Here’s a news flash of sorts: ExxonMobil (XOM), the world’s largest publicly traded oil and gas company, has barrels of money and plans $28 billion in capital spending this year and about $25-$30 billion each year thereafter through 2014.
The company made more than $19 billion last year and generated cash flow of $28.4 billion. Flush with money and confidence, XOM says it is “well positioned for future growth” despite a volatile industry environment across a “range of market conditions.”
“Each of our three business segments, Upstream, Downstream and Chemical, outpaced our competitors,” Rex W. Tillerson, chairman and chief executive officer, said last week during the company’s annual presentation to investment analysts at the New York Stock Exchange.
That’s what a mountain of cash does: It provides “financial flexibility” to pursue a host of mostly oil-related and “geographically diverse” opportunities. But there’s not much to be found in terms of renewable energy or biofuel opportunities. Tillerson warned that the Irving, Texas, company “will not be distracted from our focus on maximizing long-term shareholder value.”
He added that XOM’s capital spending plan is “largely unaffected” by the global recession. The company’s return on capital employed, which it calls a key indicator of “disciplined decision making and financial performance,” was 16.3 percent, or more than 50 percent higher than its nearest competitor.
ExxonMobil has a large inventory of projects in the hopper, and during the presentation it highlighted last year’s achievements and future plans, including:
– It replaced more than 133 percent of its 2009 production with proved reserves additions totaling 2 billion oil equivalent barrels, based on long-term pricing used by the company to make investment decisions. It was the 16th consecutive year the company replaced more than 100 percent of its production.
– The company added the equivalent of 3.9 billion barrels of oil to its resource base through by-the-bit additions, resource acquisitions and revisions to existing fields. Of the 3.9 billion barrels of oil equivalent increase to the resource base, 2.1 billion barrels were through by-the-bit additions resulting from exploration drilling that discovered new resources.
– Exploration plans for 2010 and 2011 will evaluate offshore plays in Southeast Asia, the Black Sea, Canada’s East Coast, the U.S. Gulf of Mexico, Libya, Brazil and Australia, and also onshore unconventional gas potential in North America, Europe and Indonesia.
– During 2009, eight major projects started operations and are projected to add the equivalent of 400,000 net barrels per day to ExxonMobil’s production in 2010. An additional 12 major projects are expected to start production between 2010 and 2012. Combined with other projects, the company expects its share of production from new projects to increase by 1.5 million oil-equivalent barrels per day by 2015.
– The company’s major projects portfolio contains more than 130 oil and gas projects that span all resource types and regions of the world. The net share of the resources represented by those projects is the equivalent of 24 billion barrels of oil.
– In 2010, ExxonMobil said it “will continue to progress its biofuels program and alliance with a leading biotech company, Synthetic Genomics Inc., to research and develop next-generation biofuels from photosynthetic algae.
The latter point was the lone mention of renewable energy or biofuel programs, and no specifics or capital spending amounts were outlined, which only underscores XOM’s present and future focus and imperatives. But we knew that.
Crudely put, it’s all about the crude for ExxonMobil.