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ExxonMobil Third Quarter 2021 Results

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   |    Friday,October 29,2021

Exxon Mobil Corp. reported its Q3 2021 results.

Exxon announced estimated third-quarter 2021 earnings of $6.8 billion, or $1.57 per share assuming dilution. Third-quarter capital and exploration expenditures were $3.9 billion, bringing year-to-date 2021 investments to $10.8 billion, as the company continued strategic investments in its advantaged assets, including Guyana, Permian Basin, and in Chemical.

Oil-equivalent production in the third quarter was 3.7 million barrels per day. Excluding entitlement effects, divestments, and government mandates, oil-equivalent production increased 4% versus the prior-year quarter, including growth in the Permian and Guyana.

CEO Darren Woods said: "All three of our core businesses generated positive earnings during the quarter, with strong operations and cost control, as well as increased realizations and improved demand for fuels. Free cash flow more than covered the dividend and $4 billion of additional debt reduction. With the progress made in restoring the strength of our balance sheet, this week we announced a dividend increase maintaining 39 consecutive years of annual dividend growth."

"Next month, the board will finalize our corporate plan that supports investment in industry-advantaged, high-return projects, and a growing list of strategic and financially accretive lower-carbon business opportunities," added Woods. "The strong returns generated by our core businesses provide the near-term cash flows to fund lower-carbon opportunities that leverage our competitive strengths in technology, engineering and project development. We expect to increase the level of spend in lower-emission energy solutions by four times over the prior plan, adding projects with strong returns as well as seeding some development investment in large hub projects that require further policy support. Retaining flexibility to strike a balance across our different investment opportunities, while maintaining a strong balance sheet, is critical to ensure our business produces accretive, long-term returns and remains resilient under a wide range of future scenarios. We anticipate the company's strong cash flow outlook will enable us to further increase shareholder distributions by up to $10 billion through a share repurchase program over 12-24 months, beginning in 2022."

Third-Quarter Business Highlights:

Upstream

• Average realizations for crude oil increased 7% from the second quarter. Natural gas realizations increased 28% from the prior quarter.

• Liquid volumes increased 5% from the second quarter, driven by lower planned maintenance activity. Natural gas volumes decreased 2%, driven by lower demand in Europe.

• During the quarter, production volumes in the Permian averaged approximately 500,000 oil-equivalent barrels per day, an increase of approximately 30% from the third quarter of 2020. The focus remains on continuing to grow free cash flow by lowering overall development costs and increasing recovery through efficiency gains and technology applications.

Downstream

• Fuels margins improved from the second quarter with increasing product demand. Lubricants continued to deliver strong performance, supported by above average basestocks margins, strong performance of the Rotterdam Advanced Hydrocracker, and lower operating expenses.

• Overall refining throughput was up 5% from the second quarter on improved demand and lower planned maintenance activity.

• After Hurricane Ida left much of Louisiana refining and oil production offline, ExxonMobil secured 3 million barrels from the U.S. Strategic Petroleum Reserve to produce essential fuel supply, delivering record terminal throughput rates to impacted communities and front line workers in the state.

Chemical

• Quarterly earnings of $2.1 billion reflect reliable operations coupled with strong demand, supported by the company's global supply and logistics flexibility.

• Industry margins remain historically strong, but moderated in the quarter driven by increased industry supply.

Capital Allocation and Structural Cost Improvement

• ExxonMobil's 2021 capital program is expected to be near the low end of the $16 billion to $19 billion range. In the fourth quarter, the board of directors will formally approve the corporate plan, with capital spending anticipated to be in the range of $20 billion to $25 billion annually.

• During the quarter, the company paid down gross debt by an additional $4 billion. Year to date, ExxonMobil has reduced gross debt by $11 billion, and improved the total debt to capital ratio to 25%. The company expects to manage debt within a range of 20% to 25%, ensuring a strong, investment-grade credit rating.

• In addition to reducing structural costs by $3 billion in 2020, the company has captured $1.5 billion in additional structural savings through the first three quarters of 2021. The company is on pace to exceed total structural cost reductions of $6 billion annually by 2023 compared to 2019 levels, with efforts continuing to identify further structural savings by leveraging the corporation's global scale and integration.

Strengthening the Portfolio

• ExxonMobil continued to progress its high-return deepwater developments in Guyana, where discoveries at Pinktail and Cataback increased the estimated recoverable resource base to approximately 10 billion barrels of oil equivalent. Exploration, appraisal, and development drilling continues, with a total of six drillships currently operating. The Liza Unity floating production, storage and offloading vessel set sail from Singapore to Guyana in the quarter, and remains on schedule for startup in 2022. The third major development, Payara, is on schedule for 2024 startup, and Yellowtail is expected to achieve first oil in 2025.

• In Baytown, Texas, the company plans to build its first, large-scale plastic waste advanced recycling facility, with startup expected by year-end 2022. This facility will be among the largest in North America. In Europe, ExxonMobil is collaborating with Plastic Energy on an advanced recycling plant in Notre Dame de Gravenchon, France, which is expected to process 25,000 metric tons of plastic waste per year when it starts up in 2023, with the potential for further expansion to 33,000 metric tons of annual capacity. These efforts support the company's aim to build approximately 500,000 metric tons per year of advanced recycling capacity globally over the next five years.

Reducing Emissions and Advancing Low Carbon Solutions

• ExxonMobil plans to grow investments that lower emissions, leveraging the company's technology, scale, integration, and global footprint. Cumulative low-carbon investments are anticipated to be approximately $15 billion from 2022 through 2027. The company is also on track to achieve its 2025 emissions intensity reduction plans by the end of 2021, and expects to announce accelerated Scope 1 and Scope 2 reduction plans later this year.

• During the quarter, 11 companies, including ExxonMobil, expressed interest in supporting the large-scale deployment of carbon capture and storage technology in Houston. The companies agreed to begin discussing plans that could lead to capturing and safely storing up to 100 million metric tons per year by 2040. Carbon capture and storage is a critical technology in helping society meet its net-zero ambitions, and ExxonMobil has captured more human-made CO2 than any other company.

• Last week, ExxonMobil announced engineering, procurement, and construction contracts as it plans to increase carbon capture and storage capacity by approximately 1 million metric tons per year at its LaBarge, Wyoming facility. The facility currently captures 6 to 7 million metric tons of CO2 per year and has captured more CO2 than any other facility in the world. A final investment decision is expected in 2022.

• ExxonMobil announced its majority-owned affiliate, Imperial Oil Ltd., is moving forward with plans to produce renewable diesel at a new complex at its Strathcona refinery in Edmonton, Canada. When construction is complete, the refinery is expected to produce approximately 20,000 barrels per day of renewable diesel, which could reduce emissions in the Canadian transportation sector by about 3 million metric tons per year. The complex will use locally grown plant-based feedstock and hydrogen with carbon capture and storage as part of the manufacturing process.

The company signed an agreement with non-profit independent validator MiQ to begin the emission certification process for natural gas produced at Poker Lake facilities in the Permian Basin. Certified lower-emission natural gas validates reduction efforts and helps customers meet their emissions goals. The company has expanded use of aerial LiDARTM imaging and SOOFIE methane-detection technologies, and is evaluating additional next-generation applications as part of its ongoing initiatives to detect and reduce methane emissions.