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Exxon to sharply ramp up capital spending this year and next

Oil major plans to spend $30bn in 2019 and $33bn-$35bn in 2020

ExxonMobil, the largest listed US oil company, plans to sharply step up its capital spending over the next few years, to deliver a “significant increase” in its volumes of production of oil and gas.

At a presentation for analysts in New York, the company said it planned capital spending of $30bn this year and $33bn-$35bn next year, up from about $26bn last year. Darren Woods, chief executive, said the investment opportunities available to Exxon, following its acquisition of assets in the Permian Basin in the US and its oil discoveries in Guyana, were more attractive than at any time since Exxon and Mobil merged in 1999.

Mr Woods said that even in a world in which the world cut greenhouse gas emissions in an attempt to meet the goal of limiting global warming, there would still be a need for heavy investment in oil and gas production to offset natural decline in producing fields.

“Perhaps the biggest risk to the industry today is under-investment,” he said. “Society needs us to make these investments.”

The increased investment over the next couple of years is intended to deliver a 46 per cent increase in earnings over 2020-25, assuming a Brent crude price of $60 a barrel, the company said.

Exxon also intends to step up its asset sales over the next three years, selling businesses worth about $15bn, it said.

The presentation follows Exxon’s announcement on Tuesday of plans for a steep increase in production in the Permian region, the heartland of the US shale boom, to 1m barrels equivalent of oil and gas by 2024.

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That growth and the start-up of production at the large oilfields Exxon has discovered off the coast of Guyana, are expected to drive a rapid increase in the group’s total output. Its presentation did not give precise numbers for the expected growth, but showed a potential expansion from 3.8m barrels of oil equivalent per day last year to up to about 4.5m boe/d in 2021 and over 5m boe/d in 2025.

Exxon has a market capitalisation of about $340bn, and the projected asset sales represent about 4 per cent of its enterprise value. In planning disposals, it is following its peers among the large international oil companies, including Royal Dutch Shell, BP and Chevron, which have been running asset sale programmes in recent years.

Exxon said in its presentation that its aim was “further simplifying [its] asset portfolio based on strategic fit, materiality and growth potential”.

It added that the plan would be expected to reduce the number of individual assets it owns by about 20 per cent.


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