Exxon Raises Capital Spending as Worldwide Oil Glut Looms

Exxon Mobil Corp. volition rise superior spending adjacent twelvemonth arsenic it adds the $60 cardinal acquisition of Pioneer Natural Resources Co. to oil-production plans, threatening to worsen adjacent year’s expected crude glut.

Author of the article:

Bloomberg News

Kevin Crowley

Published Dec 11, 2024  •  Last updated 12 minutes ago  •  2 infinitesimal read

ruaqelva4fw{h1[tfir52b0)_media_dl_1.png Bloomberg

(Bloomberg) — Exxon Mobil Corp. volition rise superior spending adjacent twelvemonth arsenic it adds the $60 cardinal acquisition of Pioneer Natural Resources Co. to oil-production plans, threatening to worsen adjacent year’s expected crude glut.

Article content

Article content

Exxon plans to walk betwixt $27 cardinal and $29 cardinal of currency successful 2025, North America’s largest vigor explorer said successful a connection Wednesday. Annual outlays volition emergence to astir $30.5 cardinal successful the pursuing 5 years compared with astir $24.5 cardinal earlier the Pioneer deal. 

Article content

Exxon’s outlook is successful nonstop opposition to different oil-industry players. The OPEC+ confederation extended plans to withhold crude from the marketplace into adjacent twelvemonth arsenic prices conflict amid a looming surplus. Meanwhile, Chevron Corp. past week announced the archetypal chopped to yearly expenditures since 2021 arsenic it prioritizes profits implicit production. 

Exxon expects to pump the equivalent of 5.4 cardinal barrels a time by 2030, the astir successful the company’s modern history. Cost savings from the Pioneer woody that closed successful May were raised by 50% to much than $3 billion. 

Exxon Chief Executive Officer Darren Woods is investing successful what helium calls “advantaged” projects that tin nutrient lipid and earthy state for the equivalent of little than $40 a tube implicit the agelong term. Lower-cost ventures specified arsenic lipid drilling successful the US Permian Basin and Guyana, and liquefied earthy state output are seen remaining profitable good into the aboriginal adjacent if large economies modulation distant from fossil fuels, denting prices. 

Exxon announced 2 caller improvement plans successful Guyana, astir tripling regular accumulation capableness to 1.7 cardinal barrels from the existent level. Company-wide, low-carbon investments were raised to $30 cardinal done 2030, up from $20 cardinal done 2027. 

Article content

“The portfolio of advantaged assets we’ve built is the envy of the industry,” Woods said successful November. 

Woods’ strategy whitethorn marque consciousness for shareholders successful the agelong term, but analysts fearfulness Exxon’s expanding lipid accumulation whitethorn adhd to a planetary oversupply forecast for adjacent year. That, successful turn, would complicate efforts by the Organization of Petroleum Exporting Countries and its allies to incorporate the surfeit and buoy crude prices. 

“It’s Exxon precise straight that’s eating the lipid market’s lunch, and peculiarly the Saudi’s lunch,” Paul Sankey, a seasoned lipid expert and laminitis of Sankey Research LLC, said earlier the announcement. Weak Chinese depletion and expanding supplies from places similar the US and Brazil are starring to a “pretty pressured lipid price.”  

Woods’ refusal to depart from Exxon’s halfway lipid and state concern has served the institution good since 2021, erstwhile vigor request roared backmost from pandemic-era lows. The stock’s full instrumentality of much than 100% implicit the past 3 years is much than treble those of the S&P 500 Index and Chevron. 

But analysts are starting to question the contented of focusing connected oil-production maturation astatine a clip erstwhile the planetary crude benchmark is connected way for a 2nd consecutive yearly decline, Chinese vigor request remains weak, and OPEC+ is sitting connected millions of barrels of untouched output capacity, according to Citigroup Inc.   

(Updates with 2026-2030 spending program successful 2nd paragraph.)

Article content