ExxonMobil at Bernstein Conference: Strategic Shift and Growth Plans

On Thursday, 29 May 2025, ExxonMobil (NYSE:XOM) presented at the Bernstein 41st Annual Strategic Decisions Conference 2025, unveiling a strategic transformation aimed at becoming the most competitive entity in the oil, gas, and petrochemical sectors. The company outlined its financial achievements and future growth ambitions, highlighting both opportunities and challenges in its journey toward higher returns and emissions reduction.

Key Takeaways

• ExxonMobil has removed $13 billion in structural costs and divested $25 billion in less productive assets.
• Plans to triple Guyana’s operations capacity and increase Permian assets by 50%.
• Aims for 8% to 10% annual growth in earnings and cash flow, with a $20 billion earnings increase by 2030.
• Focus on carbon capture, low-emission hydrogen, and biofuels, steering clear of renewable energy investments.
• Committed to $20 billion in stock repurchases this year and next, contingent on market conditions.

Financial Results

• Reported $34 billion in earnings and $55 billion in cash flow over the past year.
• Achieved an 11% total shareholder return last year.
• Enterprise value stands at approximately $505 billion.
• Projects an 8% to 10% compound annual growth rate in earnings and cash flow by 2030.
• Expects to generate $165 billion in free cash flow at constant oil prices of $65 per barrel by decade’s end.

Operational Updates

• Guyana operations are set to expand, with production facilities increasing from three to eight by 2030.
• The Golden Pass LNG project will see its first line operational by year-end, with a total capacity of 18 million tons.
• Aims for net-zero gas production in the Permian basin by the end of the decade.
• Contracted to capture approximately 9 million tons of carbon dioxide with various partners.

Future Outlook

• Global energy demand is expected to rise by 15% in the next 25 years, despite efficiency gains.
• ExxonMobil plans capital investments of $28 to $30 billion annually over the next five years.
• Oil and gas will maintain a 50% share in the global energy mix by 2050.
• Focuses on projects with a supply cost under $35 per barrel of oil.

Q&A Highlights

• Discussed ongoing arbitration with Hess regarding Guyana operations, with a decision expected soon.
• Emphasized the need for streamlined infrastructure permitting in the U.S.
• Plans to increase Permian production to 5.4 million barrels per day by 2030.
• Utilizes AI technology for oil and gas exploration.

In conclusion, ExxonMobil’s strategic presentation at the conference underscored its commitment to transformation and growth. For more details, readers are encouraged to refer to the full transcript.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Good morning. Bob Brackett at Bernstein here. I am Bernstein’s energy and transition senior analyst. Welcome to the second day of the forty first strategic decisions conference. We are not expecting a fire drill.

So if you hear the fire alarm, please take it seriously. Your primary exit is directly, to the left of me where I’m pointing now. If forever whatever reason that is blocked, you will go out the door to the right. There’s a second exit right here. Both take you down to the street.

You’ll exit and wait for further instructions. This is your fireside chat. You’ll see on the screen behind me, and once these slides come off, a QR code that will take you to an app that allows you to ask questions. Please ask questions. There they are.

You’ll see that after Neil presents a bit. They’ll come up to the iPad in front of me. I will look at them, organize them, and continue the conversation. As I wait for your questions, we’ll structure this like a a pyramid principle. We’ll start by talking about macro.

We’ll move on talk about strategic issues, financial strategy issues, and then move into operations. That’s where we’re heading. With that, I will sit, and I will introduce Neil Chapman, senior vice president at ExxonMobil, who will walk us through a few slides before we start chatting.

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. Good morning, everybody. And, I’m not gonna spend a long time on the slides. We’ll get into q and a, rather quickly. But I do I I I do wanna spend just a little bit of time for the folks who are not so familiar with ExxonMobil and not so familiar with our industry talking about what we’ve been doing and where we’re headed.

But I’m just gonna use three or four slides to do that. We Bob, you will recall, we held a investor day down in Houston in December. And in that investor day, we described what we’ve been doing for the last five years and what our plans are for the next five years to the end of this decade. And the headline is that we have completely transformed this company. We’ve reengineered it.

We’ve rewired it in five years to become by far and away the most competitive, the most the highest returns of any company in the oil, gas, and petrochemical petrochemical business. We’ve taken close to $13,000,000,000 of structural costs out of the business. We’ve divested over $25,000,000,000 of less productive, nonstrategic, lower return assets. We’ve added the highest return portfolio in investment and development opportunities this corporation has seen in decades. The net result of that is that we grew cash flow, and we’ve grown earnings at constant prices and constant margins over the last five years at eight to 10% per year.

We laid out the plans going forward, which is more of the same. We’ll be executing this most attractive investment portfolio we’ve ever had, highlighted by the picture on the chart in front of you, which is one of the production vessels in Guyana. We will triple the capacity of our Guyana operations in the next five years. We will add 50% to our high return Permian assets. In the downstream, we’ve got a whole series of projects taking low value products, part of a refinery, think about carbon black, think about pentanes, the lowest value upgrading them into more attractive higher value molecules.

The result of that is we have a very high confident set of investments and further restructuring of the business, which will continue this eight to 10% earnings and cash flow growth through the end of the decade. That is unprecedented in our industry, to grow eight to 10% per year over a decade at constant prices and constant margins. And that’s reflected in consensus. When you look at consensus, you’ll see now there is already today a big differentiation between this corporation and the rest. Going forward, you’ll see that cash flow growth continues to grow for this corporation, and, it’s pretty flat to down for the other majors.

So turning to the slides, and I’ll go straight to the slide which is number three for those online. It’s labeled ExxonMobil at a glance. I’ll just be very, very brief. We’re organized into three different segments. On the right hand side, the upstream, that’s oil and gas.

That’s finding oil and gas, getting oil and gas out to the ground. We then have a product solutions. The objective of the product solutions organization is to take those oil and gas molecules, upgrade them to higher value products. You’ll be familiar with diesel and jet fuel and gasoline, but we also make synthetic lubricants, high value, plastics, high value rubbers, and elastomers in our chemical business. And the final part is this low carbon solutions.

We during this period, last five years, we launched a low carbon solutions business, and, Bob, I’m sure we’ll get into this a little bit. We’re not focused. We’re not participating in the renewable business. We’re focused on carbon capture and sequestration, none none to low emission hydrogen biofuels and lithium, which are all technologies and products that play to the core capabilities of this corporation. Just under the under the picture, you’ll see this expression, we’re working to solve the and equation.

That is at the core. It’s a philosophy that’s at the core of all of our strategy. The world needs more oil, needs more energy. The expectation is with the growth in standard of living around the world with AI, the energy demands in the world will continue to grow through 2050. It’s estimated there’ll be 15% more energy required despite the efficiencies between now and and that time.

The world needs reliable, affordable energy. It also needs to reduce emissions, and that’s why we call it an and equation. You have to grow energy supply. You also have to reduce emissions. That’s at the core of what we believe in, and we believe you can do both.

You can see some metrics there. Last year, it was a $34,000,000,000 earnings business, $55,000,000,000 of cash flow. You can see last year we had 11% total shareholder return and the enterprise value of this corporation is just about $05,000,000,000,000 I’m going to skip over that slide. I talked about the growth for the future between now and 02/1930. Actually, we call it 02/1930 in 02/1930.

Between now and the end of the decade, we’re going to grow earnings at constant prices and constant margins by $20,000,000,000. We’re going to grow cash flow at constant prices and constant margins by $30,000,000,000. That reflects this 8% to 10% CAGR in earnings and cash flow through the decade. So if you own our stock, what do you get? This is the way we like to think about it.

You know, we have a consistent and growing dividend. We’ve grown the dividend of this corporation for forty two years every single year. I think, Bob, there are just three companies in the S and P who’ve done that. We have a share repurchase program. This year, we plan to repurchase $20,000,000,000 of stock.

We said subject to reasonable market conditions, we’ll continue that next year and repurchase $20,000,000,000 of stock. By the way, in just twelve months, we’ve bought back a third of the stock that we issued when we bought Pioneer, what, twelve months ago. And then the 10% earnings growth, you can see. So you’d anticipate you own this stock in 18% annual return. You can look at the five year and that little table there.

ExxonMobil total shareholder return close to 15% over the last five years. You can see that’s above all of the other energy stocks. You can see it’s above the S and P industrials. So, Bob, I’ll go straight into questions, but that gives you a perspective on what we’ve been doing in the company.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Fantastic. Thanks for that, Neil. And, colleagues in the back, maybe we can put that QR code up again as well. Perfect. And I’ll I’ll start with some question.

I’ll start with the concept of outlooks. There’s two types of outlooks. There are normative outlooks, and there are predictive outlooks. Everyone in this room is in the business of predictive outlooks. They are trying to predict the future.

A normative outlook is how we would like the future to be. In the oil space, energy space, something like the IEA net zero emissions scenario is a normative outlook. It is a world in which emissions fall to zero rapidly, in my view, unachievably, but it’s very much not predictive. Every year, you all put out an annual energy outlook. Tell me whether it’s predictive or normative.

I think I know the answer. And and give me a couple highlights of how you see the energy transition playing out.

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. I I think, Bob, people get seduced by what they want to happen. Everybody wants emissions to go to zero. It’s normal. It’s logical.

And when the IEA scenario that you talked about, which was going for the world to go to net zero by 2050, we were very, very clear when that was published. It is not possible. It is not affordable. It is not going to happen. And so back in that time, we were continuing to produce an energy outlook, which we say is realistic and it’s affordable and it’s the most likely scenario.

It was not popular. If you go back ten years when we were year putting out that, we were described as impossible. You’re a misbeliever. It’s not going to happen. Now ten years on what’s happened?

I mean, the reality is we’re not even close to the pledges that governments have made in terms of reducing net zero. It’s not for the want of trying. It’s just a massive energy system. And energy is so pivotal to an economy. You’ve got to have reliable, affordable energy to grow an economy.

When you get a big disruption like the Russia invasion of Ukraine and gas was suddenly no longer coming from Russia into Europe, it’s highly, highly disruptive. And I think what happens is reality starts to set in. So if you go back ten years, there was a tremendous number of third parties predicting us going to net zero, oil and gas going away in the very, very near term and the short term. The reality is you don’t see those predictions anymore. You do not because I think people have started to understand what it will take.

We do need to get emissions down. We will, as a society, get emissions down, but yet it’s an and equation. You have to continue supplying energy. People are are coming out of poverty in the developing world. I mentioned the data centers.

It’s enormous. Increased energy. You have to supply it. So we produce it every single year. You’ll see the consistency of our energy outlook.

Go back twenty, twenty five years. We do in-depth analysis every single year on what’s happening. We have signposts on what changes are. It doesn’t materially change. The reality, the world’s gonna need about 15% more energy in the next twenty five years versus what it has today, and that’s despite all the improvements in efficiency.

The world will reduce emissions, we think, by about 25% over that period, but it won’t go to zero. It it will not. And oil and gas will still remain 50% of the energy mix in that period at the end of that period.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: In that outlook, you spend a lot of time talking about demand drivers, some of the supply drivers. Price generally is omitted. Talk about the world of price in which that outlook sits. And and we’ll stick to two commodities, oil, and then tell me how bullish you are on on US Natural Gas.

Neil Chapman, Senior Vice President, ExxonMobil: You know, for those less familiar with this business, it’s what we call a depletion business. I always used to like to use a bottle of water. So I apologize for the folks online, but, you know, when you search for oil and gas, you penetrate a reservoir which has a fixed amount of oil in it. So my bottle is a reservoir of oil. You find the reservoir.

You start to produce the oil. But when that reservoir is empty, your volumes go to zero. Your cash flow goes to zero. You have to find more. It is not easy to look a mile, two miles under the surface of the ground to find oil.

So what happens? Without investment, the volumes in this industry will go down about 1010% every single year. That’s what the depletion is of this industry. In other words, you have to add about 10% new capacity every single year just to stay flat. So what does that mean?

To come to your question, it means the supply and demand always gets into balance. Yes. You’re gonna have periods where there’s an oversupply and a weak economy and price will fall down. Yes. You’ll get periods when the economy is booming and supply can’t get back in in in balance and you’ll get high prices.

But the reality is no matter what it is, it always gets into, parity on average. So even when oil and gas demand goes down and there are some parts of oil and gas like gasoline where the demand will go down with the penetration of electric vehicles, but the supply and demand gets back into balance. And so we believe even if the market shrinks in the future because it’s a commodity, because it’s a depletion business, supply demand gets into balance, so the price will always set by the increment price of the incremental barrel. That’s the way we see it.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: I I didn’t hear a number in there, and that was probably deliberate. I’ll I’ll redirect then. Talk about your number and talk about the role that cost of supply philosophy plays and how you allocate capital.

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. I mean, I talked about rewiring this company, and I talked about reengineering this company. It’s a commodity business. You have to have the lowest cost of supply. So we’re investing plus or minus plus or minus sort of $2,830,000,000,000 dollars of capital per year over the next five years.

We set a clear criteria for our organization. We will not invest in an oil development unless it has less than $35 cost of supply. What does that mean? That means if the price of oil is $35 or lower for the next twenty years continuously. You know, it has never been less than $35 for more than a few months in the past, but let’s just say it does.

We’ll still generate a 10% return on all of our projects. That’s the criteria we set. Of all of the investments that we’re making in the Upstream in the next five years, its average is greater than a 40% DCF on all the capital we’re investing. That’s the differentiation between the investment portfolio we have. And that’s the way I think and it’s exactly the same in gas, Bob.

The equivalent in gas to $35 of crude oil is $6 per million BTU of gas. We will not invest unless we can get our projects to at least meet that hurdle. You go into some of our most attractive like Guyana and like the Permian, it’s way south of $35 a barrel. We’ve never had a portfolio this attractive, I would say, certainly in decades and back in any memory anybody has.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: It it would be probably the seventies, but then I

Neil Chapman, Senior Vice President, ExxonMobil: think maybe even before that, frankly. I don’t know.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Talk about the near term outlook then. You you we’ve laid out this long term outlook, robust demand for hydrocarbons, out to 2050. Where are we today in the oil price cycle?

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. I mean, prices have softened. You know, last couple of years, prices have been in the seventies and low eighties, and today, they’re in the sixties. And why they’re in the sixties? Well, I mean, most the oil price is a commodity.

It’s set the price is set by sentiment. It’s set by fundamentally supply and demand. If you look at the demand for crude oil, actually, the highest demand this world has ever had for crude oil. This year will be the highest consumption of crude oil in history. Last year were the highest consumption in history the year before.

So the demand is actually continuing to grow. But, of course, we all know what the narrative is on the economy. People are nervous. People are conservative. So there is somewhat of an expectation in the market that demand will soften.

We’re not seeing it. But that sets the sentiment. And on the supply side, you know, OPEC play a big role, and and OPEC announced that they’re going to put a few hundred thousand barrels in the market. This is a hundred million barrel market. But the sentiment the sentiment really influences the price.

What OPEC have talked about putting more volume onto the market, it’s not really very material. But when you get the sentiment of a weakening economy, the sentiment of more supply prices tend to fall. And you see they fell quite quickly, and now they started to come back. So price today is, I would call it midrange. Brent is $65.

We would see that as a long term midrange price.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Is there anything particularly strange about the cycle we’re in now, or is this just a a normal oil price cycle?

Neil Chapman, Senior Vice President, ExxonMobil: You know, I I think it’s a a a normal oil price cycle. I would say in the gas business, it’s a little bit different. You know, Europe gas supply was primarily supplied by Russia, pipeline gas into Russia. And after the Ukraine crisis and that supply went down, the world went short of gas. And you saw this explosion in gas price.

And just to give you a a sort of simple metrics, a normal gas price in Europe would be in the sort of 8 to $10 per million BTU. After the Ukrainian crisis, price went up to $60. I mean, totally unaffordable, devastating for the European economy. Now what’s happened is the world’s come back into balance. More supplies come in.

Some of the people have moved away from gas. The price has come back down into a, I would say, a more typical range, but, Bob, it still carries a premium because that Russian gas is in out of the market. And in normal demand scenario, gas is extremely tight. So instead of a typical $8 in Europe, you’ll you’ll see today the price is sort of $12, 13 dollars. So that’s unusual.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: And then if we move to the regulatory environment, what would you like to see? Anything more clear in today’s regulatory environment? Yes.

Neil Chapman, Senior Vice President, ExxonMobil: I mean, yeah, here’s the challenge, and I’ll just focus on The United States. It is ludicrous, completely ludicrous in this country how long it takes to get an infrastructure permit. That’s what this government needs to focus on. You can’t build a pipe anywhere outside of Texas in this country. To get a permit to drill takes forever.

There is no logical reason. It’s not like there needs to be a lot more analysis. And I’ll just give you an example that’s very familiar to everybody in our industry. To get a permit to drill a well in the unconventional Permian in Texas takes about two months. To get that same permit to do the same analysis on federal lands in New Mexico takes about two years.

It’s exactly the same process. It’s woefully inefficient. It costs society a lot of money. It costs the economy a lot of money. I’m very, very pleased that the current administration is absolutely focused on that.

And I talked with Chris Wright just and that’s his focus to streamline this process. It’s not to change the analysis. That’s appropriate. It’s to streamline the analysis. Bob, time’s money.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: So and and we’re gonna switch, and we’re gonna talk, upstream strategy. There’s some specific upstream questions I’ve got, that we’ll get to. I do I do wanna frame the high level strategy first. ExxonMobil is a company that produces around 4,600,000,000 barrel oil equivalent a day. You have a path to 5,400,000 by 2030.

You plan to grow the Permian by point ’8. That covers all of that growth. Then you have Guyana, your working interest there, and then you have some Brazil, and you can throw in some LNG. How does that math square? Is that 5.4 target conservative, or does it embed some disposals and declines in the noncore?

Neil Chapman, Senior Vice President, ExxonMobil: Well, first of all, I’d say 5.4. This is the highest production ExxonMobil will have had since the nineteen seventies when we got nationalized in Saudi Arabia. The highest. I’ll go back to my bottle. If you just say we’re 4.6, four point seven million barrels a day, and we’re going to be 5.4, that is true.

But the five the 4.7 is declining at 10% per year. So what you’re doing is you’re replacing declining reservoirs that are emptying with new reservoirs. So Guyana, we’re going to triple the capacity in Guyana. We got three boats online today, three production facilities. We’ll have eight by the end of the decade.

We will add 50%, as you say, to the Permian capacity, but a lot of it is offsetting depletion. What’s really important is these barrels are way more profitable than the barrels that are getting replaced. The barrels in the Permian, the barrels in the the production in the Permian, the production in Guyana are by far and away the most attractive in the industry. So not only we’re growing, Bob, in terms of total volume, we’re upgrading the mix. We’ve doubled doubled the earnings per barrel over the last five years of the upstream production.

Same production rate as we had, little bit higher, not much, but we’ve doubled the earnings per barrel. That’s the difference in quality at constant prices. And we have a question on a specific asset. Update on Golden Pass timing. Yeah.

So Golden Pass is, it’s a liquefaction. So we’re taking gas from The US market, liquefying it, putting it in liquefied natural gas into the the world market. I talked about this demand for gas in Europe with the Russian, with the Russian supplies being eliminated. We are in that business of liquefaction in The United States at Golden Pass for one reason alone. Back in the early twenty years ago, the expectation on the energy outlook was that The US would be a massive importer of gas.

The Gulf Of Mexico was coming to the end. This was pre, unconventional development. What happened was the unconventional technology development unleashed this extraordinary reservoir capacity of gas in this country, which now means The US is exporting. Exxon and Qatar Energy had built an import facility, and this goes back to fifteen, twenty years. So we have a really low cost way of converting the import facility to an export facility, easily the lowest cost liquefaction investment in this country, you know, by design.

It’s 18,000,000 tons. Exxon has 30%. Qatar Energy has 70%. The first of the three lines will be completed and, online at the end of this year, and the other two will follow in the in the coming months.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: And we have a number of questions around Guyana, relative to arbitration proceedings with Hess, and and they have two broad flavors. One is, can you give us an update on where those arbitration proceedings are? And the second is what does life look like after the arbitration proceedings are over in terms of operations and working relationships? So maybe tackle the first.

Neil Chapman, Senior Vice President, ExxonMobil: Well, I mean, you know, the one of the unfortunate parts about this this whole arbitration and proceedings is it’s in the public domain because it’s all associated with Chevron’s purchase of Hess. Contractual disputes are not unusual in this industry, but normally they’re not in the public domain. This one obviously is. We believe and our partner, the Chinese CNOC, believe very, very strongly that we have the right of first refusal. In other words, we can match a purchase price.

That’s typical in the industry. Obviously, Hess and Chevron have a different view. It’s a contractual interpretation. So when you can’t resolve between yourselves, you go to arbitration. Those those arbitration processes are written in the contract.

The arbitration process is at the ICC. The ICC sit as a panel of three judges, and they will opine on does Exxon and CNOOC have the right of first refusal, the preemption right. Actually, the hearing has just taken place, but, I mean, the hearing is kind of a conclusion of a whole series of submissions that concluded actually this week. And then the the panel, have a period to opine to come to a decision. I don’t know exactly when they’ll come to a decision.

All I can tell you is the typical timeline of the arbitration in that court is two to three months. And, Bob, what’s the second part of your question?

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: So the second part is Oh, relationships.

Neil Chapman, Senior Vice President, ExxonMobil: The relationship post. Yeah. I mean, I think, you know, one of the things that Hess is a partner in Guyana. You know, with their 30% equity in Ghana, they have been a very, very good partner, and they continue to be a very good partner. And, actually, at a working level, at an operating level, zero change.

This is a contractual dispute that happens, but in terms of operations, in terms of investments, we’re a % aligned. No change at all. You know, we’re confident the judges will go in our favor, but if they don’t and, Chevron can purchase Hess, Chevron becomes a partner instead of Hess. No change for us. It’s no change at all.

It’s it’s just business as usual. We will continue. So we believe strongly you have to protect your contractual right. The Chinese believe the same thing and that’s why we went to arbitration. But if the judges decide that’s not the case, then we get a new partner.

Business carries on as normal. And I would tell you, we have partnerships with Chevron all over the world. There’s been no change in terms of how we’re working together at all.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: You can see that, obviously, in the headlines this year, the ramping of Tenge Chevron towards a million barrels a day where Chevron’s the operator and you are the partner has, to date gone extremely well.

Neil Chapman, Senior Vice President, ExxonMobil: I don’t agree with that. I mean, the startup has gone extremely well, but this project is way over budget and way, way late. I mean, years late. So the execution of the project is something we’re very, very disappointed about as are the other partners. This happens.

But when you go into a partnership and you have a lead operator, that’s what happens. We’re very, very pleased that it started up eventually, and we’re pleased with the process of starting up, which have been have been very well executed.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Very clear. I I will amend my sentence to say, this year in 2025, the ramp up to

Neil Chapman, Senior Vice President, ExxonMobil: 2,000,000 barrels has gone very well with the two of you being involved. We do have another upstream question. Do you have discussions with hyperscalers to build natural gas plants for data centers? Yeah. We do.

And, actually, we’re pursuing, an off the grid major power decarbonized power plant specifically for the hyperscalers and for a big data center investment. The thing is absolutely colossal. But, Bob, I wanna be clear. We’re a hydrocarbon company. That’s what we’re good at.

We’re not an electricity company. We’re not an electron company. We don’t have interest in power generation, so we’re not in wind and solar. What we do have interested in is the desire by these hyperscalers, so you know who they are. They want net zero power.

With a data center, the intermittency of wind and solar will not meet the need. The only way to do this quickly is to do it off the grid, gas fired power generation. And we can do that at net zero emissions because our Permian production at the end of this decade will be net zero in terms of gas production. From the when you burn gas to produce power, we are capturing all of that carbon dioxide. We’re concentrating it, and then we’re injecting it back into the ground where it came from.

That’s what you call carbon capture and sequestration. What we’re interested in is supplying differentiated low carbon natural gas. What we’re interested in is the carbon capture and sequestration. This will be the largest carbon capture and sequestration project anywhere in the world. We’re already the only company that’s doing this at scale.

We’ve contracted order of magnitude 9,000,000 tons now with different companies to capture carbon dioxide, stop it going into the atmosphere, secure it underground, miles underground, where it came from. That’s what we’re doing. And, you know, we’ll see. You know, the reality is if you’re going to have a natural gas power station and you’re going to add the decarbonization, it’s going to cost more because somebody has to pay to do the carbon capture and sequestration. I think the hyperscalers are so adamant and so keen to have net zero power.

We’ll see. But right now, they’re prepared to to engage in that project.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: And and arguably have the healthy margins to absorb it. Well, I think they I suspect that’s the case. I mean, I just

Neil Chapman, Senior Vice President, ExxonMobil: think power generation in the the total cost profile of a hyperscaler is relatively small. The only thing that’s interesting to me, it’s absolutely massive. These data centers are colossal. Colossal. The energy demand is is quite extraordinary.

So yeah. Yeah.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: We we saw in two two comments there, comments and a question. You know, a gigawatt data center is a city of half a million plus people. So if you are adding the capacity for a gigawatt, you are building a new city the size of Pittsburgh, Boston, whatever from scratch. You mentioned off the grid, but not not off the pipeline grid, but more you’re talking about off of the electricity grid behind the meter independent of Yeah. The grid.

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. That’s that’s what we’re doing behind the meter. I mean, regulation, it’s just a lot to get it on the grid. I think they want to move really, really quickly. I mean, there is an urgency and a timeline for these hyperscalers.

You you you can’t build things like nuclear that quickly. What we have is we have gas readily available. We have a site readily available. You need a lot of lot of water. It’s a lot of water readily available.

And most importantly, you can’t just inject carbon dioxide into the ground anywhere. You have to inject it where the geology will allow you to stick it in the ground and secure it forever for a long, long time. And movement of those carbon dioxide molecules from this power plant to the right geology requires logistics. I just talked about the challenge of logistics. We purchased a company called, Denbury a couple of years ago, which has the only major single carbon dioxide pipeline that runs from Mississippi all the way to Houston, and we’re leveraging that to get those molecules from the power plant to the right geology on the Gulf Coast.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: 1 can almost narrow down where this hyperscaler can be given given the constraints of water and a c o two pipeline in the reservoir, but I I will leave that for for clutter people in the audience. We do have a question that allows us to move more into the the integrated portions of ExxonMobil. You stated there’s no softening in demand. Can you provide more color on demand trends in your refining business?

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. I mean, a refinery you know, people think of these plants as refineries. We think of them as manufacturing units that can make a variety of products. We’re very, different. Our refineries are connected to chemical plants.

A typical refinery in this country was constructed to produce gasoline, diesel, jet fuel, maybe some base stock lubricants. Our plants are integrated with chemicals, so we can take some of those molecules from refinery, put them into a chemical facility, and make plastics, polyethylene, polypropylene, specialty plastics with unique technologies. The demand for those plastics with unique technologies are growing very very rapidly. The demand for gasoline in the world is going to peak and go down with electric vehicles. If you have an isolated refinery, you got a lot of challenges.

If you have a refinery where you can move those molecules to make higher value added product, It gives you that flexibility, but you have to have the technology to do that. We’ve been investing in that technology on how to upgrade those molecules for decades. I’ll just give you one example. Proxima. Proxima is a new to the world product extraordinarily strong, extraordinarily lightweight.

This goes into things like wind turbines, lightweighting a vehicle where you need to lightweight to get more out of the battery, but you need the strength, obviously, for safety reasons. It’s replacing rebar in concrete, much lower cost, stronger. But we’re making it. We’re producing it from molecules on a refinery that are worth less than the feedstock a barrel of oil. And it’s that technology that you’ve invested in for many, many years to think about these assets as not just producing transportation fuels, but how do you get the maximum value out of producing a variety of products from those very same assets?

That’s that’s a unique strategy, and it’s one that we have been pursuing for the last decade plus. And, you know, we we talked a lot on the investor day in December about how we’re upgrading all those molecules into a whole variety of new products.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Yeah. I do wanna highlight Proxima because it’s easy to come up with a brand name. Right? And and Proxima sounds kinda cool. It is more difficult to win the Nobel Prize in chemistry.

So Robert Grubbs won the Nobel Prize in chemistry, founded a start up to take his ideas and commercialize them, and then you bought him out. So Proxima ultimately came from Nobel Prize winning chemistry. Is that fair?

Neil Chapman, Senior Vice President, ExxonMobil: Well, that’s fair in terms of the product, but the the products have been around for quite a time. The problem is the feedstock. So you you have it’s dicyclopentadiene, which it doesn’t matter. It’s just a lot a lot of words. But to produce that product, it’s a byproduct of what we call steam cracking today in very, very limited supply.

The key to this whole explosion is not just the invention that you talked about, which is really, really interesting, but how can you make more of it? And how can you make more of it at a low cost? It’s the catalyst technology that we have invented to take pentane, which is a product, which is a molecule you really don’t want in a refinery. It’s really low value. Upgrade that molecule to the feedstock to produce Proxima.

So it’s a combination of the two, Bob, and I think that’s that’s so so typical of what we do as a company. We find ways to upgrade molecules to get better value.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: And and so let’s move to financial strategy, and let’s talk about one of the slides you showed. The pace of buybacks this year is is uninfluenced by the macro environment, which we discussed. And you’ve talked about it being subject to market conditions next year. Talk about the balance sheet and the ability to deliver those buybacks, and what what do market conditions next year look like that would, prohibit that?

Neil Chapman, Senior Vice President, ExxonMobil: Yeah. Maybe the maybe I’ll just take that in in this I’ll come to the answer, but it’s it’s an important point to say in a business like ours, which is a capital intensive cyclical business, if you want to maintain a consistent distribution to the shareholders and fund your capital investment when the crude oil price is going up and down, you need a strong balance sheet. It’s so fundamental to what we do is to have a strong balance sheet. You know, we have a double a credit rating. I think there’s just three companies with a higher credit rating in the S and P, higher than ours.

We’ve got 7% net debt to capital. We have tremendous capacity and flexibility at low prices to continue our investments because we know the price is gonna come back again. We have the flexibility to cut back if we want to. So the way we think about capital allocation is this and it’s in a a sort of seriatim. First of all, I’ll go back to my bottle.

You have to continue to invest. If you don’t, your volumes and your cash flow are going to go down. It is a complete fallacy for companies to say we’re cutting back on capital for capital efficiency. You can do that today. You’ll pay a price in the following years, and that’s what you see in the industry.

So we’re gonna continue to invest in high return advantage products. That’s the first priority in our capital allocation priority. The second priority is to maintain the quality of the balance sheet. It’s essential in a business, capital intensive, cyclical. You must do that.

And then the third is distributing to the shareholders. We have a dividend which we’ve increased every year for forty two years. As I mentioned, there’s only a couple of companies that have managed to do that. We think a flexible tax efficient way of continuing to reward shareholders in share buybacks. So, Bob, you know, as I mentioned, we we we’re on a program today, is $20,000,000,000 a year this year and next year.

We say subject to reasonable conditions. You know, if you have a big incident like a COVID, that may change something. But what we want to do is try and have a consistent routine distribution to shareholders. So that’s what we mean by reasonable. I think you’ve always got to put some qualification, but our intent is to maintain that.

As I mentioned, you know, we’ve we’ve already bought back a third of the shares issued for $64,000,000,000 Pioneer acquisition. So, yeah, that’s the way we think about it. By the way, can I just add one more thing? Just because it’s interesting that I went back to I was talking about this plan through 2030. So if we were to maintain our dividend at the level it’s at and we were to fund our capital program, which is about $30,000,000,000 a year, we at constant prices, I think the current price, $65 a barrel, constant midrange margins, we’ll generate a hundred and $65,000,000,000 of free cash flow between now and the end of the decade.

Hundred and $65,000,000,000 at mid prices. That’s the flexibility that we have.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Never waste a good crisis. Someone has said at some point, but not probably during a crisis. You didn’t waste the COVID crisis, and and industry didn’t waste the COVID. One would argue that weak market conditions are a much greater opportunity for ExxonMobil in sort of three ways. One, an opportunity to buy your stock back at a discount.

You know, two, an opportunity to structure costs, approaches. Right? Everyone’s not too busy drilling wells, and so there’s time to focus on on the cost structure. And the third is to be opportunistic where companies with balance sheets that weren’t ready for the crisis, look interesting. If there’s a crisis next year, how would you balance those three opportunities?

Neil Chapman, Senior Vice President, ExxonMobil: Well, you have to have a long term strategy in this business. We don’t change the strategy. What we can change is the rate and pace of execution of that strategy, and that depends can depend on opportunities. Look. I I, again, I always go back to my bottle.

I gotta keep replacing these reservoirs, and you do it through exploration. But exploration is a tough business. You gotta go and find try and find oil two miles underneath the surface. It’s not that easy. And so you have to have a contingency plan, and the contingency plan is if there’s a company out there which is more valuable to us than it is to them, in other words, we can produce oil and gas cheaper and get more oil and gas out than the incumbent, then that’s an opportunity.

That’s why we bought Pioneer. Pioneer have a tremendous amount of undeveloped reservoirs, which with our technology, we can get more oil out of those reservoirs than Pioneer could, and we can do it at a lower cost, so that creates a deal space. You know, what I want to do is make sure our organization is constantly striving to create that deal space. And then we look at every asset around the world and every company around the world. You’d expect nothing else from from us.

And so we we’re looking constantly to where there is a deal, and sometimes these things come off and sometimes they don’t, but we want to be ready. But I’ll just talk about what happened very briefly in COVID to illustrate the flexibility that you have. So in the unconventional, this is getting oil and gas out of rock, which you never should be able to get oil and gas out. If you if you drill it into sand, think about pouring water onto the beach, The water goes straight through the sand. That’s what normal good reservoirs look like.

They just happen to be two miles under the ground. So oil will flow through that sand, and it’ll come through the surface. Unconventional rock is like metal. You drill into metal, nothing’s gonna happen. There may be hydrocarbons in the rock, but there’s no way that the molecules can flow.

So the way to get it out is you explode the rock. Literally explode the rock two miles under the ground, and you create artificial channels to allow that oil and gas to flow. There’s two parts to the process. One is to drill. The other one is to explode.

The explosion piece is twice the cost of the drilling. So when COVID came along, what we did is we carried on drilling. We drilled a tremendous amount because we could get drilling rigs really, really cheaply. But we didn’t do the fracking, and we didn’t produce the crude oil. Why?

Because it’s the more expensive step. It’s twice the cost. And I didn’t want we didn’t want to put oil on the market at $35 a barrel when we knew the price was gonna come back. So we drilled like crazy, created a lot of uncompleted, unfracked wells. As soon as the price came back, we fracked immediately and produced all that production at what ended up being $80.90 dollars a barrel of crude oil.

That’s the flexibility you have that you have a good balance sheet.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: And I’m coming back to this concept of deal space. You seem extremely excited about the pipeline of unconventional resource technologies in your portfolio, and that creates even more opportunity for deal space.

Neil Chapman, Senior Vice President, ExxonMobil: There’s a tremendous differentiation in the producers in the unconventional space, and that difference is growing by the day. In other words, the leaders and and I’m very, very comfortable. I know if you just look at the cost that’s all published, we are the lowest, drilling and completion cost in the industry by quite some way, and that gap is growing. We’re recovering more oil. And the way we do it is we use technology.

It’s all about technology. Just very, very briefly, when you explode the rock and you create these channels, the great problem you have is it’s one to two miles under the ground. So you got one to two miles of rock. Gravity is pulling that down to close those fractures. So how do you keep those channels open?

Typically, you use sand. So you fracture and you put sand. Sand doesn’t close the fractures completely, but it’s enough to keep the fractures open. The problem with sand is it’s heavy. So when you fracture, you can’t get the sand a long way down the fracture, which just limits the amount of oil that can flow.

So for close to ten years, we’ve been working on a technology to put a different type of product, not sand, but coke. Coke from our refineries, which has little to no value. And we are fabricating that coke where we can reinject that instead of sand into the wells. It is just as strong, but it’s much lighter. And because it’s lighter, it goes further down the fracture, allowing you to recover much more crude oil out of the rock than anyone else can.

Ten years to develop that technology patented. Not only is it patented, no one else can use it, we’re the only ones who can produce the coke as well. And and then that’s it doesn’t come. The industry’s done a marvelous job. The independent oil producers have done a fantastic job at developing the initial technology.

What we’re doing is applying science to that trial and error of technology, and that’s just creating a differentiation in performance.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: So so let’s think to 2030. You’re producing 5,400,000 barrels equivalent, a day. That’s 2,000,000,000 barrels a year. You’re going to be generating significant free cash flow from that, and you’ll have choices. You’re going to have to replace Guyana and Permian with or find new Guyanas and Permians, or you’re going to have huge free cash flows to return to shareholders.

What how hard will your job be in 2030?

Neil Chapman, Senior Vice President, ExxonMobil: I love that problem. I mean, I just love the problem. If we’re producing more cash flow, we’re producing that volume. This is a fantastic position to be in. It’s differentiation and performance that’s going to be the key.

You know, we’re working today on using AI technology to find more oil and gas. Oil and gas is tough to find. I mean, you’re sending sound waves into the earth. You know, you in in the deep sea, it’s probably a mile of ocean water and under the surface of the seabed. You’re going two miles into the rock.

You’re sending sound waves in there, and you’re trying to interpret what comes out to see if you can find oil and gas. We have the largest dataset of subsurface information of any institution, never mind companies in the world. The key is how can you find what the what’s similar about the geology in Guyana, and where would that apply somewhere else in the world? But you have to have the dataset. You have to have the right computing capacity, the right AI capacity to find it.

So, you know, it’s not an or. It’s an and to me. What we need to do is get better at finding more oil and gas. We are working towards that using this new technology. We’re constantly looking at creating deal space so that if we can replace those barrels by acquisition, we will obviously consider that.

I mean and then the third is we’re using technology to extract more oil out of a reservoir than historically has been possible. Go back to my beach. Think about that beach. Think about that water that’s gone through the beach. And once it’s dispersed, how the heck do you get all of that out again?

In Guyana, these reservoirs, when you drill a hole in there, there is pressure two miles under the surface of the ocean, which will force the oil up. But, obviously, as you take oil out, that pressure depletes, and you can’t get more oil out. So how you still leave a tremendous amount of oil in the reservoir. So how would you get that out? Well, then you start to reinject gas or water into the reservoir to repressurize the reservoir to push it out.

The problem is you don’t know where to inject because interpreting what that reservoir looks like is through seismic. And when you have seismic, these sound waves sent into the earth, historically, it takes two plus years to process the information. So what happens is you can be injecting at the wrong part of the reservoir, not pressurizing the oil towards the well that’s producing, but in the wrong direction. We’ve got technologies now where we put seismic on the surface of the seabed, and instead of taking two to three years to process the information, we can process it in two to three year two to three months. So that gives you close to a real time way of knowing how to get more oil and gas out of the reservoir.

The reason we can do that, we have one of the largest, fastest computers in the world in any industry, and we’ve just replaced it with one that’s four times faster. That is a unique technology that we have that no one else has.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Your your, excitement comes across Oh, yeah. I’m sorry. I like oil and gas, gentlemen and ladies. In the final minute, talk to, investors in the audience and and on the line. What’s the value proposition for owning ExxonMobil shares?

Neil Chapman, Senior Vice President, ExxonMobil: I mean, it’s all about shareholder return. I mean, we are the highest TSR in the last one year, the last three years, in the last five years. We’ve had a higher shareholder return than the major industrials. You know, we describe ourselves in a league of our own, and that’s not meant to be an arrogant statement at all. But versus the oil and gas companies, there’s such a large margin today in performance.

We like to compare ourselves against the major industrials. We’ve got this cash flow growth. We’ve got this free cash flow generation that this industry has never generated before. I mean, Bob, it’s just not happened before. And the confidence level is really, really high because we already know exactly which projects we already own, to develop in.

If you look at, take some of the ratios, you know, take EV to EBITDA, and you compare ExxonMobil’s, EV to EBITDA to the major industrials. Yeah. We’re half. We’re half. It doesn’t make any sense.

It doesn’t make any sense to me. But what it shows you is the upside potential in this stock value. That’s what it shows. If you can generate cash flow, which the oil and gas company has not done historically, we’ve already demonstrated we can do it at constant prices for the last five years. We know we have that to extend it through the next five years to the end of the decade.

And, obviously, people like myself and the management committee are working on the next decade all of the time. You’re generating an extraordinary amount of free cash flow, extraordinary amount at mid price, mid cycle prices. You know, that means that we I showed earlier on, you know, we see this potential of an 18% per year, value growth from the owning ExxonMobil stock.

Bob Brackett, Bernstein’s energy and transition senior analyst, Bernstein: Very clear, Neil. Thank you, Neil, and thank you audience for joining.

Neil Chapman, Senior Vice President, ExxonMobil: Thank you.

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