our Carbon Ventures and Proxxima ventures. On the Upstream side, we've got a lot of, obviously growth potential through the back end of this decade. But we -- this is a depletion business, we recognize that. And so that organization continues to look well beyond the 2027, 2030 time horizon, making sure that we have got a good understanding of what it's going to take to keep that pipeline full. So I feel really good about that. I think the way we've organized the businesses and the central organizations that we've put in place to serve those businesses is going to have huge payoffs here in this space.
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Operator: The next question is from Roger Read with Wells Fargo.
Roger Reed: Yeah. Thank you. Good morning. Since you all have probably the most geographically diverse set of operations of anyone we cover, I was just curious the most recent news this morning, shows maybe a few cracks in the economy. If you could kind of give us an idea as you look across the products in the chemical side, thinking that's where we really see the demand parts, what you are seeing kind of, let's say, China back around to our side of the globe?
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Darren Woods: Sure. Good morning. Roger, I think the key message I would leave you with across our business is when you look at kind of pricing in margins is there's two pieces, two halves to the equation, there is the demand side and there is the supply side. On the demand side, frankly to start with chemicals, we see the demand basically returning to the kind of growth that we've seen prior to the pandemic. So basically growing at 1% to 2% above GDP. And so that's back on track from a growth standpoint. Certainly, that's what we are seeing in the first half of this year. The challenge in that business with the margins has been frankly, from the supply side of the equation. We've got a lot of capacity coming on and a queue of capacity yet to come on. So that's moral of the story in chemicals, less of a demand and growth story and more of a supply story and a lot of supply coming on in the short-term. And like the past, the challenge in the chemical business, given the large chunks of capacity to come on in discrete times, that you've got to grow your -- got to grow through that capacity to get your margins back up again. One of the reasons why we stay so very focused on low cost of supply, feed advantage and, importantly performance products is to make sure that we've got advantages above and beyond the commodity cycle. And you see that playing out on our chemical business with earnings that frankly are well above what would be expected given the challenging market conditions that we see in the margin environment. China is growing despite maybe some of the – it is not growing at the rates that we've seen historically the very high rates, but still growing at a healthy clip. And as you come around to the US, we are seeing kind of reasonable economic conditions and growth in the US as well. Europe, I think is probably the most challenged area of the globe. And frankly, with some of the policies we see Europe implementing, my expectation is becoming more challenging, quite frankly and unfortunately -- particularly
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we see Europe implementing, my expectation is becoming more challenging, quite frankly and unfortunately -- particularly unfortunate for the folks living in Europe given the -- I think, the drag that the policy they are putting in place is going to put on their economy. So I think China is looking reasonable. India is growing and it looks very, very healthy. The US is looking reasonable with good growth. Demand for -- on the energy side of the equation with petroleum products continues to be very high. Record levels of demand around the world. And again, I think very good supply coming into the equation there, which is keeping -- has brought margins from those very high levels that we've seen in the first quarter and then back into last year. We are now getting back down into more typical ranges. And frankly, all of our plans anticipated that. It is always difficult to call the timing of it, but we certainly knew that the elevated margins that we were seeing in the refining business would ultimately come back into normal ranges. My expectation going forward then is we'll continue to see what I would say is historical volatility levels in that. We'll see times when the margins spike and we'll see times. And the margins are challenging. But again, we've built our refining business to be robust to those. And if you look at the work we've been doing to high-grade that portfolio, we've taken out a lot of the low-margin, less advantaged refineries and are now focused on the integrated refineries that have a mix of high value products that we are producing and are advantaged from a size and scale and cost standpoint. And then on the gas side of the equation -- and the oil side of the equation, oil demand continues to be at record levels. Last year was a record. We anticipate this year will be a record, and then next year will be a record. So demand continues to be fairly healthy from an oil standpoint. It is just a question of working through the supply that is coming on. Most of that led by what's happening in the
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standpoint. It is just a question of working through the supply that is coming on. Most of that led by what's happening in the Americas. And then on gas that's going to continue to grow in demand, and it is another -- again, a function of the capacity is coming on. So I think good news is that we are seeing the industry be very responsive to the demand. And frankly, it is very consistent with the foundation of the strategy that we put together, which is you got to be low cost, you got to be on the left hand side of the cost of supply curve. Thanks Roger.
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Operator: The next question is from Josh Silverstein with UBS.
Josh Silverstein: Thanks good morning, Darren and Kathy. You continue to make good progress on the cost savings front. It looks like there was an uptick of about $600 million sequentially. It looks like you've called out kind of a $200 million turnaround savings in energy products. Just wanted to see if you can provide some more examples of what's driving the improvement and how you take the current kind of $10.7 billion to the $15 billion over the next few years. Thanks.
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Kathy Mikells: Great. Thanks very much for the question. And so, you're right. If we look on an after-tax basis we had about $600 million overall on a pre basis for the year-to-date where our structural cost savings is about $1 billion. So making really good progress. Continuing to optimize maintenance is a big driver of overall savings. We gave a number of $200 million in energy products in terms of my prepared remarks. And that was just noting that, in the half we had a particularly heavy turnaround slate. And if we looked back at that same turnaround slate the last time we did it, we did it much more quickly and we did it at lower cost. Hence the $200 million savings number that you mentioned. We are also obviously driving savings in terms of supply chain and looking to get more efficient there. And all of our centralized organizations which we've kind of stood up over the last couple of years, are really responsible for driving savings into the business. So whether that's global business solutions or whether that's supply chain, or our global operating and sustainability group, who works on our maintenance activities, we are really starting to see the uptick from the benefit that those organizations can bring, by simplifying things and standardizing things, and bringing better data analytics to optimize our overall organization. So that's what you are going to continue to see on a go-forward basis. And then I’d say, longer-term, as those centralized organizations start to standardize processes for the company which are quite disparate, as we sit here today, we'll be able to apply more technology to get, I’d say, even more automated in the things that we do which will drive further efficiencies for us long term. So whether it is getting more efficient on logistics or getting more efficient because we're standardizing now between ourselves and Pioneer, standardizing all the materials and things that we're buying, those are the things that will continue to drive savings. And I think we have both the largest
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and things that we're buying, those are the things that will continue to drive savings. And I think we have both the largest program, by far of anybody in the industry and now a very proven track record that we feel quite good about typically over delivering on the initial plans that we developed. So we are feeling good about the progress we're making, and that overall target to get to $15 billion in savings between 2019 and 2027.
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Darren Woods: Yes. And I would just -- I guess one other way to think about it, Josh is, for the first time in the history of our corporation, we've organized ourselves to take -- to focus on every aspect of delivering the business irrespective of what that business is. Look at where the synergies exist, and are now taking the experience, the collective experience of the corporation and the expertise in each of those areas and focusing it on an opportunity set. So the size of our business, it gives us a huge advantage here. And so a lot of these things you are seeing are accruing by basically taking the best thinking that had occurred in the -- around the organization around the world, and then applying that uniformly everywhere, it is relevant. And that's happening time and time and time again. And so I think a very unique capability and capacity that frankly, others can't match. And the benefits are showing up in these structural cost savings for sure. Also showing up on the revenue side of the equation with respect to better marketing, better ability to sell into value. So there's, I think, a huge benefit to the changes we've been making.
Operator: We have time for one more question. Our final question will be from Bob Brackett with Bernstein Research.
Bob Brackett: Good morning. I'd like to paraphrase a comment Darren made, that lithium complexity is misunderstood by industry. And I'm intrigued, is that a comment around the marketing and the relative use of the Downstream side? Or is it a comment around maybe the Upstream and the complexity of processing?
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Darren Woods: Good morning Bob. Yes, that comment I meant to imply for more broadly, the whole low-carbon solutions business that, where as you look at each of those businesses, they've got their unique set of complexities. For lithium, in particular, you are taking what is essentially a brand-new technology, marrying that with some established technologies for subsurface, some established technologies above-surface, consistent with our processing experiences in refining and chemicals. And so putting those things together in a new business to make a product. I wouldn't say has complexities that people can't comprehend. I would just say they’re new -- and there haven't been very many people who have worked way through that. Where some really unique challenges are is building brand new value chains. And the carbon capture market, as an example where there's just – there is not an existing market today that pays for carbon removal that's being incentivized with government policy. Government policy is forming, while at the same time, you are trying to build the infrastructure to support that market, the logistics, the supply and then at the same time, develop a customer base. And so the complexity that I see in the low-carbon space, that's a particularly challenging one because of all the moving parts and all the work that has to be done to try to piece those things together to come up with, frankly, a business and business model that, one, is sustainable for the long term. and two, that generates returns that are competitive in the portfolio. But I have to say, we are geared to do that kind of work. Our experience lends itself to that. And frankly, what Dan and the team is accomplishing leaning on a lot of the core capabilities of the organization, and we are tackling those challenges and making really good progress. I think on the hydrogen side of the equation, there is not a real vibrant market or a strongly economic market for low, virtually carbon-free hydrogen. So that's being developed. Obviously, the
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vibrant market or a strongly economic market for low, virtually carbon-free hydrogen. So that's being developed. Obviously, the government incentives are supporting that in the short term. But we've got to work our way to a market-driven forces, so that we are competing in an open market and not relying on government subsidies. So that's, I think, one of the challenges in that space. But I think my comment was more generally that there is a lot of optimism around the low carbon solution – low carbon businesses in general. But if you think about where progress has been made to-date, most of that's been in the wind and solar and EV areas. And all of those are playing into well-established markets. The power generation market is very well established. The automotive industry is very well established. Now they are bringing in new technologies that have some of their own unique challenges, but they are not building brand-new markets. In our case, and some of the businesses we are building brand-new markets.
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Bob Brackett: Thanks very clear. Thanks for that.
Darren Woods: You bet Bob.
Jim Chapman: Thank you Bob. And thanks, everybody, for joining the call and for your questions. We're going to post the transcript of this call to the Investors section of our website by early next week. But before we wrap, I want to draw your attention to a couple of topics. First, a reminder. Later this month, we will be issuing our Annual Global Outlook, which includes our latest views on energy demand and supply through 2050, and which forms the basis for our business planning. And second please mark your calendars for our Corporate Plan Update and Upstream Spotlight, which is going to be a Wednesday, December 11. And for more information on that, again please see the Investors section of our website. So with that, have a nice weekend, and I'll turn it back to the operator to conclude.
Operator: Thank you. This concludes today's call. We thank everyone again for their participation. You may disconnect at this time.
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Marina Matselinskaya: Good morning, everyone. Welcome to ExxonMobil's First Quarter 2024 Earnings Call. We appreciate you joining the call today. I'm Marina Matselinskaya, Director of Investor Relations. I'm joined by Darren Woods, Chairman and CEO; and Kathy Mikells, Senior Vice President and CFO.
This presentation and prerecorded remarks are available on the Investors section of our website. They are meant to accompany the first quarter earnings news release, which is posted in the same location.
During today's presentation, we'll make forward-looking comments, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2. You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Note that we also provided supplemental information at the end of our earnings slides, which are posted on the website.
And now please turn to Slide 3 for Darren's remarks.
Darren Woods: Good morning, and thanks for joining us. Our strategy and the way our people are executing created significant value in the first quarter. We delivered $8.2 billion of earnings and $14.7 billion of cash flow. Even more important, we continue to strengthen the underlying earnings power of the company, which both Kathy and I will discuss in more detail on today's call.
An important driver of this improved earnings power is our ongoing focus on structural cost savings, which reached $10.1 billion in the quarter versus 2019, furthering our progress towards our goal of $15 billion by 2027. CapEx in the quarter was $5.8 billion, as we continue to invest in advantaged growth projects that will drive future earnings and cash flow. At the same time, we further strengthened our balance sheet, bringing our net debt-to-capital down to 3%, the lowest in more than a decade.
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To reward our shareholders, we distributed $6.8 billion in cash, including $3.8 billion in dividends. For all of 2023, ExxonMobil was the third largest total dividend payer in the S&P 500. Only Microsoft and Apple paid more. We also repurchased about $3 billion of shares. Buybacks were temporarily paused until the shareholders of Pioneer voted on the combination of our companies, which they approved on February 7. Post close, we expect buybacks to ramp up to a pace of $20 billion a year.
Our ongoing success this quarter reflects the intense focus we have had for the past 7 years on improving every aspect of our business. We developed a strategy tied more directly to our core competitive advantages. We reorganized the company to create a group of centralized organizations that fully utilize the significant synergies between our businesses. We set and met ambitious plans to improve the fundamental earnings power of the company. And we established a track record of excellence in execution that is second to none.
All of this has been critical to laying the foundation for further success, both in the current plan period through 2027 and over a much longer growth horizon, which I will discuss in a few minutes. As covered in the corporate plan update in early December, we expect to generate an additional $12 billion in earnings potential from 2023 to 2027 on a constant price and margin basis. That represents a compounded annual earnings growth rate over the plan period of greater than 10%. The drivers of this additional value are clear. Higher volumes from advantaged assets, mix improvements from the shift to higher-value products and further structural cost reductions.
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