Good morning. My name is Betty Jen. I cover the U.S. Integrated and E&P space. I just want to welcome everyone to day two of the Barclays 39th Energy and Power Conference. I am delighted to have Jack Williams from ExxonMobil to be our next speaker. Jack, you have been with Exxon for over 38 years. During that time, I'm sure you have seen how the company has evolved. As we were talking last night, the company is more laser-focused on cash flow growth than ever before. With that, I will have you start with some prepared remarks before going to Q&A. Thank you.
Thanks, Betty. Appreciate it. Really good to be here with all of you all today and spend a few minutes talking about our company. I'm looking forward to it. A cost center statement here. I'll be making some forward-looking statements during our session. Just a few slides, real quick. I'm only going to take a few minutes and let Betty have some questions. Just a little introduction to ExxonMobil and what we're about and what we're focused on right now. Starting with the AND equation that you've most likely heard us talk about before, which is producing the energy the world needs and also reducing emissions at the same time. We just published our new global outlook. It's on our website if you're interested. It kind of doubles down on that AND equation and makes the point, makes the case for both needs. The world does continue to need a lot more energy. We look out to 2050. We are not meeting our climate aspirations. We need more emissions reduction as well. Looking at ExxonMobil and our opportunity slate, it's really, in my time with the company, I've never seen an opportunity slate like we have today. Very, very deep, long pipeline. We'll talk some about the street plans out to 2030, lined out in terms of earnings and cash flow growth. Even beyond 2030, we have a lot of opportunities, all based on these competitive advantages and capabilities that we have as a corporation that we've been really focused on making sure that we're leveraging to the fullest. In 2030, the firm plans looking at 10% annual earnings growth, $20 billion of earnings growth over that time period, $30 billion of operating cash flow growth over that time period. Setting ourselves up for continued growth beyond 2030. You know we like to think we have a pretty good track record in terms of delivering on that. Over the last five to seven years, we came out in 2017, 2018, 2019 period, talked about a lot of investments. Those have kind of manifested themselves. We've seen a lot of cash flow growth and earnings growth over the past number of years, five-year leading TSR on the basis of that. The result is a lot of startups that have already happened and then some that are coming up and starting up this year as we speak. On the right-hand side is a list of the 10 startups that we have planned for this year. I'm pleased to say seven of them are already in startup operations right now. The other ones are all on track. A lot of growth coming this year. In total of these projects, that'd be $3 billion of earnings capacity that we'd see in 2026. What that generates, that's kind of a good down payment, if you will, on our 2030 story that you see on the left-hand side of the chart. That's just we're showing the consensus for our growth out to 2030 and our competitors. You can see the leadership position that we have. If you think about sharing ExxonMobil and the benefits, what I've been talking about is this 10% earnings growth out to 2030, the organic growth that we plan to deliver and have, again, concrete plans in place, some of which come from those 10 projects that I showed on the last page. We also have a competitive dividend yield in the 3.5%+ range. We've learned we're currently buying back shares at a pace of $20 billion a year this year. We've talked, we've forecast that for next year as well. That would translate into the numbers shown. When you add all that up, you know it's an 18% annual return expected between now and 2030. An exciting, we think, a very exciting future for the near term and then long term beyond that as we think about beyond this 2030 time period. We have a lot of LNG investments. We have a lot of new technology coming on. We have a lot of visibility beyond 2030 as well. With that, Betty, I'll turn it back over to you, and we can talk about a few questions.
Great. Thank you for that. Maybe starting with the global energy outlook, which you mentioned you guys just put out. Since last year, we have seen more macro volatility, more geopolitical tension. At the top of the door is AI, where we need more and more electricity demand. How is Exxon's energy outlook incorporating some of these changing dynamics? Along that line, I know Exxon plans very long term. Is there any implication on your planning focus areas?
Yeah. The energy outlook, which we now call the global outlook because we go beyond just energy, we talk about emissions as well. There's not a tremendous amount of change year on year. If we look at that, you see oil demand flattening. People talk about a peak. We don't really see a sharp peak. We see more of a flattening. As you look out to 2050, oil and gas are still over 50% of the energy mix. We've talked about, you've heard time and time again, talking about depletion mechanisms and how much you have to invest just to stay flat. To continue to grow a little bit beyond that, it takes a lot of investment, continued investment in oil and gas. As we think about the, you think about 1.5 billion more people on the planet by 2050, 25% energy growth supporting a doubling of GDP, and importantly, growing living standards in the developing world. One of the stats that we talk about in the global outlook this year that I find quite sobering is that if you think about kind of meeting basic human needs, you're talking about utilizing about 50 MBTU a day of energy per capita. The developed world is triple that, but there's half the world that doesn't meet that 50 MBTU threshold, half the world that doesn't have enough energy to meet basic living standards. A long way to go, a lot of energy use in terms of raising up people's quality of life and in terms of meeting that economic growth and more people on the planet out to 2050. Clearly, a case to be made for more energy. As I said, we're not meeting our emissions goals, and we have some thoughts on how better to do that. We definitely need to make more progress on that area as well. That is the basis of our long-term plans, and that's what we're looking at. That's why we're continuing to invest heavily in oil and gas, but also continuing to invest in low-emissions technologies as well.
We definitely need Exxon to be doing all of that. Pivoting more to the company level, M&A has been a big topic. Do you think that over the last quarter, probably more explicitly last quarter, Exxon is taking more of a proactive stance on M&A and that you are seeing opportunities across business units or business segments? My question is, what's driving that view? Do you think there is a widening value gap between what Exxon can do versus the rest of the market, or is it more driven by the macro volatility that's creating these opportunities?
Yeah, it's a good question, Betty. It has been a topic as of late. Just to clarify, nothing's fundamentally changed about how we're approaching M&A and thinking about M&A. I would say one development is that we're very proud of the Pioneer merger and acquisition. We thought that went very, very well. We continue to increase our synergy expectations as a result of that. The Pioneer employees coming into organizations are working out really, really well. A welcome addition, bringing in a lot of capabilities. We're very pleased with that acquisition. Some of the comments are just reflecting the fact that we're really, really pleased with where we are with that. You kind of hit on it, Betty, when you think about it. Fundamentally, for value to be created in an acquisition, you have to be able to bring more, get more value out of the businesses and assets than the current owner is currently getting. When you think about these competitive advantages, capabilities that we've been building up, scale and technology and integration, execution excellence, and everything our people are bringing, and the deep capabilities with these central organizations that we have in project management and technology and operations and supply chain and trading, we do feel like we can bring a lot of additional value and assets. We've been really, really focused in the last decade or so on building up these capabilities. When we think about assets out there, we think we can, you know, we have an array of possibilities because of what we could bring, the value that we can bring to these assets. The only thing we're saying is that we have a lot of organic. I showed you those 10 startups. We have a lot of organic opportunities, continued growth in the Permian Basin through beyond 2030, running over 30 rigs there and bringing a lot of technology there. The Guyana development and our fourth FPSO out there and more coming on. On the product solution side, we've borrowed a big steam cracker in China, the big Singapore upgrade project. We're looking at more U.S. Gulf Coast upgrades. We have more technology and new product lines with Proxima and Carbon Materials. We have a lot of organic. That's fundamentally what we're building our plans on. It's all organic opportunities. As I said earlier, we have a very, very good slate of those. However, we're just acknowledging there's another tool in the toolbox that is acquisitions. When you can bring more value and you can bring more value out of assets and businesses than the current owner, then that's open for us as well. That's really the only thing. Fundamentally, nothing's really changed other than the fact that we're very pleased about the Pioneer transaction.
Right. We do hear a lot about the upstream, but I guess from the value creation standpoint, it's across upstream and downstream. When you think about the portfolio, do you want to lean more or is there a balance between upstream and downstream chemicals areas?
Yeah, you know it's a good question. Of course, I've been on both sides. I spent a large part of my career in the upstream early on and in the last 11 years on the management committee. Eight or nine of those have really been more on the product solution side, the chemicals and downstream side. We don't have a formula on how much downstream, how much chemicals, how much upstream. If you look over our history, it's varied quite a bit over time. We do want to make sure that we have businesses that we have advantages in, that we have fundamental advantages and we continue to invest in and grow. Whether those are across, whether they're in chemicals, whether they're downstream, whether they're upstream, we're going where the best opportunities are. When we do find where there's a business where we're not able to continue to invest, that would be something we'd look at divesting. A good example of that would be the Santoprene business in our chemicals portfolio that we divested several years ago. It was a good business. The problem was we needed to keep investing in R&D in that to keep it developing and the opportunities weren't competitive with the rest of our slate. We ended up divesting that asset. That's what we're continuing to look at, keeping that mix fresh and making sure that we really have competitive advantages in all the businesses that we're choosing to continue to participate in and then making those investments and fulfilling those advantages. It would not surprise me to see between upstream and downstream chemicals, that changing over time. That's perfectly fine.
Great. Maybe doubling down on the upstream story a bit, you highlighted the synergies with Pioneer. It was a big claim when Exxon said, you think you can double resource recovery in the Permian. There's a lot of questions around how do we get there, what is Exxon seeing, what do you think the market or the industry is underappreciating from Exxon's technology edge over the peers?
Yeah. It's really, you know, it is a pretty aspirational goal. I will readily admit that. I think we all readily admit that. Darren will readily admit that, who gave us a challenge to the organization. We absorbed the goal and aspiration. As usual, when we have clear marching orders on what we want to go do, we get after it and start working on it. We've been working on it for a number of years. This is not a new aspiration. It's been around for six, seven, eight years that we've been working on it. We're kind of steadily adding to the technology portfolio. We talked a lot about lightweight propping. What a great example of leveraging the full corporation in terms of that additional recovery mechanism. We have, you know, we're spending $1 billion a year in R&D. One of the big things when we formed these central organizations in the corporation was we formed one technology organization. We had our technology talents divided amongst several different technology organizations, brought all that together to where we could really put a corporate prioritization, easily put a corporate prioritization on the portfolio. We put more focus on how can we, you know, we have this massive unconventional resource base. How can we get more out? Because if you take a 7% recovery to 8%, 9%, 10%, much less if we can take it to 14%, that's big additions. A small incremental change on what's a very low recovery on a very big resource, a lot of oil in place gives you a lot more resource. We think it was definitely worthwhile to be spending a lot of our resources working on that. When you think about the double recovery, we don't have a silver bullet. We're not saying we have this one technology that's going to double recovery. Last we reviewed, I saw, call it a couple of dozen different technologies that we're working on that we think collectively certainly have the potential of double recovery. Now, will all those work out as we hope? Probably not. When you look on a risk basis, it's substantial what we think we can deliver. I can't talk about all the individual ones today, but there's just a lot of things we're working on in addition to lightweight propping. I think that was something that people didn't see coming in terms of using Petcoke in that mechanism. We had some of our, quite frankly, our folks that were downstream researchers kind of connect the dots there. It's a really good example of integration. We're continuing to bring those types of ideas to this resource. There are still a lot of ways to go. We recognize it's an aspirational goal, but we think we got a lot of opportunities there.
Expect to see continued steady improvement from here. In contrast, though, I'll say the Guyana resource has been kept at 11 billion bbl for a while. Neil and Marc are saying that number is too conservative. Despite the technology innovation for the seismic infill drilling, can you just speak to the conservatism there or what the upside could we see from the Guyana asset?
Sure. The first thing I'd like to say is 11 billion bbl is a lot of oil. That's a lot of resource. We're quite proud of 11 billion oil equivalent barrel resource in Guyana. To put that in perspective, we produced about 0.7 to date. There's a long way to go in Guyana to recover that 11 billion. We're kind of simultaneously focused on, number one, getting good economical development plans in place to produce the full 11 billion bbl of resource that we see, which certainly goes beyond the developments that we have in place now that we've announced. We're also looking to continue to explore and add on to that. Unlike the Permian, the recovery in Guyana is conventional reservoirs and the recovery rates are much higher in the base case. This is really about exploration. This is really about finding more. Most of the resource in the state of our block that we're developing is focused on the southeast portion of it. There's still exploration running room out to the west and northwest that we have yet to really fully exploit. We feel like we have a fiduciary responsibility to update the 11 billion bbl if we have any updates. We will, and we have not to date. It's not for lack of trying. We're continuing to work on that. We're continuing to optimize the 11 we know we have and make sure we can most economically extract that 11 billion oil equivalent barrels and also look to continue to add to it. We're not done exploring on that block, and we'll continue to work on it. Right now, 11 billion oil equivalent barrels is the best number we have for our resource estimate in Guyana. We're quite proud of it. It's a big number.
It's a big number. It's not just about the resource depth, but it's also about execution. It's quite impressive how consistently the project is able to bring online under budget, ahead of schedule. The execution has been really great. Can you speak to what organizationally has changed or that's enabling that type of track record and AI integration with what you're seeing with the events in Bergen? How are you integrating that to enable you to do even better?
Yeah. You know, I'd appreciate the opportunity to talk a little bit about projects. Because I have Product Solutions reporting to me. I also have Global Projects reporting to me and Supply Chain. I've been around the projects business for quite a while. We formed this Global Projects organization back in 2018. Before that, we had a couple of different project organizations. We have seen the advantages of that. It's been really differentiating in terms of the ability to take on these big projects and be able to execute them consistently, deliver big projects on time, on budget. It's one thing to have these great opportunities. It's the other thing to actually deliver them. We've been able to do both, I think, largely because we have a very, very capable and very differentiated, unique Global Projects organization that could take on these big things. I mean, we were building these big boats in Guyana and building a world-class steam cracker in China and this big Resid Upgrade project in Singapore and multiple other projects all simultaneously. Not many companies had the capability to do that many big projects successfully. We think it's providing a tremendous amount of advantage. Very happy we have that organization. I think it's a great example of leveraging the scale of the corporation, putting all that capability in one organization, and letting them execute all the projects on behalf of the whole organization. Like I said, we're seeing tremendous benefits from that. One of the things they've done in terms of AI is we've, and we've had this for many, many years, a knowledge management database. We're putting all the lessons learned from all the projects we're executing, big and small, all of them in one large database. We've been doing that for a number of years, well before people were talking about AI and leveraging that data. AI will just allow us to leverage that even more. We're kind of set up. A lot of, as you know, a lot of the advantages of AI is just how good your data set, how good is the data that the AI model is learning from. We have some great data that's built on the world's largest project database. We're very, very optimistic that it's going to make a big difference longer term. It just makes us that much more productive and that much better in terms of making sure that we're leveraging every single lesson, every single bit we've learned in the past and bringing that to every single project we do.
Do you think AI integration can be transformative?
I think so. I mean, I think it's very early innings of AI. The way we're approaching it is, you know, we have a technology organization. In the technology organization is our information technology organization, our IT organization. We've put all that in one organization looking enterprise-wide. We're focused more on kind of the effectiveness abilities of AI, not necessarily the efficiencies, and being pretty focused and disciplined on how we're on the big things we're looking at. Olivier was up here earlier talking about drilling. I think there's big opportunities in drilling. We're certainly looking at that. We're looking at exploration, seismic processing, those kinds of things, supply chain optimization. We have a half a dozen or so things where we're looking at enterprise-wide what we think we can make the kind of first entrees. Longer term, you have to think it's going to make a big difference in terms of the productivity.
Great. In your prepared remarks, you mentioned it's not just the next five years, but Exxon is also looking into the 2030s. A big differentiation is the capital you are allocating for the next generation of projects. Can you talk through the project selection process, and where do you see the best opportunity that differentiates Exxon beyond 2030s?
Yeah. I can, Betty. One of the things about that is that the time frames that we're dealing with are incredibly long. A project like Mozambique, it's been out there for a number of years. We've been working on it for a number of years, optimizing, and got lots of partners, lots of deals. It is a huge resource in a very geographically advantageous area for LNG and technology in the markets. That is one where we're optimistic. We recognize there's a long road ahead. We've still got a lot of work to do, but that will be one we'll be bringing on post-2030, should it go forward. We have every expectation and hope that it will. Another LNG project is Papua in Papua New Guinea that would also be a post-2030 startup. Both of these projects have been working on for a number of years. It just takes a number of years to work through all the issues and get to the final startup on these big projects. On the upstream side, I think you also got continued growth in the Permian based on technology and based on that increased recovery we talked about. There will be some further Guyana development post-2030 as well, we certainly hope. We got a lot to work on the upstream. You look at the product solution side post-2030. I really think these new products we were talking about recently, Proxima and our battery anode, the graphite that go into lithium-ion batteries, it's going to increase the battery charging by 30%, the capacity by 30% to make a big difference. Those two combined should be material earnings in the mid-2030s. A little bit of earnings before the 2030s, but really kind of moving in. By the end of the latter half of the 2030s, those two combined, Proxima and the Carbon Materials Venture combined, could be the same size as energy products as today. Our big fuels is today. These would be kind of units that would be in the refining parts of our integrated manufacturing facilities. They'd be units in those facilities later on. Big opportunities there. It's a really good example of leveraging the technology organization and being able to connect dots that others can't connect. Proxima would be the feed stream for Proxima would be an element that goes into gasoline today. Connecting back to our global outlook, we do see oil, we see gasoline demand declining in the latter half of the outlook to about 25% lower in 2050 than it is today. Now, that does not translate into oil demand because oil goes into a lot of things other than gasoline. We'd be pulling molecules out of that stream and putting them into a completely different use, into automotive light weighting of automotive deals, infrastructure, coatings, and wind turbine blades. We're taking gasoline molecules and turning them into wind turbine blades. It's a very interesting perspective there. I think those are just, you know, by the 2030s, I would expect that this Carbon Materials venture is going to spin out some other things as well because we're continuing to do research there. Basically, our view is the world's going to be long carbon. What can we do with that carbon? We have a lot of carbon through our manufacturing facilities. How can we capture that and utilize that in other ways? Our teams have a lot of really, really clever ideas, two of which we're monetizing now and others which we're continuing to work on. A lot going on in the 2030s. One thing we didn't talk about, Betty, is a low carbon solution space and CCS. CCS and this U.S. Gulf Coast end-to-end carbon capture and sequestration system that we have in place is going to be continuing to grow throughout that whole time period and generating stable cash flows and good earnings. That would be another contributor as well.
Yeah. I truly believe in the CCS potential for Exxon, just given the infrastructure you have on the Gulf Coast. Maybe putting that all together, profitable growth is a big mantra for Exxon. $20 billion earnings growth, $30 billion cash flow growth by 2030. How high is the confidence for you to sustain that level, being able to through cycle return and the sustainability of that cash flow beyond 2030s?
Yeah, we have pretty good confidence based on all the advantages we talked about earlier. It's in that vein that we also throw in M&A as well as a potential opportunity. When you talk about long-term growth and so forth, we just mentioned that that's another opportunity we have. The plans we have are generating a lot of cash flow growth. One additional tailwind I haven't mentioned either that I need to is these structural cost reductions that we've been generating. When you're generating top-line revenue growth and you're generating operating cost reduction at the same time, that's a fantastic, you know, it's the rubber band deal on the margin. That's a fantastic tailwind for generating earnings growth. We're doing both. We're doing both simultaneously. We generated $13 billion in structural cost reductions to date on the pathway to $18 billion by 2030. That's another real, real help there. We're continuing to, and we're going to exit 2030 having generated a lot of operating cash flow, a lot of free cash flow, but also with a strong pipeline of investments underway to generate earnings beyond that as well. To us, it's around continuing to invest based on the strengths we have, continuing to reward our shareholders with dividends and to the extent possible, share buybacks as well, continuing to focus on the cost side of the equation as well. We think that's a winning formula for success long term.
That's a very strong position. We'll end it there. Thank you so much, Jack, for the conversation.
Thanks, Betty. Appreciate it. Thank you all.