New plans have been revealed by ExxonMobil that focus on increasing earnings and cash flow. The purpose of these plans is to sustain and grow the company’s dividend, fund advantaged products, and reduce debt. The plans mention the goals and strategies through 2025, which will be followed alongside its efforts to commercialize lower-emission technologies. It is committed to growing shareholder value by meeting the global energy demands. Speaking at the company’s annual investor day, he said that they will pursue a technology-driven strategy.
He further added that their current investment portfolio is the best they have had in about 19 years. It will help them increase earning a cash flow in the near term, but it will continue to be flexible to market conditions, helping them to benefit from ongoing cost-reduction efforts. The company intends to reduce the emissions, so they are working on solutions like carbon capture and low-carbon hydrogen, which are required to de-carbonize the highest emitting sectors of the economy. The development of such solutions is extremely important if society wants to achieve the net zero ambition.
According to the plans, a capital spending of $15-$18 billion is expected in 2021 and then it would increase to $19-$24 billion per year through 2026. However, the amount spent can be changed to reflect market conditions. One such case was seen last year when the capital spending was reduced by 28 percent in 2020, it’s an effort they have been making continuously to preserve the value of investment opportunities. The cash operating expenses were also reduced by 14 percent.
The spending plans have to consider the potential market volatility, as the industry and the economy have begun to recover from the pandemic. According to Woods, they expect their investments to generate returns of greater than 26 percent, and 88 percent of their investments in resources additions like Brazil and Guyana, provide a 10 percent return at $34 per barrel or less. The company is hopeful, it will be able to achieve the goals.