Good morning, Bob Brackett at Bernstein here. I am Bernstein's Energy and Transition Senior Analyst. Welcome to the second day of the 41st Strategic Decisions Conference. We are not expecting a fire drill, so if you hear the fire alarm, please take it seriously. Your primary exit is directly to the left of me where I'm pointing now. If for whatever reason that is blocked, you will go out the door to the right. There's a second exit right here. Both take you down to the street. You'll exit and wait for further instructions. This is your fireside chat. You'll see on the screen behind me, and once these slides come off, a QR code that will take you to an app that allows you to ask questions. Please ask questions. There they are. You'll see that after Neil presents a bit. They'll come up to the iPad in front of me.
I will look at them, organize them, and continue the conversation. As I wait for your questions, we'll structure this like a pyramid principle. We'll start by talking about macro. We'll move on, talk about strategic issues, financial strategy issues, and then move into operations. That's where we're heading. With that, I will sit and I will introduce Neil Chapman, Senior Vice President at ExxonMobil, who will walk us through a few slides before we start chatting.
Yeah, good morning, everybody. I'm not gonna spend a long time on the slides. We'll get into Q& A rather quickly. I do wanna spend just a little bit of time for the folks who are not so familiar with ExxonMobil and not so familiar with our industry, talking about what we've been doing and where we're headed. I'm just gonna use three or four slides to do that. Bob, you'll recall, we held an Investor Day down in Houston in December. In that Investor Day, we described what we've been doing for the last five years and what our plans are for the next five years to the end of this decade. The headline is that we have completely transformed this company. We've re-engineered it.
We've rewired it in five years to become, by far and away, the most competitive, the most—the highest returns of any company in the oil, gas, and petrochemical business. We've taken close to $13 billion of structural costs out of the business. We've divested over $25 billion of less productive, non-strategic, lower-return assets. We've added the highest-return portfolio in investment and development opportunities this corporation has seen in decades. The net result of that is that we grew cash flow, and we've grown earnings at constant prices and constant margins over the last five years at 8-10% per year. We laid out the plans going forward, which is more of the same. We'll be executing this most attractive investment portfolio we've ever had, highlighted by the picture on the chart in front of you, which is one of the production vessels in Guyana.
We will triple the capacity of our Guyana operations in the next five years. We will add 50% to our high-return Permian assets. In the downstream, we've got a whole series of projects taking low-value products, part of a refinery—think about carbon black, think about pentanes—the lowest value, upgrading them into more attractive, higher-value molecules. The result of that is we have a very high confidence set of investments and further restructuring of the business, which will continue this 8-10% earnings and cash flow growth through the end of the decade. That is unprecedented in our industry to grow 8-10% per year over a decade at constant prices and constant margins. That is reflected in consensus. When you look at consensus, you'll see now there is already today a big differentiation between this corporation and the rest.
Going forward, you'll see that cash flow growth continues to grow for this corporation. It's pretty flat to down for the other majors. Turning to the slides, I'll go straight to the slide, which is number three for those online. It's labeled ExxonMobil at a glance. I'll just be very, very brief. We're organized into three different segments. On the right-hand side, the upstream, that's oil and gas. That's finding oil and gas, getting oil and gas out of the ground. We then have product solutions. The objective of the product solutions organization is to take those oil and gas molecules, upgrade them to higher-value products. You'll be familiar with diesel and jet fuel and gasoline, but we also make synthetic lubricants, high-value plastics, high-value rubbers, and elastomers in our chemical business. The final part is this low-carbon solutions.
During this period, the last five years, we launched a low-carbon solutions business. Bob, I'm sure we'll get into this a little bit. We're not focused—we're not participating in the renewable business. We're focused on carbon capture and sequestration, none to low-emission hydrogen, biofuels, and lithium, which are all technologies and products that play to the core capabilities of this corporation. Just under the picture, you'll see this expression, "We're working to solve the AND equation." That is at the core. It's a philosophy that's at the core of all of our strategy. The world needs more oil, needs more energy. The expectation is, with the growth in standard of living around the world, with AI, the energy demands in the world will continue to grow through 2050. It's estimated there'll be 15% more energy required despite the efficiencies between now and that time.
The world needs reliable, affordable energy. It also needs to reduce emissions. That is why we call it an AND equation. You have to grow energy supply. You also have to reduce emissions. That is at the core of what we believe in, and we believe you can do both. You can see some metrics there. Last year, it was a $34 billion earnings business, $55 billion of cash flow. You can see last year we had 11% total shareholder return, and the enterprise value of this corporation is just about half a trillion dollars. Gonna skip over that slide. I talked about the growth for the future between now and 2030. Actually, we call it 2030 in 2030. Between now and the end of the decade, we are gonna grow earnings at constant prices and constant margins by $20 billion.
We're going to grow cash flow at constant prices and constant margins by $30 billion. That reflects this 8-10% CAGR in earnings and cash flow through the decade. If you own our stock, what do you get? This is the way we like to think about it. You know, we have a consistent and growing dividend. We've grown the dividend of this corporation for 42 years every single year. I think, Bob, there are just three companies in the S&P who've done that. We have a share repurchase program. This year, we plan to repurchase $20 billion of stock. We said, subject to reasonable market conditions, we'll continue that next year and repurchase $20 billion of stock. By the way, in just 12 months, we've bought back a third of the stock that we issued when we bought Pioneer, what, 12 months ago.
The 10% earnings growth you can see. You'd anticipate you own this stock an 18% annual return. You can look at the five-year and that little table there. ExxonMobil total shareholder return close to 15% over the last five years. You can see that's above all of the other energy stocks. You can see it's above the S&P industrials. Bob, I'll go straight into questions, but that gives you a perspective on what we've been doing in the company.
Fantastic. Thanks for that. Neil and, colleagues in the back, maybe we can put that QR code up again as well. Perfect. I'll start with some questions. I'll start with the concept of outlooks. There's two types of outlooks. There are normative outlooks, and there are predictive outlooks. Everyone in this room is in the business of predictive outlooks. They are trying to predict the future. A normative outlook is how we would like the future to be. In the oil space, energy space, something like the IEA net zero emissions scenario is a normative outlook. It is a world in which emissions fall to zero rapidly, in my view, unachievably, but it's very much not predictive. Every year, you all put out an annual energy outlook. Tell me whether it's predictive or normative. I think I know the answer.
Give me a couple highlights of how you see the energy transition playing out.
Yeah, I think, Bob, people get seduced by what they want to happen. Everybody wants emissions to go to zero. It's normal. It's logical. When the IEA scenario that you talked about, which was going for the world to go to net zero by 2050, we were very, very clear when that was published. It is not possible. It is not affordable. It is not going to happen. Back in that time, we were continuing to produce an energy outlook which we say is realistic, and it's affordable, and it's the most likely scenario. It was not popular. If you go back 10 years when we were every year putting out that, we were described as impossible. You're a misbeliever. It's not going to happen. Now, 10 years on, what's happened?
I mean, the reality is we're not even close to the pledges that governments have made in terms of reducing net zero. It's not for the want of trying. It's just a massive energy system. And energy is so pivotal to an economy. You've got to have reliable, affordable energy to grow an economy. When you get a big disruption like the Russia invasion of Ukraine and gas was suddenly no longer coming from Russia into Europe, it's highly, highly disruptive. I think what happens is reality starts to set in. If you go back 10 years, there was a tremendous number of third parties predicting us going to net zero, oil and gas going away in the very, very near term and the short term. The reality is you don't see those predictions anymore.
You do not because I think people have started to understand what it will take. We do need to get emissions down. We will, as a society, get emissions down, yet it's an AND equation. You have to continue supplying energy. People are coming out of poverty in the developing world. I mentioned the data centers. It's enormous increased energy. You have to supply it. We produce it every single year. You'll see the consistency of our energy outlook go back 20, 25 years. We do in-depth analysis every single year on what's happening. We have signposts on what changes are. It doesn't materially change. The reality: the world's gonna need about 15% more energy in the next 25 years versus what it has today. That's despite all the improvements in efficiency.
The world will reduce emissions, we think, by about 25% over that period, but it will not go to zero. It will not. Oil or gas will still remain 50% of the energy mix in that period, at the end of that period.
In that outlook, you spend a lot of time talking about demand drivers, some of the supply drivers. Price generally is omitted. Talk about the world of price in which that outlook sits. We'll stick to two commodities: oil, and then tell me how bullish you are on U.S. natural gas.
You know, for those less familiar with this business, it's what we call a depletion business. I always just like to use a bottle of water, so I apologize for the folks online, but, you know, when you search for oil and gas, you penetrate a reservoir which has a fixed amount of oil in it. So my bottle is a reservoir of oil. You find the reservoir, you start to produce the oil, but when that reservoir is empty, your volumes go to zero. Your cash flow goes to zero. You have to find more. It is not easy to look a mile, two miles under the surface of the ground to find oil. What happens? Without investment, the volumes in this industry will go down about 10%, 10% every single year. That's what the depletion is of this industry.
In other words, you have to add about 10% new capacity every single year just to stay flat. What does that mean, to come to your question? It means the supply and demand always gets into balance. Yes, you're gonna have periods where there's an oversupply in a weak economy and price will fall down. Yes, you'll get periods when the economy is booming and supply can't get back in balance, and you'll get high prices. The reality is, no matter what it is, it always gets into parity on average. Even when oil and gas demand goes down, and there are some parts of oil and gas like gasoline where the demand will go down with the penetration of electric vehicles, the supply and demand gets back into balance.
We believe even if the market shrinks in the future, because it's a commodity, because it's a depletion business, supply demand gets into balance, so the price will always be set by the price of the incremental barrel. That's the way we see it.
I didn't hear a number in there, and that was probably deliberate. I'll redirect then. Talk about your number and talk about the role that cost of supply philosophy plays and how you allocate capital.
Yeah, I mean, I talked about rewiring this company, and I talked about re-engineering this company. It's a commodity business. You have to have the lowest cost of supply. So we're investing plus or minus $28 billion-$30 billion of capital per year over the next five years. We set a clear criteria for our organization. We will not invest in an oil development unless it has less than $35 cost of supply. What does that mean? That means if the price of oil is $35 or lower for the next 20 years continuously, you know, it has never been less than $35 for more than a few months in the past, but let's just say it does, we'll still generate a 10% return on all of our projects. That's the criteria we set.
Of all of the investments that we're making in the upstream in the next five years, its average is greater than a 40% DCF on all the capital we're investing. That is the differentiation between the investment portfolio we have. That is the way I think, and it's exactly the same in gas, Bob. The equivalent in gas to $35 of crude oil is $6 per million BTU of gas. We will not invest unless we can get our projects to at least meet that hurdle. You go into some of our most attractive, like Guyana and like the Permian, it's way south of $35 a barrel. We've never had a portfolio this attractive, I would say, certainly in decades and back in any memory anybody has.
It would be probably the 1970s, but that's.
I think maybe even before that, frankly. I don't know.
Talk about the near-term outlook then. You, you, we've laid out this long-term outlook: robust demand for hydrocarbons, out to 2050. Where are we today in the oil price cycle?
Yeah, I mean, prices have softened. You know, the last couple of years, prices have been in the $70s and low $80s, and today they're in the $60s. Why they're in the $60s? I mean, most the oil price is a commodity. It's set, the price is set by sentiment. It's set by fundamentally supply and demand. If you look at the demand for crude oil, actually the highest demand this world has ever had for crude oil. This year will be the highest consumption of crude oil in history. Last year was the highest consumption in history, the year before. The demand is actually continuing to grow. Of course, we all know what the narrative is on the economy. People are nervous. People are conservative. There is somewhat of an expectation in the market that demand will soften.
We're not seeing it, but that sets the sentiment. On the supply side, you know, OPEC play a big role, and OPEC announced that they're going to put a few hundred thousand barrels in the market. This is a 100 million barrel market. The sentiment, the sentiment really influences the price. What OPEC have talked about putting more volume onto the market, it's not really very material. When you get the sentiment of a weakening economy, the sentiment of more supply, prices tend to fall. You see they fell quite quickly, and now they started to come back. Price today is, I would call it mid-range. Brent is $65. We would see that as a long-term mid-range price.
Is there anything particularly strange about the cycle we're in now, or is this just a, a normal oil price cycle?
No, I think it's a normal oil price cycle. I would say in the gas business, it's a little bit different. You know, Europe gas supply was primarily supplied by Russia, pipeline gas into Russia. After the Ukraine crisis, and that supply went down, the world went short of gas. You saw this explosion in gas price. Just to give you a sort of simple metric, the normal gas price in Europe would be in the sort of $8-$10 per million BTU. After the Ukrainian crisis, the price went up to $60. I mean, totally unaffordable, devastating for the European economy. Now, what's happened is the world's come back into balance. More supplies come in. Some of the people have moved away from gas.
The price has come back down into a, I would say, a more typical range, but Bob, it still carries a premium because that Russian gas is in out of the market. In normal demand scenario, gas is extremely tight. Instead of a typical $8 in Europe, you'll see today the price is sort of $12-$13. That's unusual.
If we move to the regulatory environment, what would you like to see? Anything more clear in today's regulatory environment?
Yes. I mean, yeah, here's the challenge, and I'll just focus on the United States. It is ludicrous, completely ludicrous in this country how long it takes to get an infrastructure permit. That's what this government needs to focus on. You can't build a pipe anywhere outside of Texas in this country. To get a permit to drill takes forever. There is no logical reason. It's not like there needs to be a lot more analysis. I'll just give you an example that's very familiar to everybody in our industry. To get a permit to drill a well in the unconventional Permian in Texas takes about two months. To get that same permit to do the same analysis on federal lands in New Mexico takes about two years. It's exactly the same process. It's woefully inefficient. It costs society a lot of money.
It costs the economy a lot of money. I'm very, very pleased that the current administration is absolutely focused on that. I talked with Chris Wright just recently, and that's his focus to streamline this process. It's not to change the analysis. That's appropriate. It's to streamline the analysis. Bob, time's money.
We're gonna switch and we're gonna talk upstream strategy. There's some specific upstream questions I've got that we'll get to. I do wanna frame the high-level strategy first. ExxonMobil is a company that produces around 4.6 million barrel oil equivalent a day. You have a path to 5.4 million by 2030. You plan to grow the Permian by 0.8. That covers all of that growth. You have Guyana, your working interest there, and then you have some Brazil, and you can throw in some LNG. How does that math square? Is that 5.4 target conservative, or does it embed some disposals and declines in the non-core?
First of all, I'd say 5.4, this is the highest production ExxonMobil will have had since the 1970s when we got nationalized in Saudi Arabia. The highest. I go back to my bottle. If you just say we're 4.6, 4.7 million barrels a day and we're going to be 5.4, that is true. The 4.7 is declining at 10% per year. What you're doing is you're replacing declining reservoirs that are emptying with new reservoirs. Guyana, we're going to triple the capacity in Guyana. We've got three boats online today, three production facilities. We'll have eight by the end of the decade. We will add 50%, as you say, to the Permian capacity. A lot of it is offsetting depletion. What's really important is these barrels are way more profitable than the barrels that are getting replaced.
The barrels in the Permian, the barrels in the production in the Permian, the production in Guyana are by far and away the most attractive in the industry. Not only are we growing, Bob, in terms of total volume, we're upgrading the mix. We've doubled, doubled the earnings per barrel over the last five years of the upstream production. Same production rate as we had, a little bit higher, not much, but we've doubled the earnings per barrel. That's the difference in quality at constant prices.
We have a question on a specific asset, update on Golden Pass timing.
Yeah, Golden Pass is, it's a liquefaction. We are taking gas from the U.S. market, liquefying it, and putting liquefied natural gas into the world market. I talked about this demand for gas in Europe with the Russian supplies being eliminated. We are in that business of liquefaction in the United States at Golden Pass for one reason alone. Back in the early 20 years ago, the expectation on the energy outlook was that the U.S. would be a massive importer of gas. The Gulf of Mexico was coming to the end. This was pre-unconventional development. What happened was the unconventional technology development unleashed this extraordinary reservoir capacity of gas in this country, which now means the U.S. is exporting. ExxonMobil and QatarEnergy had built an import facility. This goes back the 15, 20 years.
We have a really low-cost way of converting the import facility to an export facility. Easily the lowest cost liquefaction investment in this country, you know, by design. It's 18 million tons. ExxonMobil has 30%. QatarEnergy has 70%. The first of the three lines will be completed and online at the end of this year. The other two will follow in the coming months.
We have a number of questions around Guyana, relative to arbitration proceedings with Hess. They have two broad flavors. One is, can you give us an update on where those arbitration proceedings are? The second is, what does life look like after the arbitration proceedings are over in terms of operations and working relationships? Maybe tackle the first.
I mean, you know, one of the unfortunate parts about this whole arbitration and proceedings is it's in the public domain because it's all associated with Chevron's purchase of Hess. Contractual disputes are not unusual in this industry, but normally they're not in the public domain. This one obviously is. We believe, and our partner, the Chinese CNOOC, believe very, very strongly that we have the right of first refusal. In other words, we can match a purchase price. That's typical in the industry. Obviously, Hess and Chevron have a different view. It's a contractual interpretation. When you can't resolve between yourselves, you go to arbitration. Those arbitration processes are written in the contract. The arbitration process is at the ICC.
The ICC sits as a panel of three judges, and they will opine on does ExxonMobil and CNOOC have the right of first refusal, the preemption right. Actually, the hearing has just taken place, but I mean, the hearing is kind of a conclusion of a whole series of submissions that concluded actually this week. And then the panel have a period to opine to come to a decision. I don't know exactly when they'll come to a decision. All I can tell you is the typical timeline of the arbitration in that court is two to three months. And Bob, what was the second part of your question?
The second part is,
Our relationship.
The relationship post.
Yeah. I mean, I think, you know, one of the things, Hess is a partner in Guyana. You know, they have 30% equity in Guyana. They have been a very, very good partner, and they continue to be a very good partner. Actually, at a working level, at an operating level, zero change. This is a contractual dispute that happens, but in terms of operations, in terms of investments, we're 100% aligned, no change at all. You know, we're confident the judges will go in our favor, but if they don't and Chevron can purchase Hess, Chevron becomes a partner instead of Hess, it's no change for us. It's no change at all. It's just business as usual. We will continue. We believe strongly you have to protect your contractual right. The Chinese believe the same thing, and that's why we're into arbitration.
If the judges decide that's not the case, then we get a new partner. Business carries on as normal. I would tell you, we have partnerships with Chevron all over the world. There's been no change in terms of how we're working together at all.
You can see that, obviously in the headlines this year, the ramping of Tengiz Chevron towards a million barrels a day where Chevron's the operator and you are the partner has, to date, gone extremely well.
I don't agree with that. I mean, the startup has gone extremely well, but this project is way over budget and way, way late. I mean, years late. The execution of the project is something we're very, very disappointed about, as are the other partners. This happens. When you go into a partnership and you have a lead operator, that's what happens. We're very, very pleased that it started up eventually, and we're pleased with the process of starting up, which have been, have been very well executed.
Very clear. I will amend my sentence to say this year in 2025, the ramp-up to a million barrels has gone very well with the two of you being involved. We do have another upstream question. Do you have discussions with hyperscalers to build natural gas plants for data centers?
Yeah, we do. Actually, we're pursuing an off-the-grid major power decarbonized power plant specifically for the hyperscalers and for a big data center investment. The thing is absolutely colossal. Bob, I want to be clear. We're a hydrocarbon company. That's what we're good at. We're not an electricity company. We're not an electron company. We do not have interest in power generation. We're not in wind and solar. What we do have interest in is the desire by these hyperscalers. You know who they are. They want net zero power. With a data center, the intermittency of wind and solar will not meet the need. The only way to do this quickly is to do it off the grid, gas-fired power generation.
We can do that at net zero emissions because our Permian production at the end of this decade will be net zero in terms of gas production. When you burn gas to produce power, we are capturing all of that carbon dioxide. We're concentrating it, and then we're injecting it back into the ground where it came from. That's what you call carbon capture and sequestration. What we're interested in is supplying differentiated low-carbon natural gas. What we're interested in is the carbon capture and sequestration. This will be the largest carbon capture and sequestration project anywhere in the world. We're already the only company that's doing this at scale. We've contracted order of magnitude nine million tons now with different companies to capture carbon dioxide, stop it going into the atmosphere, secure it underground, miles underground, where it came from. That's what we're doing.
You know, we'll see. You know, the reality is if you're going to have a natural gas power station and you're going to add the decarbonization, it's going to cost more because somebody has to pay to do the carbon capture and sequestration. I think the hyperscalers are so adamant and so keen to have net zero power. I will see, but right now they're prepared to engage in that project.
Arguably have the healthy margins to absorb it.
I think they, I suspect that's the case. I mean, I just think power generation in the, the total cost profile of a hyperscaler is relatively small. The only thing that's interesting to me, it's absolutely massive. These data centers are colossal, colossal. The energy demand is quite extraordinary. So yeah.
Yeah, we talked in two, two comments there, a comment and a question. You know, a gigawatt data center is a city of 500,000 plus people. So if you are adding the capacity for a gigawatt, you are building a new city the size of Pittsburgh, Boston, whatever, from scratch. You mentioned off the grid, but not, not off the pipeline grid, but more you're talking about off of the electricity grid behind the meter, independent of.
Yeah.
The grid.
Yeah. That's what we're doing behind the meter. I mean, regulation, it took a lot to get it on the grid. I think they want to move really, really quickly. I mean, there is an urgency and a timeline for these hyperscalers. You can't build things like nuclear that quickly. What we have is we have gas readily available. We have a site readily available. You need a lot of water, with a lot of water readily available. Most importantly, you can't just inject carbon dioxide into the ground anywhere. You have to inject it where the geology will allow you to stick it in the ground and secure it forever, for a long, long time. Movement of those carbon dioxide molecules from this power plant to the right geology requires logistics. I just talked about the challenge of logistics.
We purchased a company called Denbury a couple of years ago, which has the only major single carbon dioxide pipeline that runs from Mississippi all the way to Houston. We are leveraging that to get those molecules from the power plant to the right geology on the Gulf Coast.
One could almost narrow down where this hyperscaler can be given, given the constraints of water and a CO2 pipeline and a reservoir. I will leave that for clever people in the audience. We do have a question that allows us to move more into the integrated portions of ExxonMobil. You stated there's no softening in demand. Can you provide more color on demand trends in your refining business?
Yeah. I mean, a refinery, you know, people think of these plants as refineries. We think of them as manufacturing units that can make a variety of products. We're very, very different. Our refineries are connected to chemical plants. A typical refinery in this country was constructed to produce gasoline, diesel, jet fuel, maybe some base stock lubricants. Our plants are integrated with chemicals. So we can take some of those molecules from a refinery, put them into a chemical facility, and make plastics, polyethylene, polypropylene, specialty plastics with unique technologies. The demand for those plastics with unique technologies are growing very, very rapidly. The demand for gasoline in the world is going to peak and go down with electric vehicles. If you have an isolated refinery, you've got a lot of challenges.
If you have a refinery where you can move those molecules to make higher value-added product, it gives you that flexibility. You have to have the technology to do that. We've been investing in that technology on how to upgrade those molecules for decades. I'll just give you one example. Proxima. Proxima is a new-to-the-world product, extraordinarily strong, extraordinarily lightweight. This goes into things like wind turbines, lightweighting a vehicle where you need to lightweight to get more out of the battery, but you need the strength, obviously, for safety reasons. It's replacing rebar in concrete, much lower cost, stronger. We're making it. We're producing it from molecules on a refinery that are worth less than the feedstock, a barrel of oil.
It is that technology that you have invested in for many, many years to think about these assets as not just producing transportation fuels, but how do you get the maximum value out of producing a variety of products from those very same assets? That is a unique strategy. It is one that we have been pursuing for the last decade plus. You know, we talked a lot on the investor day in December about how we are upgrading all those molecules into a whole variety of new products.
Yeah. I do wanna highlight Proxima because it's easy to come up with a brand name, right? And Proxima sounds kind of cool. It is more difficult to win the Nobel Prize in Chemistry. So Robert Grubbs won the Nobel Prize in Chemistry, founded a startup to take his ideas and commercialize them, and then you bought him out. So Proxima ultimately came from Nobel Prize-winning Chemistry. Is that fair?
That's fair in terms of the product, but the products have been around for quite a time. The problem is the feedstock. You have to, it's dicyclopentadiene, which does not matter. It's just a lot, a lot of words. To produce that product, it's a byproduct of what we call steam cracking today in very, very limited supply. The key to this whole explosion is not just the invention that you talked about, which is really, really interesting, but how can you make more of it? How can you make more of it at a low cost? It's the catalyst technology that we have invented to take pentane, which is a product, which is a molecule you really do not want in a refinery. It's really low value. Upgrade that molecule to the feedstock to produce Proxima. It's a combination of the two, Bob.
I think that's, that's so, so typical of what we do as a company. We find ways to upgrade molecules to get better value.
Let's move to financial strategy. Let's talk about one of the slides you showed. The pace of buybacks this year is uninfluenced by the macro environment, which we discussed. You've talked about it being subject to market conditions next year. Talk about the balance sheet and the ability to deliver those buybacks. What do market conditions next year look like that would prohibit that?
Maybe I'll just take that in this. I'll come to the answer, but it's an important point to say in a business like ours, which is a capital-intensive cyclical business, if you want to maintain a consistent distribution to the shareholders and fund your capital investment when the crude oil price is going up and down, you need a strong balance sheet. It's so fundamental to what we do is to have a strong balance sheet. You know, we have a double-A credit rating. I think there's just three companies with a higher credit rating in the S&P, higher than ours. We've got 7% net debt to capital. We have tremendous capacity and flexibility at low prices to continue our investments 'cause we know the price is gonna come back again. We have the flexibility to cut back if we want to.
The way we think about capital allocation is this, and it's in a sort of seriatum. First of all, I'll go back to my bottle. You have to continue to invest. If you don't, your volumes and your cash flow are going to go down. It is a complete fallacy for companies to say we're cutting back on capital for capital efficiency. You can do that today. You'll pay a price in the following years. That's what you see in the industry. We're gonna continue to invest in high-return advantage products. That's the first priority in our capital allocation priority. The second priority is to maintain the quality of the balance sheet. It's essential in a business. Capital-intensive, cyclical, you must do that. The third is distributing to the shareholders. We have a dividend, which we've increased every year for 42 years.
As I mentioned, there's only a couple of companies that have managed to do that. We think a flexible, tax-efficient way of continuing to reward shareholders is share buybacks. Bob, you know, as I mentioned, we are on a program today which is $20 billion a year this year and next year. We say subject to reasonable conditions. You know, if you have a big incident like COVID, that may change something. What we want to do is try and have a consistent routine distribution to shareholders. That is what we mean by reasonable. I think you've always got to put some qualification, but our intent is to maintain that. As I mentioned, you know, we've already bought back a third of the shares issued for a $64 billion Pioneer acquisition. Yeah, that's the way we think about it.
By the way, can I just add one more thing? Just 'cause it's interesting that I went back to, I was talking about this plan through 2030. If we were to maintain our dividend at the level it's at and we were to fund our capital program, which is about $30 billion a year, we at constant prices, I think the current price, $65 a barrel, constant mid-range margins will generate $165 billion of free cash flow between now and the end of the decade. $165 billion at mid-prices. That's the flexibility that we have.
Never waste a good crisis, someone has said at some point, but not probably during a crisis. You didn't waste the COVID crisis, and industry didn't waste the COVID. One would argue that weak market conditions are a much greater opportunity for ExxonMobil in sort of three ways. You know, one, an opportunity to buy your stock back at a discount. You know, two, an opportunity to structure costs, approaches. Everyone's not too busy drilling wells, and so there's time to focus on the cost structure. And the third is to be opportunistic, where companies with balance sheets that weren't ready for the crisis look interesting. If there's a crisis next year, how would you balance those three opportunities?
You have to have a long-term strategy in this business. We do not change the strategy. What we can change is the rate and pace of execution of that strategy. That depends, can depend on opportunities. Look, I always go back to my bottle. I gotta keep replacing these reservoirs. You do it through exploration. Exploration is a tough business. You gotta go and try and find oil two miles underneath the surface. It is not that easy. You have to have a contingency plan. A contingency plan is if there is a company out there which is more valuable to us than it is to them, in other words, we can produce oil and gas cheaper and get more oil and gas out than the incumbent, then that is an opportunity. That is why we bought Pioneer.
Pioneer have a tremendous amount of undeveloped reservoirs, which with our technology, we can get more oil out of those reservoirs than Pioneer could. We can do it at a lower cost. That creates a deal space. You know, what I want to do is make sure our organization is constantly striving to create that deal space. We look at every asset around the world and every company around the world. You'd expect nothing else from us. We are looking constantly to where there is a deal. Sometimes these things come off and sometimes they don't. We want to be ready. I'll just talk about what happened very briefly in COVID to illustrate the flexibility that you have.
In the unconventional, this is getting oil and gas out of rock, which you never should be able to get oil and gas out. If you drill into sand, think about pouring water onto the beach. The water goes straight through the sand. That is what normal good reservoirs look like. They just happen to be two miles under the ground. Oil will flow through that sand and it will come through the surface. Unconventional rock is like metal. You drill into metal, nothing is going to happen. There may be hydrocarbons in the rock, but there is no way that the molecules can flow. The way to get it out is you explode the rock, literally explode the rock two miles under the ground, and you create artificial channels to allow that oil and gas to flow. There are two parts to the process. One is to drill.
The other one is to explode. The explosion piece is twice the cost of the drilling. When COVID came along, what we did is we carried on drilling. We drilled a tremendous amount because we could get drilling rigs really, really cheaply. We did not do the fracking and we did not produce the crude oil. Why? Because it is the more expensive step. It is twice the cost. I did not want, we did not want to put oil on the market at $35 a barrel when we knew the price was going to come back. We drilled like crazy, created a lot of uncompleted, unfracked wells. As soon as the price came back, we fracked immediately and produced all that production at what ended up being $80-$90 a barrel of crude oil. That is the flexibility you have when you have a good balance sheet.
I'm coming back to this concept of deal space. You seem extremely excited about the pipeline of unconventional resource technologies in your portfolio, and that creates even more opportunity for deal space.
There's a tremendous differentiation in the producers in the unconventional space, and that difference is growing by the day. In other words, the leaders, and I'm very, very confident, well, I know if you just look at the costs, it's all published. We are the lowest drilling and completion cost in the industry by quite some way. That gap is growing. We're recovering more oil. The way we do it is we use technology. It's all about technology. Just very, very briefly, when you explode the rock and you create these channels, the great problem you have is it's one to two miles under the ground. You have one to two miles of rock. Gravity is pulling that down to close those fractures. How do you keep those channels open? Typically, you use sand. You fracture and you put sand.
Sand does not close the fractures completely, but it is enough to keep the fractures open. The problem with sand is it is heavy. When you fracture, you cannot get the sand a long way down the fracture, which just limits the amount of oil that can flow. For close to 10 years, we have been working on a technology to put a different type of product, not sand, but coke. Coke from our refineries, which has little to no value. We are fabricating that coke where we can re-inject that instead of sand into the wells. It is just as strong, but it is much lighter. Because it is lighter, it goes further down the fracture, allowing you to recover much more crude oil out of the rock than anyone else can. Ten years to develop that technology, patented. Not only is it patented, no one else can use it.
We're the only ones who can produce the coke as well. The industry's done a marvelous job. The independent oil producers have done a fantastic job at developing the initial technology. What we're doing is applying science to that trial and error technology. That's just creating a differentiation in performance.
Let's think to 2030. You're producing 5.4 million barrels equivalent a day. That's 2 billion barrels a year. You're going to be generating significant free cash flow from that, and you'll have choices. You're going to have to replace Guyana and Permian with, or find new Guyanas and Permians, or you're going to have huge free cash flows to return to shareholders. What, how hard will your job be in 2030?
I love that problem. I mean, I just love the problem. If we're producing more cash flow, we're producing that volume. This is a fantastic position to be in. It's differentiation and performance that's going to be the key. You know, we're working today on using AI technology to find more oil and gas. Oil and gas is tough to find. I mean, you're sending sound waves into the earth. You know, in the deep sea, it's probably a mile of ocean water. And under the surface of the seabed, you're going two miles into the rock. You're sending sound waves in there, and you're trying to interpret what comes out to see if you can find oil and gas. We have the largest dataset of subsurface information of any institution, never mind companies in the world.
The key is how can you find what the, what's similar about the geology in Guyana and where would that apply somewhere else in the world? You have to have the dataset. You have to have the right computing capacity, the right AI capacity to find it. You know, it's not an awe, it's an end to me. What we need to do is get better at finding more oil and gas. We are working towards that using this new technology. We're constantly looking at creating deal space so that if we can replace those barrels by acquisition, we will obviously consider that. I mean, and then the third is we're using technology to extract more oil out of a reservoir than historically has been possible. Go back to my beach. Think about that beach. Think about that water that's gone through the beach.
Once it's dispersed, how the heck do you get all of that out again? In Guyana, these reservoirs, when you drill a hole in there, there is pressure two miles under the surface of the ocean, which will force the oil up. Obviously, as you take oil out, that pressure depletes and you can't get more oil out. You still leave a tremendous amount of oil in the reservoir. How do you get that out? You start to re-inject gas or water into the reservoir to re-pressurize the reservoir to push it out. The problem is you don't know where to inject because interpreting what that reservoir looks like is through seismic. When you have seismic, these sound waves send into the earth, historically, it takes two plus years to process the information.
What happens is you can be injecting at the wrong part of the reservoir, not pressurizing the oil towards the well that's producing, but in the wrong direction. We've got technologies now where we put seismic on the surface of the seabed. Instead of taking two to three years to process the information, we can process it in two to three months. That gives you close to a real-time way of knowing how to get more oil and gas out of the reservoir. The reason we can do that, we have one of the largest, fastest computers in the world in any industry. We've just replaced it with one that's four times faster. That is a unique technology that we have that no one else has.
Your excitement comes across very clearly.
Oh, yeah, I'm sorry. I like oil and gas, gentlemen, ladies.
In the final minute, talk to investors in the audience and on the line. What's the value proposition for owning ExxonMobil shares?
I mean, it's all about shareholder return. I mean, we are the highest TSR in the last one year, the last three years, in the last five years. We've had a higher shareholder return than the major industrials. You know, we describe ourselves in a league of our own. That's not meant to be an arrogant statement at all. Versus the oil and gas companies, there's such a large margin today in performance. We like to compare ourselves against the major industrials. We've got this cash flow growth. We've got this free cash flow generation that this industry's never generated before. I mean, Bob, it's just not happened before. The confidence level is really, really high because we already know exactly which projects we already own to develop in.
If you look at, take some other ratios, you know, take EV to EBITDA and you compare ExxonMobil's EV to EBITDA to the major industrials, you know, we're half. We're half. It doesn't make any sense. It doesn't make any sense to me. What it shows you is the upside potential in this stock value. That's what it shows. If you can generate cash flow, which the oil and gas company has not done historically, we've already demonstrated we can do it at constant prices for the last five years. We know we have that to extend it through the next five years to the end of the decade. Obviously, people like myself and the management committee are working on the next decade all of the time. You're generating an extraordinary amount of free cash flow, extraordinary amount at mid-cycle prices.
You know, that means that we, I showed earlier on, you know, we see this potential of an 18% per year, value growth from the owning ExxonMobil stock.
Very clear, Neil. Thank you, Neil. Thank you, audience, for joining.
Thank you.