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Exxon Holds Firm on Its Five-Year Spending Outlook

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Exxon

XOM 1.02%

Mobil Corp. maintained its spending plans for the next five years, sticking to its annual budget ranges that were set before the war in Ukraine caused an increase in energy prices and political pressure to increase production.

High prices at the pump have propelled Exxon and other oil companies to record quarterly profits this year. President Biden and Democrats in Congress have urged oil companies to use their profits to boost refining capacity to make more gasoline and diesel, lowering prices for consumers.

Gas prices have since come down from record highs earlier this year, as global economic jitters have damped demand for oil. U.S. oil refineries have also increased their output after many were shut down for maintenance. Analysts say that prices could continue to fall.

Exxon said Thursday that it expects to spend between $20 billion and $25 billion annually through 2027, resisting calls from the White House to boost investment. In 2027, Exxon said, the company’s profit is likely to be twice as much as it was in 2019. Exxon also expanded its stock-buyback authorization from $30 billion to as much as $50 billion through 2024.

For 2023, Exxon said it expects to spend $23 billion to $25 billion in a bid to boost supply to meet demand, above Wall Street expectations of $21.6 billion, according to FactSet. The company said its near-term investments are expected to keep production at roughly 3.7 million barrels of oil equivalent a day in 2023, assuming a $60-a-barrel price of Brent. 

Despite surging commodity prices and political pressure, industry analysts say there is little financial incentive for fossil-fuel companies to increase investments in production or expand fuel-making facilities. It can take decades to recoup investments in new oil refineries, and demand for fossil fuels could peak this decade as the world transitions to renewable-energy sources, the Paris-based International Energy Agency said in October. 

Instead, Exxon and rival

Chevron Corp.

have tried to draw large investors back to their companies by using record amounts of cash to increase investor payouts through dividends and buybacks. Chevron said Wednesday that it is allocating 25% more for spending next year than it expects to spend in 2022. 

By the end of this year, Exxon expects to distribute about $30 billion to shareholders, including $15 billion in dividends and $15 billion in share buybacks, the company said Thursday. 

Shares of Exxon, up 72% this year, were 1.2% higher at $104.84 in midday trading. 

Exxon also said it plans to spend $17 billion through 2027 on emission reductions and related initiatives, an increase of 15%. The company has been expanding its investment in lower-carbon initiatives to keep pace with the transition toward renewable energy. 

The company said it expects its five-year spending plan to increase production to 4.2 million barrels of oil equivalent a day by the end of 2027, with most of that increase coming from projects in the U.S. Permian Basin, Guyana, Brazil and liquefied-natural-gas projects around the world. 

Write to Will Feuer at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



Exxon

XOM 1.02%

Mobil Corp. maintained its spending plans for the next five years, sticking to its annual budget ranges that were set before the war in Ukraine caused an increase in energy prices and political pressure to increase production.

High prices at the pump have propelled Exxon and other oil companies to record quarterly profits this year. President Biden and Democrats in Congress have urged oil companies to use their profits to boost refining capacity to make more gasoline and diesel, lowering prices for consumers.

Gas prices have since come down from record highs earlier this year, as global economic jitters have damped demand for oil. U.S. oil refineries have also increased their output after many were shut down for maintenance. Analysts say that prices could continue to fall.

Exxon said Thursday that it expects to spend between $20 billion and $25 billion annually through 2027, resisting calls from the White House to boost investment. In 2027, Exxon said, the company’s profit is likely to be twice as much as it was in 2019. Exxon also expanded its stock-buyback authorization from $30 billion to as much as $50 billion through 2024.

For 2023, Exxon said it expects to spend $23 billion to $25 billion in a bid to boost supply to meet demand, above Wall Street expectations of $21.6 billion, according to FactSet. The company said its near-term investments are expected to keep production at roughly 3.7 million barrels of oil equivalent a day in 2023, assuming a $60-a-barrel price of Brent. 

Despite surging commodity prices and political pressure, industry analysts say there is little financial incentive for fossil-fuel companies to increase investments in production or expand fuel-making facilities. It can take decades to recoup investments in new oil refineries, and demand for fossil fuels could peak this decade as the world transitions to renewable-energy sources, the Paris-based International Energy Agency said in October. 

Instead, Exxon and rival

Chevron Corp.

have tried to draw large investors back to their companies by using record amounts of cash to increase investor payouts through dividends and buybacks. Chevron said Wednesday that it is allocating 25% more for spending next year than it expects to spend in 2022. 

By the end of this year, Exxon expects to distribute about $30 billion to shareholders, including $15 billion in dividends and $15 billion in share buybacks, the company said Thursday. 

Shares of Exxon, up 72% this year, were 1.2% higher at $104.84 in midday trading. 

Exxon also said it plans to spend $17 billion through 2027 on emission reductions and related initiatives, an increase of 15%. The company has been expanding its investment in lower-carbon initiatives to keep pace with the transition toward renewable energy. 

The company said it expects its five-year spending plan to increase production to 4.2 million barrels of oil equivalent a day by the end of 2027, with most of that increase coming from projects in the U.S. Permian Basin, Guyana, Brazil and liquefied-natural-gas projects around the world. 

Write to Will Feuer at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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