Exxon offers glimpses at strategy on AI and climate
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Exxon offered a few peeks into its strategy beyond just the topline numbers in its latest five-year corporate outlook.
Why it matters: The multinational giant is one of the world's most powerful oil companies and influences other market players.
Catch up quick: Exxon now sees $25 billion in earnings growth through 2030, up $5 billion from the prior outlook, it said Tuesday.
- It also boosted oil and gas production plans to 5.5 million barrels of oil-equivalent per day, citing Permian Basin efficiency and other factors.
- Exxon's market performance has generally outpaced its rivals as oil majors emerged from the depths of the pandemic.
The intrigue: A few takeaways from the new documents and execs' call with analysts...
Flexing on AI for oil recovery. Exxon said it's ahead of its competitors in using AI on well data "to improve how we develop the resource to maximize value and operate assets at the lowest cost," chief financial officer Kathy Mikells said in prepared remarks.
- "It's clearly a game-changer to increase resource recovery, reduce capital deployed, and maximize net present value," she said, touting proprietary methods developed in-house.
- Exxon is hardly alone. As Axios just explored, AI could help wring a lot more barrels from existing discoveries — a prospect climate advocates find chilling.
It cut planned spending on low-carbon initiatives to $20B, instead of up to $30B by 2030 under prior guidance.
- It comes after Exxon put plans for a big hydrogen project in Texas on hold. But execs are more bullish in other areas.
- "The hydrogen market ... is one area that has been more slowly developing than we originally expected. But on the reverse side of that, the CCS [carbon capture and storage] market seems to be accelerating," Mikells told analysts.
New data center info. Exxon revealed it has ID'd sites in Louisiana and Mississippi for its first planned gas-fired power plants to directly supply data centers.
- The plan envisions plants that can capture CO2, taking advantage of Exxon's transport and storage infrastructure — and hyperscalers' interest in low-carbon power.
- CEO Darren Woods also said final investment decisions should come next year, and cited talks with tech giants and power companies. NextEra Energy revealed on Monday that it's one of Exxon's partners.
- It's not clear whether the planned gas-fired plants would immediately start trapping CO2.
What they're saying: Exxon's vision of growing in the Permian Basin well into next decade "contrasts with industry views of 'peak Permian' and a shift from some companies (e.g., Chevron) to 'harvest mode,'" HSBC analyst Kim Fustier said in a note.
The bottom line: The market seems moderately pleased with Exxon's outlook, with its share price rising 2% Tuesday.
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