Good day, everyone, and welcome to this ExxonMobil Corporation Q4 2021 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Stephen Littleton. Please go ahead, sir.
Thank you, and good morning, everyone. Welcome to our Q4 earnings call. We appreciate your participation and continued interest in ExxonMobil. I'm Stephen Littleton, Vice President of Investor Relations. Joining me today are Darren Woods, Chairman and Chief Executive Officer, and Kathryn Mikells, our Senior Vice President and Chief Financial Officer. The full set of presentation slides and prepared remarks were made available on the investor relations section of our website earlier this morning, along with our press release. During our call this morning, Darren will provide a few additional opening comments and reference a select number of slides from that presentation, leaving more time for your questions. We expect to conclude the call at 9:30 A.M. Central Time.
I would also like to draw your attention to the cautionary statement on slide two and to the supplemental information at the end of the presentation slides on the website. I'll now turn the call over to Darren.
Thanks, Stephen. It's a pleasure to share our 2021 results with you today, which demonstrates the significant progress we've made to advance our strategy and position the company to sustainably grow shareholder value. Our effective pandemic response, focused investments during a down cycle, and structural cost savings positioned us to realize the full benefit of the market recovery last year. We delivered strong financial and operating performance, significantly increased earnings and cash flow to fund our advantage investments, reduced debt to pre-pandemic levels, and continued our long history of sharing our success with shareholders. Today, we'll outline some of our progress towards reaching our strategic goals, delivering earnings and cash flow growth, drive to a net zero future, build successful lower emissions businesses, and maintain optionality in our portfolio to match the pace of the energy transition. Let me touch on a couple of key points.
1st, we're working to fully leverage our competitive advantages, including our scale, to drive step changes in cost and efficiency. We're also actively managing our strong portfolio and continuing our keen focus on operating performance and disciplined capital and operating spend. We're also accelerating our work to reduce emissions and drive innovations focused on the hard-to-decarbonize sectors, such as heavy industry and commercial transportation. An important part of this activity is our ambition to achieve net zero emissions from our operations by 2050. Also important is the good progress we've made building our Low Carbon Solutions business, which is rapidly expanding utilizing existing policy. As you're all aware, we're also pursuing very large-scale opportunities that will give us first-mover advantage as we advocate for the new policy necessary to support these step-out projects. Our results demonstrate the benefits of the actions we've taken.
We're continuing to manage and evolve the company to further strengthen our competitive advantages, growing value through the transition regardless of its pace. Turning now to some perspectives in 2021. As I said, we've made tremendous progress advancing our strategy over the past year. We remain focused on safety and reliability, delivering a second consecutive year of outstanding performance. In emission reductions, we expect to meet our 2025 reduction plans four years early. That led us to set even more aggressive plans for 2030. The experience we gained developing reduction roadmaps for our assets gives us confidence for what we can ultimately achieve. This helped form the basis of our recently announced ambition to achieve net zero emissions in our operations by 2050. Of course, a big part of our work in this area involved our Low Carbon Solutions business.
As I mentioned, this new business has made exceptional progress building a large inventory of new business opportunities with a focus on carbon capture, hydrogen, and biofuels. Importantly, we're also addressing emissions by providing high-performance products that deliver solutions to help our customers reduce their emissions. Demand for these products was very strong in 2021, enabling 7% growth in our performance product volumes. This helped drive record annual earnings in our chemical business. Strengthening our portfolio across all of our businesses continues to be a key part of our strategic focus to increase shareholder returns. To that end, we had more exploration success in Guyana with six discoveries in 2021 and two additional discoveries already this year. This has expanded the estimated recoverable resources on the Stabroek Block to more than 10 billion oil-equivalent barrels.
We're on schedule to start production this quarter at Liza phase ll. In the Permian, we continue to drive improvements in drilling and completions, increasing average productions by nearly 100,000 oil equivalent barrels per day to approximately 460,000. We started up the Corpus Christi chemical facility under budget and ahead of schedule. We've continued to monetize non-core assets, generating more than $3 billion of cash proceeds from divestments during the year. Our actions are yielding strong results and, as I said, positioned us to benefit from demand recovery. We grew earnings to $23 billion and drove nearly $2 billion of structural efficiencies in 2021 on top of the $3 billion the year before. This puts us in a good position to significantly exceed our goal of $6 billion of structural cost savings per year by 2023 relative to 2019.
We maintain our disciplined approach to investments focused on competitively advantaged low cost of supply opportunities and on growing our portfolio of high-value products. CapEx was $16.6 billion for the year, which was near the low end of our guidance. As a result of our cost reductions, improved efficiency, and capital discipline, we've lowered our Brent breakeven price to $41 per barrel. We're continuing to drive that down even more, expecting to average $35 a barrel between now and 2027. Cash flow from operating activities increased to $48 billion, the highest since 2012. We used the available cash to restore our balance sheet, essentially paying back what we borrowed in 2020, reducing our debt-to-capital ratio to about 21%.
As a result of our restored financial strength, we increased the annual dividend for the 39th consecutive year and announced a $10 billion share repurchase program that started last month. Overall, a strong list of accomplishments. Now looking ahead to this year. Our plan is robust and progresses our strategic objectives. I'll highlight a few key items on this page. 1st, we will increase our competitively advantaged low-cost-of-supply production with the startup of Liza phase ll in Guyana and the Coral South development in Mozambique. The same is true for the Permian, where our focus remains on driving further capital efficiency and high-value growth. We're already ramping up manufacturing at Corpus Christi and expecting to start up our Baton Rouge polypropylene expansion later this year. These projects will continue to grow production of our high-value chemical performance products.
We're applying the same capabilities and expertise developed over decades to progress our net zero ambitions and grow our Low Carbon Solutions business. In that business, we expect to reach final investment decisions on large-scale carbon capture and storage projects at La Barge, Wyoming, and Rotterdam in the Netherlands. We're continuing to advance the flagship carbon capture opportunity in Houston. It now has 14 participating companies and has the potential to capture up to 100 million metric tons of CO2 per year by 2040. We also anticipate beginning to lift renewable diesel from our agreement with Global Clean Energy's biorefinery in California later this year, as well as making a final investment decision on our renewable diesel project at our Strathcona refinery in Canada, expanding our lower emissions fuels offering.
Finally, we expect to further strengthen our balance sheet and progress our share repurchase program while continuing to retain capital flexibility and optionality to adapt to market conditions and opportunities. Leveraging our core competitive advantages, we're well positioned for future success irrespective of the path or pace. We have the flexibility to shift resources between our traditional and low-carbon businesses at any rate required. This provides a lot of optionality and positions us to lead industry in the energy transition and in earnings and cash flow growth. We thank you for joining us today and look forward to sharing more with you during our Investor Day on March second. Unfortunately, because of ongoing COVID considerations, we'll conduct the events virtually again this year. We do look forward to the day when we can get back to hosting you all in person.
Before we take your questions, I'd like to take a moment to thank Stephen for his leadership and significant contributions, as after 30 years of service, he will be retiring at the end of this month. I wish Stephen and his wife, Kim, the very best. He'll be missed. I'd also like to welcome Jennifer Driscoll, who will be joining later this month as our Vice President of Investor Relations.
Thank you, Darren. Operator, please open the phone lines for the 1st question.
Thank you, sir. The question and answer session will be conducted electronically. If you'd like to ask a question, please do so by pressing the star key followed by the digit one on your touch-tone telephone. We request that you limit your questions to one initial with one follow-up so that we may take as many questions as possible. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Additionally, please lift your handset before asking your question. We will proceed in the order that you signal us, and we'll take as many questions as time permits. Once again, that is star one if you'd like to ask a question. We'll go first to Phil Gresh with J.P. Morgan.
Hey, good morning, and thank you for taking my question. Congrats, Stephen, on your retirement.
Thank you, Phil.
First question for Kathy on capital allocation. Great to see the net debt reduction here in the Q4 well ahead of our expectations in the startup of share buybacks in January. As you look at 2022, with oil prices where they are, how are you thinking about you know, the pace of the share buybacks and the desire to take leverage below this 20%-25% target given the pace and progress you made in the Q4?
Sure. Look, our capital allocation priorities remain the same, right? 1st, let's make sure we're investing in the high return assets and products across the business from Guyana to chemical performance products to biofuels. 2nd, continuing to strengthen the balance sheet. I talked about in the Q3, and we continue to look to our term debt maturities with an eye to paying those down in 2022, and continuing to sustain the strong dividend that we have, and then obviously returning further available cash to shareholders. We would have started the $10 billion share repurchase program at the beginning of the year at what I would have described as an equal pace against the 24-month you know, longer term time frame.
As we assess both our year-end results, where we ended up in terms of net debt, looking at the continued positive market environment, that would cause us to increase the pace of the share repurchase program. You know, and as I stand here today, I'd say increasing the pace with the faster end of that 12-24 month pace in mind. We will continue to evaluate the program and the pace throughout the year. It's one thing to sit here today and sit in what are pretty favorable market conditions, but we'll just have to see how the year pans out. That's how we're thinking about it right now.
Okay, great. No, that makes a lot of sense. Thanks for that color. And then my 2nd question, I know you'll give a more detailed update in March at the Investor Day, but just any thoughts around 2022 production targets, considering some of the recently closed asset sales, just any moving pieces, Permian or otherwise? Thanks.
Yeah. I'll take that, Phil. Good morning. You know, as you know, one of the primary objectives we've had in looking at the portfolio is less about, you know, volume and volume targets and more about the quality and profitability of the barrels that we're producing. We've been aggressively trying to high grade the portfolio across our businesses. That's certainly true in the upstream, which led to the discussion we had a couple years ago with respect to the divestment program, which continues to pay dividends and will continue to progress. The growth that we're seeing in Guyana and Permian and Brazil.
I would expect that volumes are fairly consistent with what we've seen this year, but the mix within that volume profile will continue to improve and, the earnings per barrel will continue to improve, and that's been the focus. As we move forward, you'll continue to see the what I'll say the quality of the barrels or profitability of the barrels increase. Then with time, as you head out in the later years, you'll see, you know, volumes grow with that improved quality mix.
Okay, great. That makes sense. Thanks a lot.
You bet.
Next question will come from the line of Biraj Borkhataria with RBC.
Hi there. Thanks for taking my question. I wanted to reference some of your comments that were made on the structural cost reduction. You talked about those benefits continuing into 2023. I was just wondering if you could balance that against the cost inflation we're seeing across various items, you know, raw materials, logistics, labor, et cetera. Can you talk about the net impact of those? I have a follow-on on a different topic.
Sure. Yeah. Good morning, Biraj. You know, we talked some time ago about a $6 billion structural reduction through 2023. As we worked through 2021 and drove additional improvements within the business, we've extended that structural cost reduction. We expect, as I said this morning earlier, kind of around $2 billion in, again, in 2022, another $2 billion in 2023. More than exceeding the level that we thought about and talked about last year. That obviously is the structural side of the equation in terms of reducing cost. The counterweight then is the inflation and Forex and some of the pressures that we're seeing.
In the short term, you know, we were in the down cycle, we recognized that, there would be a return and there would be growth, and that would put pressure on prices. We, in anticipation of that, tried to manage many of our contracts and the work that we were doing to maintain a level of cost and to minimize escalation as we headed into 2021 into 2022, and that's paying off. We've managed to mitigate quite a bit of that inflation. Obviously, as time goes on, we'll start to see more of that. Our expectation is, the businesses will work to offset that inflation growth.
You know, longer term, our objective is, as we grow the business with the investments that we're making in grassroots chemical facilities and some of the changes that we're making in our downstream operations, and then as we grow some of the upstream businesses, we'll offset all that increased cost with structural efficiencies.
Okay, understood. That's really helpful. Just this second question is actually asset-specific. I've been looking at some of the export data at Papua New Guinea over the last few months, and it looks like that asset is performing extremely well and above nameplate capacity. I was wondering if you could talk about whether there's anything specific you're doing to increase capacity there, and maybe any color on how much of those exports are contracted versus spot would be helpful too.
Yeah, sure. I think, again, what we're seeing in Papua New Guinea, and frankly, it's been replicated in other parts of the company is what we've been talking about, which is leveraging the full capabilities of the organization. One of the changes that we've made over time here is we've brought a lot of the optimization skills and techniques that we've historically used in our downstream businesses and our refineries, where, you know, you're eking out pennies on the barrel to be successful. Taking that technology and approach to some of our upstream assets and sharing that technology and working with the upstream teams to improve the productivity of the assets on the ground. That's paying off really all around the world where we're applying that technique.
What you're seeing in Papua New Guinea is that's part of the drive or you know, the driver of that increase. On top of just you know, hard work by that operating team to maintain reliability and to run that plant to its constraints. So I think it's the combination of those two things. Our expectation, we've seen that in chemical as well. As we brought those plants up, we've been able to run above the nameplate capacity, just again with the optimization and the hard work of the operating team. So we've kind a have an expectation or as we bring new assets on, that those operating teams figure out you know, unique ways to get beyond constraints and improve the performance.
Okay. Thank you very much.
You're welcome.
Next we'll go to Jason Gabelman with Cowen.
Hey, thanks for taking my questions. First I wanted to touch on the CapEx guidance provided a range of $21 billion-$24 billion, which is appreciated. Can you just discuss how you think about what determines the low end and the high end of that range for this year? I have a follow-up. Thanks.
Sure. So overall, I think as you consider the range that we've given, I'd kind of point to starting the year with an expectation of being more towards the center of the range, and then we'll see ultimately how the projects and the big projects proceed. It is probably the biggest indicator. Whether any new projects ultimately come online, which we would always be maintaining some level of flexibility for. Unsurprisingly, with the size of our upstream business relative to downstream and chemicals, you know, the biggest increase year-over-year comes from overall the upstream business and further spending in Guyana, further spending in unconventional, especially the Permian, beginning to upweight our spending overall on our own emission reductions.
Again, the Permian would be another place that we're particularly focused, restarting paused projects that we had in the downstream, and then you'll be well aware of the big projects that we have ongoing in chemicals. That's really what's driving the difference. I'd say how we think about landing towards the middle, you know, versus a different end within that range. Obviously tightening the range relative to the range that we've given over a longer period of time, which is the $20 billion-$25 billion.
2Thanks. That's helpful. My 2nd question, I wanted to touch on the performance products within chems. You've often discussed that's a driver of your earnings growth over the next few years and high grading the business. I just wanted to hopefully get some context around the comment about 7% growth in performance product volumes. Can you help us understand what types of earnings uplift that provides and how you think about earnings growth within that performance product business moving forward? Thanks.
Yeah. I'd go back to the corporate plan disclosures we had, where we talked about both within chem and within downstream, our focus on growing high-value, higher-margin products, which would include low-emission fuels, high-performance lubricants in our lubricants portfolio, as well as what we would describe as chemical performance products, and looking to double the volume of those products kind of over the plan period. Ultimately, as we look at the combination of downstream and chem over that period of time, looking to triple earnings. It is a strong component of what sits behind tripling earnings.
I'd also say, and this comes through our breakeven analysis, continuing to reduce the structural cost within the business across all elements of the business, you know, also are a driver of that increased cash flow and earnings power. That's how I would think about how we're looking to continue to upgrade the mix within both Downstream and Chemicals.
Maybe just a little bit of color commentary with respect to when we talk about performance, say in the chemical company, what drives that, and it's built on a pretty fundamental competitive advantage with respect to our technology capabilities and the work that we do with catalyst. The developments that we've made give many of our chemical products unique characteristics in use. That's a really important part of the value equation. We have invested in the science and technology to work with customers on applications to take advantage of those unique properties. We have labs in China and other places around the world to support our customers and the value and use of that improved performance then is shared with customers and ourselves, which gives that uplift on our performance products.
Okay, thanks for the answer.
Next we'll go to Doug Leggate with Bank of America.
Thanks. Good morning. Well, shocking news this morning. Congratulations, Stephen. We will miss you indeed. I look forward to chatting with you before you leave. Guys, I wonder if I could go to slide 12 and just ask you to walk through a little bit more color on the breakeven guidance that you're talking about. My specific question is: You're talking about an average breakeven between $22-$27, but a lot of your higher margin projects come on at the back end of that period, specifically Guyana. What does a breakeven look like at the end of the period as opposed to the average?
You're probably asking questions that I'll dive into a bit more detail when we get to Investor Day, Doug. You're right. What we walked through on this slide, and specifically on the bottom of the slide, where we did the walk from our current breakeven, you know, to that average in 2022-2027 of 35. You know, what I would tell you is, as a result of the comment with regard to the portfolio improvement continuing to take place over time, as you would expect, we start out, you know, at the higher end and then move to the lower end. I would tell you our progress, while not exactly linear, it, you know, continues to be fairly consistent over that period of time, and we'll definitely dive into that a bit further when we get to Investor Day.
Okay.
I would add, Doug, that the high end of that range is consistent with what we're showing in 2021.
Okay. It's probably below 35 is the bottom line at the end of the period.
Yes.
Arithmetically, it would have to be around. Okay. All right, thank you. My follow-up is actually, I guess it's a kind of a cash distribution question. A penny dividend increase, you basically did what Chevron did five years ago, but they didn't have the growth story. The free cash trajectory that we see is pretty significant this year beyond what you've laid out, even with the buyback. My question is: Could we ever see Exxon do, like, an interim dividend increase? Or put differently, what are you gonna do with all the cash?
I'm not gonna get out in front of the board's decision with regard to further distributions to shareholders. We've talked previously as we've looked at our dividend that some of the metrics that we look at is both our dividend yield relative to our peers' dividend yield, relative to, I'll call it, the total dividend yield on average on the market, as well as looking at our payout ratio. Our overall dividend size, you know, is larger than what our peers would be, and we have been more towards the top end of the range, both on yield as well as on payout ratio.
Obviously, as we see the improved overall results at the company, that naturally is starting to impact both of those metrics, which, you know, continue to be considered as the board looks to make decisions going forward. I'd say as we sit here today, we continue to feel pretty good about what our dividend yield is and its competitiveness.
Yeah. I would add, Doug, that, you know, the board evaluates that quarterly, so it's an ongoing discussion. We don't have a fixed time period. It's a function of the things that Kathy talked about.
All right. Thank you.
Next, we'll go to Devin McDermott with Morgan Stanley.
Hey, good morning. Thanks for taking my question. Stephen, congrats on the retirement.
Thank you, Devin.
My first question is on some of the structural cost efficiencies. You all have done a great job in bringing those to fruition here over the last few years, and are still talking about exceeding the $6 billion structural target by 2023. I can't help but notice that in the waterfall chart on longer term breakevens, you're showing an incremental $5 billion of cost reductions relative to 2021 levels. It would imply pretty significant increase in that longer term target. Could you talk a little bit more about some of the incremental opportunities that you identified? And I'd imagine that some of the structural changes at the corporate level that you've announced recently are part of that.
Sure. Just to be clear on the chart that Kathy walked folks through, the $5 that was shown on that bottom chart is $ per barrel. It's not billions of dollars.
Understood.
To be clear on that. I think the heart of the reductions that you're seeing as we go forward is a function of capturing the best of what the corporation can bring to bear in each one of our businesses. Just a little bit of background, Devin, we you know started with process safety and basically several years ago launched an effort to take the best thinking that we had in each of our businesses, bring that together, come up with one approach to managing process safety, and then roll that out across the organization. That has resulted in eliminating a lot of duplicate or parallel programs running in parallel. It brings cost. We've saved with respect to the work that we're doing in that space.
Much, much more importantly, we improved our results and have significantly reduced process safety events. We're continuing down that path. It highlighted the strength of kind of capturing the learnings that have occurred across our different businesses over the decades and the quality thinking that we have in each of our organizations, and bringing those experts together and having them address the problem on a corporate-wide basis is delivering good results. We saw the same thing with reliability when we brought, again, the best thinking of the corporation across the different operating companies together to solve the challenge of how do we improve reliability structurally and sustainably across all of our businesses. This team came up with ideas and implementations that once again, significantly lowered our cost and is improving our performance.
That is the kind of recipe that we're executing across a very wide range of opportunities. We're bringing in the maintenance activities and thinking about the above-site maintenance, what are the processes, how do you go about that into that same type of approach, leveraging the best of the corporation, which we expect to see significant improvements in our maintenance and turnaround spend. Technology and engineering that the new company or the new group that we're forming is basically again doing the same thing, best capabilities from each of our businesses. We have technology functions within each of our companies. We're bringing those things together, same with engineering. We again expect to end up doing things much more cost-efficiently for much more effect.
Those savings that we see going forward are really the result of a lot of different things being applied across a huge scale of our operations to significantly reduce cost. There are other opportunities in the future. Think about supply chain, think about some of the financial transactions as we've, over the course of 2018 and 2019, realigned our businesses and work processes so that now as you look across our different businesses, we're conducting businesses in a very similar back-office approach, so to speak, that gives us an opportunity to capture the synergies that exist between those.
A really broad range of opportunities as we kind of open the doors between the different businesses across our corporation, take the best that each has to offer, bring those together, and come up with an answer that's better than any one on its own. I think that again plays to the competitive advantages that I've been talking about since taking this job around leveraging our scale, leveraging the integration of our businesses, merely leveraging the functional excellence that each of these companies have developed, how do we better take advantage of that, and then leveraging our technology and bringing that all together by leveraging the capabilities of our people. That recipe is beginning to pay off. Frankly, hard to see where that ends with respect to the improvements that we've got lined up for the business.
Very helpful. Thank you. My 2nd question is on M&A. In addition to the high return investment opportunity, you highlight selective M&A as an opportunity in the slide deck. I was just wondering if you could talk in a little bit more detail about what strategically you'd be looking for at this point in time.
Yeah. I'll answer that, and then if Kathy has anything to add, I'll turn it over to her. You know, as we've talked about for quite some time, we do have an ongoing active M&A group, you know, we look for things that where we can in bringing it into our portfolio add unique value, grow unique value. It's got to be something that where we feel like there's a synergy or a fit with what we're currently doing to lever that value up and see accretion very early on. That's how we're looking at that, and we look at it across all of our businesses for opportunities. You've seen that kind of play out in the chemical business here with an acquisition last year.
You've seen it play out in our downstream business. I think that's a very active program. Bottom line is, you know, we've got to look at what that opportunity looks like in the context of what ExxonMobil can bring to bear, then make sure that we're in a position to effectively leverage our core competencies, skill sets, and capabilities to grow value beyond what either one of the companies could do independently. That's how we assess and think about that. Kathy, anything to add?
The only other thing I'd add is in the low carbon emission space, we're also actively assessing things, and we would have discussed the fact that we made an investment in Biojet. You know, I'll call it a biodiesel company that's out in Norway, where we also have an offtake agreement. We continue to look at opportunities in that space as well.
Thank you.
You're welcome.
Next question will be from Sam Margolin with Wolfe Research.
Good morning, everybody, and congrats, Stephen. Thank you.
Thanks, Sam.
My first question's on the emissions statement that you made where you're, you know, four years ahead of your target for 2025. It's interesting because the final data is not out yet, but I suspect that global emissions hit a record in 2021 just based on the amount of coal that came through the monthly supply numbers. You know, a lot of execution in the low carbon business is around policy and communicating to regulators, you know, what's most beneficial for society. In the context of ExxonMobil's emissions starting to fall and global emissions still rising, do you feel like your seat at the table has potentially improved or your influence is getting stronger, or is it still very early in the process?
Well, I think it's a great question, Sam. I think, you know, as we've talked about before, this is a really complicated space, and it deals with a really important part of people's lives and the resiliency of economies around the world. I think I've been encouraged, frankly, by the growth in terms of the folks who are working in this space and actively thinking through how best to achieve and address what we've been talking about for some time, the dual challenge. I think there's a growing recognition and a growing acceptance of the need for a variety of solutions and approaches to strike that balance correctly and make sure that we make progress on lowering emissions, but at the same time, don't compromise the quality of people's lives.
I think what we're seeing play out today in Europe, certainly, I think has made that point clear in terms of some of the challenges associated with moving quickly in this space or not thinking through all the potential downsides and unintended consequences. We've seen that here in the US with some of the tightness of supply. You know, that is the challenge. We're committed to helping society make that reduction. We are working hard to catalyze the right kind of policy to incentivize and to drive emissions down faster, while at the same time, protecting people's standard of living and livelihoods. There are options to do that. It does require some policy in different places.
We're seeing some of that policy manifest itself in some of the countries around the world, which underpins the work that we're doing in Low Carbon Solutions. That's a global business with opportunities that we see developing all around the planet and in many countries. There's policy in place today to support those investments, which is what's driving, certainly in the early days. Then I think those policies and investments set good examples for other countries to consider and to think about in line with the needs of their constituencies. I am encouraged. I do feel like there's a better conversation happening. Obviously a long ways to go there and a lot of work to be done, both from a policy standpoint as well as from the companies participating in the market.
Thank you. This is a follow-up about the Low Carbon Solutions organization in the company. You know, a lot of the efforts there are connected to existing operations, right? Carbon capture on facilities or biofuels coming off of refinery parks. Is the intent to fully disaggregate all of that from the base business so that we can map a revenue trend line and associate that with an emissions abatement number and watch it progress that way? Or is that more of an organizational function and not necessarily a financial segment yet? Thank you.
I'd say right now our focus is on building that third-party business, right? We have, I'd say, a huge number of projects in the pipeline. We feel very good about the progress that's been made in a pretty short period of time since we launched the Low Carbon Solutions business. We also have the overall activities in terms of reducing our own emissions. Those activities, you know, are really the prime accountability of the business lines. There's an overall, I'll call it corporate coordination, best practice role that's taking place there. That's part of what enabled us to actually expect to meet the 2025 goals ahead of time.
When we talk about our overall efforts as it relates to emissions in their entirety, we're always talking about what we're doing within our own four walls and then what we're doing to help reduce, I'll call it, our customers' emissions, or more broadly, what the company does in terms of the products and technologies that it offers in helping to reduce society's emissions with lower lifecycle emission-type products. That's how we think about it. Certainly, first and foremost, that third-party business is something we're focused on building today. We are not expecting that. That's gonna be a, I'll call it new segment that we're disclosing as opposed to just focusing on building that business, which is still in its early stages.
You can imagine, Pam, if you think about looking across one, our global portfolio and then opportunities with customers or third parties, is understanding, you know, what's the lowest cost of abatement. You know, how much CO₂ can you reduce for the lowest dollar spent? That group has a good perspective that we're leveraging across all the opportunities, whether they're internal or external. Frankly, if you look at the portfolio of opportunities that we're looking at as a company, there's a really good mix between what we're gonna be doing at our own facilities, opportunities to provide lower emissions products for our customers, and then opportunities to reduce industry-wide CO₂ emissions. It's got a good mix today. We're very early in this process. I mean, this is a very dynamic space.
If you think back a couple of years ago, hydrogen and carbon capture, and frankly, even biofuels were struggling to kind a be in the mix in terms of potential solutions. Whereas today, I think people recognize the importance they're gonna play going forward. I would just say it's rapidly evolving. There's a lot of interest. We've certainly had a lot of interest expressed in our business and the opportunities we're pursuing. I would say we'll keep talking about that, and you'll see that business grow with time as places around the world take the steps to make
Thanks. By the way, it's Lunar New Year, and it's the year of the Tiger, so that seems potentially significant. Thank you.
I'm glad to hear that.
Have a good one.
You too.
Next we'll go to Neil Mehta with Goldman Sachs.
Hey, good morning, team. Congrats on strong results, and congrats to you, Stephen, on your retirement here. A couple questions for you. The 1st is on the Permian. Darren, can you just provide an update on how you're thinking about prosecuting that asset? We heard from Chevron, they're thinking about 10% type of growth in the Permian in 2022 versus 2021. How are you thinking about volume growth? And then, in general, what is the right approach to maximize the value from the Permian relative to what you were talking about a couple years ago?
Yeah, sure, Neil. I think maybe I'll start with where you ended, which is what we were talking about a couple of years ago. Which you'll recall, we talked about, and I think the terms I used were, you know, right now the industry's playing a short game, and we're a long ball hitter, and how do you take the long ball game into the unconventional space? That led to the approach that Neil Chapman has talked about over the last couple of years with respect to setting up more of a manufacturing approach, and driving efficiencies, and driving technology and applications into those developments. That has worked very well, and we're seeing the results of that.
We grew our Permian production from 2020- 2021 by over 25%. Our expectation as we go into 2022 is to grow another 25%. That's we're you know doing that with a very tight control on capital. So that's how we're playing the game, and we continue to look at within our the approach that we outlined a couple of years ago and the success that we've seen with that, and bringing to bear a lot of the technology and application expertise, think drilling and reservoir management that the rest of the corporation has, really seeing the benefits of that. We're gonna make sure that we stay in that envelope.
Obviously, as we progress, production and development, new horizons are opening up, and we've got more delineation work to do that will continue to kind a grow the understanding of where the opportunities are, and we'll progress those in the context of staying within that concept that we've laid out, which we're seeing allows us to bring barrels to market at a very low cost. That's gonna be an important part of the equation, maintaining that low cost, high value operation.
Do you have a number in mind from a volume perspective as you think about this year?
This year, I think we're gonna be 25% up. We expect to be 25% up from 2021.
Okay.
Which is consistent with how the increase that we saw from 2020- 2021.
Okay, very helpful. Then I really like this exhibit or page 12, the slide with the breakevens. I know we spent a lot of time on it already on the cost and the volume side. The big number here is mix, the $9 a barrel. Can you spend some time talking about the composition of it? How much of it is upstream versus fuel versus chemicals, and any more granularity that we can expect at the Investor Day to help us break down the mix shift that you're seeing in the business?
Sure. Look, overall, the business composition by its nature is heavy Upstream relative to Downstream and chem. As you think about that mix, all of the businesses are contributing to the favorable mix. Upstream has an outsized contribution. You know, we talked about in our strategic plan that 70% of those investments were in, I'll call it, the strategic Upstream development area. Guyana, Permian, Brazil, bringing on more LNG. Those are really what are fueling, I would call the Upstream improvement in the portfolio. We also talked about, by the time we get to 2027 in Downstream and chem, you know, over 40% of the earnings coming from those high-value, high-performance products.
You do get a mixture overall, but obviously a very big change overall in the portfolio, coming from the upstream. Overall, that's what the big drivers are. We've talked about 50% of our volume from post-2020 startups in 2027, you know, from the upstream. Just to give you another stat, you know, in terms of how significant the mix change is there.
Darren, Kathy.
Thank you.
All right, next question will come from the line of Paul Cheng with Scotiabank.
Hi, thank you. 1st, Stephen, thank you for the help, and congratulations, and wish you a wonderful retirement. That two questions please. I think, for Darren, you guys have just announced the sort of a streamline topical restructuring. Historically that, your chemical and refining is already running as maybe as coordinated as anyone. I mean, 70%, I think, of your chemical facility linked directly to your refinery operation. You always in the management committee that have an executive sort of overseeing both chemical and refining. With this structural change, are we talking about major headcount reduction? Is that the rationale behind? How exactly the topic realignment really changing the way really seamless and one of the best in the industry in coordinating between chemical and refining. I mean, how is that really going to change that process and further improve?
Yeah.
And-
Go ahead.
Maybe after that then I will ask the 2nd question.
Okay, yeah. I think, you know, a good observation, and I would echo the point you made, which is if you look at our chemical and downstream business historically, they have been very well coordinated, I think among the best within the industry. I would say, though, there's a difference between coordinating between two owners and then having a single owner, and we really see the opportunity as to have one set of management overlooking those businesses and making sure that we're prioritizing across those businesses and those resources. Making sure that we're prioritizing not only the investments that we're making in the facilities but the allocation of the resources, our technical resources, our engineering resources, and pursuing the highest priority payout opportunities across those two. It's difficult to do today across two separate organizations.
This will improve upon that. We've got a good base case. We think we're gonna make this even better. We've demonstrated the power of that to ourselves, frankly, in a couple previous organizational changes. I'll just take the upstream business. When you think about the functional companies that we had in our upstream business, many of them working very closely together and coordinating. We then consolidated all those businesses from seven, three, two, and now down to one. As we step through each of those, despite what I would say is the best intention of the organizations in working collaboratively together, you get a step change in performance and opportunities to reduce cost and becoming more efficient as you consolidate those. We're gonna see, we believe, the same opportunity within the downstream in the Chemical portfolio.
The other point I would make, which I don't wanna go unrecognized, is by taking and centralizing what I will call is service delivery processes out of those businesses, and again, bringing the best the corporation has to offer, and then high grading the thinking there, as I talked about with process, safety, and reliability. Doing that in maintenance, we think is gonna drive a step change improvement with respect to how we execute maintenance across the entire portfolio. There's this opportunity to consolidate expertise and then leverage that across all of our operating companies. Those two things I think are gonna be very, very critical. The third point I would make with respect to headcount reductions, that's not what we see driving this improvement opportunity. We made those tough decisions back in 2020.
We recognized how hard that was gonna be on the organization, and we stretched ourselves to make sure that when we put together our plans for that, as best as possible, comprehended what was to come and made this, you know, a one-time deal as much as we can, and therefore stretch ourselves to then move the organization to the level of efficiency that we need to support the lower staffing. That's the work that we've been doing. Obviously, as attrition has occurred within our company and the industry more broadly and across the economy as a whole, we've been very thoughtful and cautious about what positions we fill and how we manage that attrition.
Again, continuing to think through opportunities to get more efficient and take advantage of the attrition to make sure that we're managing our staffing in line with what we see as the ultimate opportunity. When you put all that together, we feel like we're in a fairly good position to execute this and not have the kind of, you know, one-off large redundancy programs that we went through in 2020.
Okay. Thank you. The 2nd question maybe is for Kathy. That at 20%, 21%, that the capital at a $90 oil price obviously is extremely comfortable, and one may argue that maybe it's low leverage. The volatility in the market is unpredictable. From that standpoint, given you are generating a lot of free cash, should we continue to put a portion of that into the balance sheet, into the cash until you reach maybe an ultra-conservative such as zero net debt? I mean, if you look at in 2020, if you have a zero net debt entering into the downturn, that's tremendous opportunity, whether it's from buyback or other things that you can do.
Is that a reasonable approach for a business as unpredictable and volatile as oil and gas? Or that you think that's just purely not efficient use of capital structure? On the side, quickly, if I can sneak in this. Can you talk about your US cash tax payment position over the next several years? Thank you.
Okay. Overall, we would absolutely agree that during the best part of the cycle, we need to be really restoring our balance sheet and giving ourselves plenty of flexibility to contemplate what's ultimately gonna be the down part of the cycle, which is difficult to call. You would have heard me make commentary that we are going to further reduce our debt. We certainly think getting to the low end of, I'll call it, the total debt-to-capital range is something that we're absolutely targeting and expecting to achieve this year. Relative to where we've been historically, I'd say carrying a bit more cash is within the expectation as well.
I would say we're very aligned in understanding that during the top part of the cycle, we really wanna make sure that we've built in a whole lot of flexibility and completely restored our balance sheet, continue to have really strong credit ratings. We wouldn't today sit here and say, we think we need to have zero net debt or carry zero debt overall. That debt does serve also as a little bit of an offset, you know, against inflationary pressure to some extent. I'd say we feel pretty comfortable that we're getting the balance right, you know, in both ensuring we have a strong balance sheet and plenty of liquidity. During this part of the cycle, making sure that we have a path forward to continue to have that flexibility and return excess cash, you know, within our capital allocation priorities to shareholders.
Yeah. I would add, Paul. I don't think you have to go too far back in time to just test how resilient the strategy that we had in place with respect to capital structure was. I mean, 2020 in the pandemic, and we saw the worst conditions in this industry in living memory. The fact that we managed through that extreme set of circumstances, maintained our commitment to our shareholders, continued to pay dividend, managed our capital program, and basically kept all those projects that we were pursuing alive and slowed some of those down, paused them, kept others going. That balance that we struck going through those extreme challenging times, I think demonstrated the robustness of the approach that we're pursuing.
I'll just come back to your second question. I'd say as we look forward in the near term, just the next few years out, we don't really see our US cash kind of tax position changing, but that is with a big caveat that there's obviously been a lot coming forward in Congress with respect to potential tax changes. While the Build Back Better bill did not kind of ultimately go through, I also don't think it's entirely off the table in terms of coming back and seeing something smaller, but likely to still have various tax provisions in it. That's how you should think about it for the moment before we see any other legislative changes.
Thank you.
Operator, we probably have time for one more caller.
Okay. We'll take that last caller. It'll be Roger Read with Wells Fargo.
Yeah, thanks. Good morning. Sneaking me in here at the end. I'd like to ask, international gas was exceptionally strong. I don't think it's a stretch to understand why, but I was curious as we look between LNG, you know, domestic sales, wherever those occurred, and then, you know, you had talked about building up a trading organization, and I was curious if that was a positive contributor this quarter.
Sure. Well, I think, you know, the story around natural gas is pretty well understood with respect to the tightness that we're seeing. You know, the majority of our sales of gas are contracted under long-term contracts, so limited opportunities to make significant changes in the short term. I would say that we do have a very active trading program, and we continue to grow that, and our expectation is that we'll continue to grow that. I think that's gonna play a bigger role as we go forward. But I don't think as you look at today's results, it's you know, the value that you're seeing is basically being driven primarily by the base business.
Okay. Any changes in terms of your LNG outlook, particular projects? I know there's been talk of bidding on some things in Asia Pac market or East Asia, maybe I should say, in terms of new facilities. Just curious if there's been movement there. You talked a little earlier about the outlook with PNG, but you know, whether it's Middle East, Asia, or Gulf Coast, just curious in terms of expansion.
Yeah. I would say there's nothing has changed per se. I think, you know, we have, as you know, a fairly broad portfolio of opportunities that we've been working, and we continue to work those. If we can find those projects which deliver the kind of returns at the cost of supply that we think is needed to compete over a very broad range of future scenarios, that we'll pursue those. You know, that's kinda how we're thinking about it. I would just say the work that we're doing in that space today is consistent with the work we've been doing for some time now. There are opportunities out there that we're evaluating, but they need to be competitive in the portfolio, and they need to be competitive long term across a very wide range of future scenarios.
Yeah. No change with the big projects that we're progressing. Obviously, we've got the Mozambique Coral South floating LNG project still expected to start up towards the end of this year and continuing to progress the Golden Pass project.
Great. Thank you. Good luck, Steven, in your retirement.
Thank you very much, Roger. I'd also like to thank all of you for your time and thoughtful questions this morning. I'd also like to thank you for the opportunity to work with you over the past couple of years. I look forward to introducing you to Jennifer. With that, I hope you enjoy the rest of your day. Thank you, and please stay safe.
Thanks, everybody.