The ExxonMobil Corp. earned $8.2 billion in the first quarter and positioned itself to do well in the future by strengthening its underlying earnings power.
That’s according to Chairman-CEO Darren Woods, who said from Houston that his company had $14.7 billion in first quarter cash flow and planned to grow its earnings potential by an additional $12 billion from 2023 to 2027 for an annual growth rate of more than 10 percent.
“An important driver of this improved earnings power is our ongoing focus on structural cost savings, which reached $10.1 billion in the first quarter versus 2019 and furthered our progress toward our goal of $15 billion by 2027,” Woods said. “Our capital expenditures in the quarter were $5.8 billion as we continued to invest in advantaged growth projects that will drive future earnings and cash flow.”
He said ExxonMobil furthered strengthened its balance sheet by bringing its net debt to capital down to 3 percent, the lowest in over a decade, and paid shareholders $3.8 billion in dividends.
“For all of 2023 ExxonMobil was the third-largest total dividend-payer in the S&P 500,” Woods said. “Only Microsoft and Apple paid more. We also repurchased about $3 billion of shares.
“Buybacks were temporarily paused till the shareholders of Pioneer Natural Resources voted on the combination of our companies, which they approved on Feb. 7. Post-close, we expect buybacks to ramp up to a pace of $20 billion a year.”
Woods said his company has developed a strategy tied more directly to its core competitive advantages and has reorganized to create a group of centralized organizations that fully utilize the significant synergies among its businesses.
“Our focus on shareholder value extends beyond the work we’re doing to drive profitable growth,” he said. “I’ll give you three examples from the quarter that demonstrate how we are working to insure that the value we’ve created is not diminished through third-party actions.
“First we filed for arbitration to confirm our rights and establish the value that the Chevron-Hess transaction places on the Guyana asset. This will allow us to evaluate options to maximize the value for our shareholders. Second we’re continuing our lawsuit against two special interest activists masquerading as investors. We’re asking the court to require that the SEC’s existing rules be consistently applied in order to restore the integrity of the system.
“We believe the system will only work properly if the rules are clearly understood and clearly applied to all parties. And third we successfully defended the Pioneer Natural Resources merger against a frivolous lawsuit designed to abuse a legitimate legal process. The court ruled in our favor and sanctioned the lawyer for operating in bad faith. While the results of these efforts may not show up in any discrete quarterly result, they underpin long-term value and demonstrate our strong commitment to doing what’s right.”
Senior Vice President-Chief Financial Officer Kathy Mikells said most of the company’s year-over-year incremental savings in upstream exploration and production were driven by operational efficiencies.
“At Kearl Trucking we’ve basically automated all our heavy trucking for an improvement overall from a safety perspective and for operating efficiency with the logistics and efficiency of that operation,” Mikells said. “Contrasting that with energy products we had a heavy slate of maintenance in this past quarter and those turnarounds were actually done more efficiently than the same turnarounds the last time the company would have had to execute them.
“So that drove structural cost savings for us.”
Looking to 2027, Mikells said, ExxonMobil’s Global Operations and Sustainability Organization is using statistical maintenance analysis to drive better efficiency and effectiveness in its planned maintenance.
“Last year we stood up a Global Business Solutions Organization responsible for standardizing some of these big end-to-end processes like procure-to-pay and record-to-report as well as our planning activities,” she said. “As we standardize those we can implement more technology in order to improve the automation of many of those activities.
“When we benchmark ourselves we know we’re too heavy on manual activities relative to what we would consider best in class, so that should drive incremental savings.”
