Exxon Mobil on Wednesday outlined a corporate spending plan that it said will double earnings and cash flow by 2027 from 2019’s levels, while also reducing emissions. The plan comes as the oil giant reevaluates its long-term strategy following the pandemic, and after a shake-up in its boardroom.
The company said it plans to spend between $20 billion and $25 billion per year through 2027. This is higher than the $16 billion to $19 billion range the company outlined for 2021 spending, but significantly below the $30 billion to $35 billion the company forecast spending annually before the pandemic took hold.
The company said the plan allows for “flexibility to adjust to adverse market conditions.”
U.S. oil briefly tumbled into negative territory in April 2020 as the pandemic sapped demand for petroleum products, which forced energy companies like Exxon to rapidly cut costs. Investors are now prioritizing companies that are focused on leaner operations and returning capital, rather than those that are solely focused on growth.
In October, Exxon announced its first dividend hike in more than two years, and also announced plans to begin a share repurchase program of up to $10 billion over the next 12 to 24 months.
Looking forward, the company said it’s focused on high-quality assets. Exxon said that more than 90% of its new upstream investments will return more than 10% even if oil trades at $35 per barrel or below.
On Tuesday, U.S. oil stood at $69.16 per barrel. Prices have been volatile recently — WTI’s fallen rapidly after breaking above $85 in October — underlining uncertainty over the long-term trajectory for oil prices.
“The restored strength of our balance sheet and improved financial outlook support accelerating investment in our industry-advantaged, high-return projects, and a growing list of financially accretive lower-emission business opportunities,” Darren Woods, Exxon’s chairman and chief executive officer, said in a statement. “Our strategy is designed to create shareholder value by leveraging our competitive advantages while maintaining flexibility to respond to future policy changes and technology advances associated with the energy transition.”
Exxon also reiterated its plan to spend $15 billion on emissions-reducing technologies. The company said the money will be used to cut emissions from existing operations as well as for investments in areas like carbon capture.
Shares of Exxon advanced about 1.7% during premarket trading on the heels of a broader market comeback and this announcement.