EXXON MOBIL CORP Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Operational Strengths: Delivered strong results across safety, reliability (record performance in product solutions), and emissions (over 60% reduction in methane intensity since 2016).
• Financial Performance: Earned $34 billion in 2024, third highest in a decade; cash flow from operations $55 billion, third highest in a decade; return on capital employed 13%, with a five-year average of 11% (rising to ~17% when setting aside certain balances).
• Project Highlights: 2025 projects include Yellowtail in Guyana (third quarter), Singapore Resid Upgrade Project (back end of second quarter), Baytown advanced recycling units (second and fourth quarters), and others. These projects aim to increase profitable volumes, make more profitable products, and lay foundation for new businesses.
• Policy Views: Need for right policy framework for energy future, including carbon intensity standards to engage industry efforts and reduce emissions affordably, avoiding artificial discouragement or support of energy sources in perpetuity.

Segment Performance

• Upstream: In 2024, achieved highest-ever production from advantaged assets. In the Permian, delivered record production from Heritage ExxonMobil and Pioneer assets, with production expected to grow from 1.5 million oil-equivalent barrels per day at the end of 2024 to 2.3 million barrels per day by 2030. In Guyana, delivered record production from the world's premier deepwater development, with GDP per capita in Guyana more than tripling since 2020. Revenue contribution from upstream is significant due to its high production and growth potential.
• Product Solutions: Further enhanced industry-leading portfolio by divesting non-strategic assets, established foundation for new-to-world products, and drove record sales of high-value products in 2024. The shift to a more profitable product mix is a key driver of earnings improvement.
• Low-Carbon Solutions: Uniquely positioned with an end-to-end system for capturing, transporting, and storing carbon emissions, contracted more than 6.7 million tons per year of CO2 for transport and storage. Demonstrated strong commercial interest through customer contracts and equity partnerships, with an estimated total addressable market of $100 billion by 2030.

Guidance

• 2025 Projects: Expect to start up major projects with over $3 billion in earnings potential by 2026. Key projects include Yellowtail in Guyana, Singapore Resid Upgrade, Baytown advanced recycling units, etc.
• Long-Term: Aim to have 60% of option production from advantaged assets by 2030, 80% growth in high-value product sales and product solutions by 2030, and $20 billion more in earnings and $30 billion more in cash flow by 2030.

Risks

• Regulatory/Legal: Lawsuit against California Attorney General and activist groups for defamation and interference in advanced recycling business, highlighting need to defend company and preserve value.
• Policy Uncertainty: Impact of tariffs, LNG permit bans, and regulatory changes on business operations and cost-competitiveness.
• Commercial Challenges: Dependence on customer interest and long-term contracts for low-carbon solutions and new businesses, as well as uncertainty in market adoption of new products and technologies.

Question and Answer

• Q: Neil Mehta of Goldman Sachs on Guyana project milestones and terminal plateau.

A: Darren Woods stated Yellowtail is tracking ahead of expectations, with long-term projections having variables due to reservoir depletion and optimization, but teams working hard to maintain utilization.

• Q: John Royall of JPMorgan on North American tariffs.

A: Darren Woods focused on company's cost-competitiveness and low-cost-to-supply position, emphasizing continued outperformance despite tariffs.

• Q: Betty Jiang of Barclays on data center strategy and CCS value chain.

A: Darren Woods mentioned offering decarbonized power for data centers leveraging end-to-end CO2 system, with strong customer interest and expectation to bring solutions to market quickly.

• Q: Devin McDermott of Morgan Stanley on 2025 project timing and earnings impact.

A: Darren Woods detailed timing of key projects like China Chemical Complex (first quarter), Fawley conversion facility (early second quarter), Baytown advanced recycling units (second and fourth quarters), etc., with over $3 billion in earnings potential by 2026.

• Q: Doug Leggett of Wolfe Research on cash distribution philosophy.

A: Kathy Mikells explained buyback pace coinciding with Pioneer acquisition, and dividend philosophy focused on sustainability, competitiveness, and growth, with 42-year dividend increase streak.

• Q: Steve Richardson of Evercore ISI on CapEx risks.

A: Darren Woods stated flat CapEx profile for existing portfolio upgrades, with efficiency gains from technology application, and confidence in capital efficiency trajectory.

• Q: Jean Ann Salisbury of Bank of America on LNG contracting strategy.

A: Darren Woods mentioned LNG projects underpinned by long-term contracts linked to crude pricing, with portion of production left uncontracted for trading opportunities.

• Q: Bob Brackett of Bernstein Research on FID cadence for LNG projects.

A: Darren Woods emphasized low cost of supply as critical for LNG projects, leveraging project organization and technology to drive to left-hand side of cost of supply curve.

• Q: Neal Dingmann of Truist Securities on capital spend and OpEx for long-term plan.

A: Kathy Mikells stated 2025 cash capex between $27-$29 billion, 2026-2030 between $28-$33 billion, with $18 billion in structural cost reductions by 2030.

• Q: Roger Read of Wells Fargo on CO2 regulation.

A: Darren Woods and Kathy Mikells discussed flexibility to adjust to regulatory changes, importance of streamlining regulation for business, and ongoing discussion with new administration on permitting and regulation.

• Q: Paul Cheng of Scotiabank on Gulf of Mexico basin.

A: Darren Woods stated Gulf of Mexico presence limited by cost of supply, geology, and evaluation of opportunities, with focus on cost-effective supply and advantaged returns.

• Q: Ryan Todd of Piper Sandler on CCS commercial side.

A: Darren Woods mentioned healthy sales pipeline, unique end-to-end system, and aggressive growth plans dependent on customer interest and long-term contracts.

• Q: Biraj Borkhataria of Royal Bank of Canada on chemicals market and reserve replacement ratio.

A: Darren Woods and Kathy Mikells discussed chemicals market challenges and resilience of company's facilities, with Kathy stating reserve replacement ratio not particularly informative.

• Q: Jason Gabelman of TD Cowen on project earnings and cash flow.

A: Kathy Mikells explained focus on operator projects, with incremental benefits from non-operator projects and typical lag between earnings and cash flow from projects