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Exxon Mobil Corp Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Cash flow from operations was $55 billion, the third highest in a decade, to fund profitable growth, maintain financial strength, and reward shareholders.
- The company has built the best Upstream portfolio in the industry, achieving the highest production from advantaged assets and the highest liquids production from the overall portfolio in 2024.
- The company strengthened and further capitalized on its unique competitive advantages, technology, scale, integration, execution excellence, and people.
- The company is uniquely positioned.
- The company is well-positioned to meet surging demand from data centers for low-carbon power and on a timetable that alternatives such as nuclear simply can't match.
- The depletion curve continues to bring volumes down.
- The company's presence in the Gulf of Mexico is more limited.
- The company is facing challenges in the supply side of the equation.
- The company is facing growth expenses associated with its business.
- The company is facing a little bit of inflation.
- The company expects to start up a new facility that can produce 25,000 metric tons of Proxxima products and plan to grow to nearly 200,000 tons by 2030.
- The company is committed to investing in new businesses in a stepwise fashion, progressing in tandem with demonstrated success in the marketplace.
- The company expects to see more than $3 billion of improved earnings once the projects are up and running full, which is considered in 2026.
- The company's ongoing shift to a more profitable product mix is a key driver of earnings improvement in Product Solutions.
Q&A Highlights from Exxon Mobil Corp Earnings Call Q4 2024
- Analyst asked about project start-ups and milestones for Guyana's Yellowtail project, and also about the long-term capacity of the asset.
- Darren W. Woods, CEO of Exxon Mobil Corp., stated that the company is tracking consistently with its public statements and expects many projects to come in slightly ahead of schedule. He mentioned that Yellowtail is tracking well and the company is confident that it will come in ahead of schedule. He also stated that it is challenging to project the long-term capacity of the asset, but the company is working hard to fully utilize the assets and expects to deliver more than what they are estimating.
- Darren W. Woods, CEO of Exxon Mobil Corp., stated that the company is tracking consistently with its public statements and expects many projects to come in slightly ahead of schedule. He mentioned that Yellowtail is tracking well and the company is confident that it will come in ahead of schedule. He also stated that it is challenging to project the long-term capacity of the asset, but the company is working hard to fully utilize the assets and expects to deliver more than what they are estimating.
- Analyst asked about interest in low-carbon gas solutions versus traditional gas power plants and how quickly Exxon can bring these solutions to the market.
- Darren W. Woods stated that there is a strong desire for decarbonized power in the data center industry, and Exxon is well-positioned to offer these solutions. He mentioned that the company is leveraging its end-to-end system for capturing, transporting, and storing CO2, which brings a lot of value to hyperscalers. He also stated that the company is well into the development phase and expects to bring these solutions to the market faster than anyone else in the industry.
- Darren W. Woods stated that there is a strong desire for decarbonized power in the data center industry, and Exxon is well-positioned to offer these solutions. He mentioned that the company is leveraging its end-to-end system for capturing, transporting, and storing CO2, which brings a lot of value to hyperscalers. He also stated that the company is well into the development phase and expects to bring these solutions to the market faster than anyone else in the industry.
- Analyst asked about the recent news with DeepSeek and how it has impacted Exxon's conversations with end customers.
- Darren W. Woods stated that the DeepSeek news has not impacted Exxon's conversations with end customers. He mentioned that the company is well-positioned to offer decarbonized power and is working hard to fully utilize the assets. He also stated that the company is well into the development phase and expects to bring these solutions to the market faster than anyone else in the industry.
- Darren W. Woods stated that the DeepSeek news has not impacted Exxon's conversations with end customers. He mentioned that the company is well-positioned to offer decarbonized power and is working hard to fully utilize the assets. He also stated that the company is well into the development phase and expects to bring these solutions to the market faster than anyone else in the industry.
- Analyst asked about the company's capacity for dividend growth and whether they are waiting to buy in the Pioneer stock before stepping up the dividend.
- Kathryn A. Mikells, the company's CFO, explained that the increased buyback pace is a coincidence, as it was aligned with Pioneer's acquisition, which provided incremental cash flow. The company's philosophy regarding the dividend is to ensure sustainability, competitiveness, and growth. The share buyback program is a secondary benefit, and the company aims to maintain a competitive dividend for shareholders. The company has increased its annual dividend for 42 years running, a claim only 4% of companies in the S&P 500 can make.
- Kathryn A. Mikells, the company's CFO, explained that the increased buyback pace is a coincidence, as it was aligned with Pioneer's acquisition, which provided incremental cash flow. The company's philosophy regarding the dividend is to ensure sustainability, competitiveness, and growth. The share buyback program is a secondary benefit, and the company aims to maintain a competitive dividend for shareholders. The company has increased its annual dividend for 42 years running, a claim only 4% of companies in the S&P 500 can make.
- Analyst asked about the company's approach to investing in multi-decadal assets and the factors they consider when evaluating these projects.
- Darren W. Woods, the company's CEO, explained that the constant factor in their decision-making process is ensuring that the projects are low-cost supply sources, competitive in the market, and have an advantaged cost of supply compared to other competitors. The company's project organization and technology organization are also critical in driving these projects to the left-hand side of the cost of supply curve. While stability in the local communities is considered, it is not the primary variable in their decision-making process.
- Darren W. Woods, the company's CEO, explained that the constant factor in their decision-making process is ensuring that the projects are low-cost supply sources, competitive in the market, and have an advantaged cost of supply compared to other competitors. The company's project organization and technology organization are also critical in driving these projects to the left-hand side of the cost of supply curve. While stability in the local communities is considered, it is not the primary variable in their decision-making process.
- Analyst asked about the timeline for the PNG and Rovuma projects.
- Darren W. Woods stated that the company is working towards a 2026 timeframe for the Rovuma project and continues to work towards a target for the PNG project, with hopes of having something near the back-end of 2025 for FID.
- Darren W. Woods stated that the company is working towards a 2026 timeframe for the Rovuma project and continues to work towards a target for the PNG project, with hopes of having something near the back-end of 2025 for FID.
- Analyst asked about the assumptions for annual capital spend and OpEx during the period to achieve the doubling of US production.
- Kathryn A. Mikells provided guidance on capital expenditure, stating that the company expects cash CapEx to be between $27 billion and $29 billion in 2025, and between $28 billion and $33 billion between 2026 and 2030. She also mentioned that the company has a global procurement organization working to reduce expenses and has made significant structural cost reductions, with a goal of achieving $18 billion in savings by 2030. Darren W. Woods added that the company has demonstrated the ability to grow the business and reduce costs, with a focus on creating value in new markets and new businesses.
- Kathryn A. Mikells provided guidance on capital expenditure, stating that the company expects cash CapEx to be between $27 billion and $29 billion in 2025, and between $28 billion and $33 billion between 2026 and 2030. She also mentioned that the company has a global procurement organization working to reduce expenses and has made significant structural cost reductions, with a goal of achieving $18 billion in savings by 2030. Darren W. Woods added that the company has demonstrated the ability to grow the business and reduce costs, with a focus on creating value in new markets and new businesses.
- Analyst asked about how changes in federal government regulations on CO2 might affect Exxon Mobil's renewable and low-carbon investment approaches.
- Darren W. Woods, CEO of Exxon Mobil, explained that the company's work in the Low Carbon Solutions business is not based on any specific policy but rather on the need to supply energy sources and products while reducing emissions. He also stated that the company recognizes the need for society to reduce emissions and is working to offer a skill set and capability set that can help accomplish this goal.
- Darren W. Woods, CEO of Exxon Mobil, explained that the company's work in the Low Carbon Solutions business is not based on any specific policy but rather on the need to supply energy sources and products while reducing emissions. He also stated that the company recognizes the need for society to reduce emissions and is working to offer a skill set and capability set that can help accomplish this goal.
- Analyst asked about the company's small presence in the Gulf of Mexico relative to its size and asked if it's due to cost structure, regulatory environment, or geology.
- Darren W. Woods, CEO of Exxon Mobil, explained that the company's presence in the Gulf of Mexico is limited due to evaluating the opportunities and cost of supply. He stated that the geology is tough, which impacts the cost, and that the company is evaluating opportunities and will be in there with the rest of industry if the Trump administration opens up new areas for exploration. He emphasized that the company is agnostic with respect to location and more focused on the characteristics and ability to develop advantaged barrels.
- Darren W. Woods, CEO of Exxon Mobil, explained that the company's presence in the Gulf of Mexico is limited due to evaluating the opportunities and cost of supply. He stated that the geology is tough, which impacts the cost, and that the company is evaluating opportunities and will be in there with the rest of industry if the Trump administration opens up new areas for exploration. He emphasized that the company is agnostic with respect to location and more focused on the characteristics and ability to develop advantaged barrels.
- Analyst asked about the commercial side of Exxon Mobil's carbon capture and storage (CCS) business, including challenges and contributions expected over the next couple of years.
- Darren Woods, CEO, explained that the company has a unique position in the market due to its end-to-end capture, transport, and storage system, which has led to increased customer interest and a healthy sales pipeline. He also noted that the company is developing its system to provide more optionality and take advantage of storage sites along the pipeline. He mentioned that growth plans in this space are aggressive, but dependent on customer interest and willingness to engage in long-term contracts.
- Darren Woods, CEO, explained that the company has a unique position in the market due to its end-to-end capture, transport, and storage system, which has led to increased customer interest and a healthy sales pipeline. He also noted that the company is developing its system to provide more optionality and take advantage of storage sites along the pipeline. He mentioned that growth plans in this space are aggressive, but dependent on customer interest and willingness to engage in long-term contracts.
- Analyst asked about the difference between the earnings contribution and the cash flow contribution of these projects.
- Kathryn Mikells, CFO, explained that the company focused on projects where it is the operator, as opposed to TCO where it is not, and on projects that are newly starting up, rather than existing projects. She also mentioned that the company continues to get incremental benefits from the projects that are already underway.
- Kathryn Mikells, CFO, explained that the company focused on projects where it is the operator, as opposed to TCO where it is not, and on projects that are newly starting up, rather than existing projects. She also mentioned that the company continues to get incremental benefits from the projects that are already underway.
