ExxonMobil(XOM) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of nearly $8 billion for Q2 2023, which is two times higher than the earnings in Q2 2018 under comparable commodity prices [6][17] - Cash flow from operations totaled $9.4 billion in the quarter, or $13 billion excluding changes in working capital [16] - Year-to-date production reached 3.7 million oil-equivalent barrels per day, aligning with full-year guidance [16] Business Line Data and Key Metrics Changes - In the Permian, the company set a production record and is on track for a 10% overall growth in production for the year [8] - In Guyana, a record quarterly gross production rate of 380,000 barrels per day was achieved, with potential to increase capacity above 400,000 barrels per day [9][12] - The Baytown chemical expansion was mechanically completed, adding 750,000 tonnes per annum of performance chemical products [9][10] Market Data and Key Metrics Changes - The company completed the divestment of the Billings refinery, contributing to approximately $2 billion in cash proceeds from divestments of non-strategic assets year-to-date [11] - The company’s gas portfolio is now about 45% LNG, reflecting a shift in focus [66] Company Strategy and Development Direction - The company is focused on structural improvements and driving sustained, industry-leading performance through portfolio reshaping and efficiency [6][17] - The acquisition of Denbury is expected to enhance the company’s competitive position in carbon capture and storage, with a goal to reduce emissions significantly [13][14] - The Growing the Gulf initiative, which involves $20 billion in investments over ten years, is aimed at capitalizing on U.S. resources and economic growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company’s ability to meet energy needs while reducing emissions, highlighting ongoing efforts in carbon capture and storage [8][14] - The company anticipates continued growth in earnings power and is on track to achieve $9 billion in structural cost savings by year-end [16][20] - Management noted that the current market environment presents opportunities for unique value creation through M&A, particularly in low carbon and Permian assets [27][28] Other Important Information - The company has established three new centralized organizations to improve performance and lower costs [11] - The company is committed to finding additional savings and improving the earnings power of its businesses [16][20] Q&A Session Summary Question: Cost saving target post-Denbury - Management indicated that the cost saving target of $9 billion is expected to increase as new organizations identify further efficiencies [24][25] Question: M&A opportunities in low carbon and Permian - Management emphasized the need for M&A opportunities to create unique shareholder value, stating that any acquisition must exceed the value of independent operations [27][28] Question: Drivers of better MPV in Permian - Management discussed the advantages of cube development and capital efficiency in maximizing resource recovery in the Permian [30][32] Question: Drivers of margin decline in energy products - Management clarified that the margin decline is a direct result of industry refining margin reductions, not unique to the company [39][40] Question: Chemical outlook amidst new capacity - Management highlighted the diversified feed slate and investments in chemicals that position the company favorably despite new capacity entering the market [43][46] Question: Pressure to accelerate carbon capture - Management acknowledged the need for more solutions in emissions reduction and expressed commitment to advancing carbon capture technologies [49][51] Question: Lithium drilling and refining opportunities - Management is exploring lithium production opportunities, leveraging existing capabilities in subsurface management and refining processes [70][73] Question: Cash balance and capital deployment - Management expressed satisfaction with the current cash balance, emphasizing the importance of maintaining flexibility for future investments [75][78] Question: Oilfield services costs outlook - Management noted early signs of inflation easing in certain cost categories, with expectations for overall inflation to decrease moving into 2024 [81][82]